The constitution requires that congress authorize the issuance of debt.
Before 1917, all spending came with a specific bond attached. There was no debt ceiling, because there was no “general” debt. If congress wanted to fund NASA, they would issue a bond specifically for funding NASA.
Is that what you want to go back to? I don’t know what the consequences would be, maybe it would work out.
Trying to square that statement with reality is making it difficult to retain my hat atop my head.
Both parties are guilty of increasing expenditures without assuring corresponding revenue, seemingly without limit or any sense of culpability; raising taxes is at least an acknowledgement that any monetary system based on some kind of real value has to balance income and expenditure. Spending money on, say, a two decade-long war far in excess of income (and even cutting taxes in that period) obligates taking on more debt, which means having to raise any self-imposed limits to debt. Republicans being both opposed to increasing tax revenues and blockading increasing the debt ceiling are basically putting the government in a pointless, self-imposed bind for ‘ ideological’ (read: moronic) reasons.
There is, of course, the theory that you can just take on debt endlessly and it doesn’t matter as long as the economy is growing and ‘people’ are willing lend you money, which is essentially selling futures in the US (and global) economy. Since all non-standard basis monetary systems are essentially just government fiat and/or confidence schemes (Hello cryptocurrencies!) anyway, it is not an entirely irrational argument as long as no one else comes by and tries to knock down your house of cards. This is largely maintained by ensuring that everyone has a vested interest in seeing the system continue, e.g. globalization, and that US currency is the fundamental basis for global trade, with petrodollars being the classical example.
Yes. Back in 2011, the Republicans held the debt ceiling hostage and demanded spending cuts. This was at a time when unemployment was still really high and the US was still recovering from the 2008 financial crisis. The result was a slower recovery, worse economy, and higher unemployment.
The agreement cut spending more than it increased the debt limit. In the first installment (“tranche”), $917 billion would be cut over 10 years in exchange for increasing the debt limit by $900 billion.
The agreement established a Congressional Joint Select Committee that would produce debt reduction legislation by November 23, 2011, that would be immune from amendments or filibuster. The goal of the legislation is to cut at least $1.5 trillion over the coming 10 years and should be passed by December 23, 2011. The committee would have 12 members, 6 from each party.
I posted about it in this thread, reposting because I think it fairly comprehensively answers your question:
The core reason we have this and most countries don’t, our constitution which was ratified in 1789 specifically says the legislature has the power to issue debt. Most other democracies budgeting and appropriations and taxing require legislative approval, but debt issuance is actually an executive function, often specifically by say a Minister of Finance or what have you (the terminology varies), but essentially the foreign equivalent of our Treasury Secretary usually as normal operations of their office issue debt “as necessary” to cover needs of the government. In those countries the legislature probably has some oversight and regulating authority on specifics of how the debt instruments work and etc, but they don’t have authority to approve or disapprove issuance, it’s seen as innate power of the equivalent of the Treasury Department of that country.
Basically we just have a very outdated way of doing it.
@k9bfriender I don’t see any reason that Congress couldn’t just pass a law that automatically raises the debt ceiling as needed. Congress can and does delegate its constitutional power: that’s what’s behind so many federal entities. For example, the Constitution gives Congress specifically the power to coin money and regulate its value, but they delegated both of those powers.
It’s not my preferred option. I would just prefer a law that said something like this: “Unless stated otherwise, all future spending laws shall authorize the Treasury of the United States to borrow as much money as needed to avoid defaulting on this debt.”
This is notable because the same GDP is heavily dependent on the private sector which also has to pay for its own debts.
Finally, there’s unfunded liabilities, or future obligations that are not included in public debt:
I think the value that time was around $45 trillion. See also,
But some argue that it might be as high as $200 trillion:
The implications, then, is that the country has been borrowing and spending heavily since the early 1980s, and with increased financial speculation leading to fallout after 2008, had to increase both further.
Given that, the point in having some sort of ceiling for both becomes important.
This doesn’t follow at all. The debt ceiling is a way of stopping the US from paying bills it has already accrued. All it does is put the US credit rating in danger, and if we ever actually defaulted, then our interest rates would soar, making the amount of debt outstanding much, much more expensive. If you want to somehow get that future spending under control, the way to do it would be caps on deficits (which is a terrible idea, but that’s another thread). Once you’re running up against the ceiling, it’s already too late – the money is spent, the bills are coming due.
That doesn’t make intuitive sense because if you spend $12k, then you have indebted yourself to the tune of $12k. It would seem as if your “debt ceiling” had already been raised from $10k to $12k.
I imagined it as if you had a debt ceiling of $10k. You and your family decide to buy new living room furniture for $5k, new kitchen appliances for $5k, and a new TV for $2k, while at the same time saying that you will not raise your “debt ceiling.”
It seems that you have stated an impossible contradiction. You would either have to not spend some of that money or raise your debt ceiling. How does the federal government spend the money in the first place without raising the debt ceiling?
Congress says, you’re going to spend this much on the military, this much on social programs, and this much on debt service (those three are by far the biggest parts of the government budget), but you don’t spend it all at once. Then, as you’re issuing debt to pay for the money you’re required to spend, the government says, whoa, we didn’t say you could issue that much debt.
For a large portion of the last decade, there has actually been no debt limit due to temporary suspensions. In those periods, the Treasury was authorized to issue however much debt was necessary to make up the difference between revenue and expenditures. Just take one of those temporary suspensions and make it permanent.
That’s what I am missing. If you spent the money, you are in debt whether you “issued” the particular funding source to pay for the debt or not.
It seems to me that if Congress says “spend $100 billion on X” and it turns out that we don’t have $100 billion, then that could either be construed as: 1) spend it anyways and we issue debt to cover it, or 2) the spending directive is conditional on whether we have $100 billion or have authorized $100 billion in debt. I don’t see how it is construed as: 3) spend it, but we’re not issuing the proper instruments to cover it as of right now.
Of all of the ways to look at it, 3 seems the most absurd and unnatural reading and indeed an unconstitutional reading because defaulting on debt is something we are not permitted to do.
Congress says spend $10 on the military. Tax receipts and other sources come in, and during the year, the military orders $10 worth of equipment and paid for $8 so far. They have $2 more they have to pay, but there’s no more money coming in. So the US wants to issue debt, but is at the debt limit.
It seems to me that based on how Congressional rules work viz. you do not have to specifically Amend Something Previous Adopted (Robert’s Rules of Order and similar) to amend a previous law, that the mere act of passing a spending bill that puts us over the debt ceiling would automatically nullify the existing debt ceiling.