Surely, President Joe Biden does not want a federal government default on the national debt. Nor do any Congressional Democrats. After all, if there is one this year, the voters will surely remember who’s to blame on Election Day next year. And surely, Congressional Republicans feel the same.
So, it stands to reason that the Democrats and the Republicans both have a very strong incentive to once again raise the national debt ceiling: But not until they both push us right to the edge of the cliff.
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Over the last year or so, as the Federal Reserve has tightened the monetary screws to lower the rate of inflation, Congressional Democrats have managed to keep our economy from falling into a recession by passing massive federal spending measures. But now that the Republicans have a tiny majority in the House, the party is surely over.
Better yet for the Republicans, the federal government has just reached the legal limit of our national debt ceiling, when only extraordinary measures taken by Treasury Secretary Janet Yellen can stave off bankruptcy until late spring, or possibly, early summer.
Luckily for us, Yellen, a very highly respected economist, is a former Chairwoman of the Federal Reserve. And, for what it’s worth, like Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, Yellen also grew up in Brooklyn. And almost no one from Brooklyn -- or from anywhere else in this country wants a national bankruptcy.
The legal national debt limit is analogous to a law stipulating that the sun sets at a particular hour, minute, and second, or that New Year’s Day always falls on January 1st. Similarly, our national debt continues to rise every year solely because our nation continues running huge federal budget deficits.
Abolish The National Debt Ceiling
Our national debt ceiling has done absolutely nothing to curb deficit spending. Every few years, as we came close to breaching the debt ceiling, Congress debated how we could deal with this problem – and every time, at least so far – it has simply raised the legal debt ceiling.
The debt ceiling, then, has certainly done nothing to curb deficit spending. But it has created periodic fiscal crises, when it sometimes appeared likely that the unthinkable might actually happen: that the United States would actually go bankrupt.
The national debt ceiling has established a periodic game of “Chicken” between Congressional Republicans and Democrats, with the president pacing the sideline, occasionally barking out a new play to his team.
Since 1978, when the debt ceiling was established, Congress periodically raised the ceiling, thereby averting a default and a worldwide financial crisis. Surely, common sense suggests – if not, dictates – that Congress would finally get the memo and just abolish the national debt ceiling once and for all. But then again, attributing common sense to members of Congress would be oxymoronic.
House Republicans, who hold a razor-thin majority, are positioned to block the raising of the debt ceiling unless the Democrats in both the House and Senate accede to at least some of their demands. But if the Democrats refuse to bargain, then we could finally be plunged into bankruptcy, likely setting off another worldwide Great Depression.
One might like to believe that neither side would be willing to let that happen, so that by sometime this summer cooler heads will prevail, and we will once again avert financial disaster. We’ll just kick the can a bit further down the road, until we have to deal with the next financial crisis.
While the debt ceiling has had virtually no effect on holding down federal budget deficits, it does call attention to our rapidly rising national debt, which has surpassed $31 trillion, and is rising at a rate of more than $1 trillion a year.
Members of Congress are quite correct in being extremely concerned about our runaway national debt, but it’s high-time they realized that placing a legal ceiling on the debt – and then just raising it every few years – has had virtually no impact on improving our nation’s finances.
If they are truly serious of about at least slowing down our debt’s rate of increase – let alone entirely halting its rise – then they need to work much harder at holding down annual federal budget deficits, and perhaps someday actually balancing the federal budget.
