It seems to me that the debt ceiling is invariably raised whenever we get close to hitting it. Why even have a limit at all if it will always be raised? It’s like having a speed limit sign say “Speed Limit 65, unless your car can go faster”
My guess is, it gives pause for thought. It’s a speed bump, not a wall.
It also helps prevent a calamitous budget such as a $10 trillion-in-spending-in-one-year anomaly by setting an artificial (albeit temporary) barrier.
That’s not really a factual answer, however (seeing how this is GQ and not IMHO).
The debt ceiling is necessary because only Congress, under Article I, section 8 of the Constitution, has the power to “borrow money on the credit of the United States.” Thus, Congress has to individually authorize each bond issue. Beginning in WWI, however, Congress passed legislation allowing the Treasury to issue bonds (and thus take on debt) without specific Congressional approval, as long as the debt did not exceed a previously set Congressional limit. This limit, the debt ceiling, is arguably required because only Congress, not Treasury (which is part of the Executive branch), has the authority to borrow money. So the debt ceiling is ultimately a way for Congress to delegate its power without running afoul of the Constitution.
Also, to make clear that the debt ceiling was never intended to limit excessive budgets, note that the debt ceiling only limits the ability of Treasury to borrow money. It does not limit Congress’s ability to pass a budget that exceeds the limit. This is why we occasionally face the ridiculous situations when the government cannot borrow money (due to the debt ceiling) to pay for expenses Congress already approved.
Worse, encroaching on the debt ceiling can put the government in the position of not being able to pay invoices for goods already delivered and services already rendered.
Went it was first passed my thoughts we oh that’s nice. We now have a magic number that we can change when ever we want to. But it makes us fill like we are being responsible.
You were around in 1917?
Occasionally? Try every budget cycle where there is no approved and signed budget, come a new fiscal year on October 1st.
That’s not what he’s talking about. Generally speaking, appropriations expire on October 1 each year. Appropriations are the legal authority to commit the government to a financial obligation. For the most part, unless appropriations are approved by law by October 1, the government loses the ability to make financial obligations.
The amount of money in the treasury has nothing to do with October 1. And issuing debt is simply one means of filling the treasury.
So it is quite possible to commit the government to spending money (having a valid appropriation) without the financial means to back it up (having dollars in the treasury).
Could Congress, however, constitutionally formulate the delegation in another way which does not require periodic adjustment to the debt ceiling? Could it, for instance, authorise the Treasury in an Act of Congress to issue new bonds to the amount of x dollars annually, rather than setting a ceiling on the aggregate debt accumulated? Could it link this authorisation to the rate of inflation, the growth of GDP or some other index which allows for increases in debt without requiring an increase in the ceiling by means of an Act of Congress?
I suppose all those options would remain constitutional in the sense that Congress has ultimately approved of the money being borrowed, consistent with Article I, section 8. However, whether these schemes are “Constitutional” ultimately rests with the Supreme Court. I mean, there are some who question whether the current debt ceiling mechanism is even constitutional, because it appears to violate section 4 of the 14th Amendment (“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”).
But yes, there are alternatives to the current debt ceiling problems. In the past, Congress (more precisely, the House) relied on the “Gephardt Rule” to bypass the problems associated with the debt ceiling by automatically raising the debt limit whenever the budget resolution report was adopted.
But ultimately the debt ceiling “problem” remains because it is useful political theater for some politicians.
This is similar to how the congress can authorize a government agency to do something but then not provide the appropriated funds required to do that. Congress can pass a law saying, “We want agency X to fix problem Z” without providing any real funding to make that a reality.
By doing legislation in piecemeal it permits the legislation to get passed. If they tried to lump in the debt ceiling with the appropriations laws then it probably wouldn’t pass. The annual appropriations laws are what actually give most government agencies authority to spend each year. If they tried tying the debt ceiling in with that to force the debt ceiling to not really go up, then lots of government agencies would not get the funding required to function at the levels they function. So what do we do?
The debt ceiling is a motivator for congress to improve on their appropriations laws and reduce federal spending or increase taxes. That’s the only way to stop hitting the debt ceiling - either 1) make more money for the government, 2) make government smaller by providing less services, or 3) reduce payments through programs for poor, disabled, or elderly through checks or medical services.
Obviously nobody wants to see their grandparents who paid into the system for 40-50 years living in poverty or unable to get care for a broken bone. The reality is that the government should have been saving up for the past 40 years and treating the social security and other buckets like real bank accounts instead of money available to spend. Because this has not happened, the only real solution is to increase taxes until the number of retirees begins to decline in 30-40 years. Lowering government spending might help a little, but the reality is Americans probably want lowered government spending but still want the same level of government services (e.g. safe roads, safe food, a military to protect the nation, etc.). The reality is we probably need to raise taxes to decrease federal deficit unless we are okay with just increasing the debt limit until it is so high the US dollar is hugely devalued.
The debt limit ultimately may end up being a motivator to take one of the much needed actions like increasing taxes, etc. to get out of this financial mess. But maybe the situation has to get more serious before this will surface as a motivator. Just thoughts/speculation. Not sure what will happen though or if this view is correct.
The irony is that those people tend to argue that in order not to question “the public debt, authorized by law,” that the government should issue debt NOT authorized by law.
The problem with thinking of the debt ceiling as a speed-bump or time to stop and reflect on our current spending/taxing situation - the chicken littles in the US run around about how armageddon will occur if we don’t raise the debt ceiling and keep spending more money.