If Congress approves the budget agreement hammered out by President Joe Biden and House Speaker Kevin McCarthy, it should generate only a brief sigh of relief from the American public. Returning the nation to fiscal sanity rather than brinkmanship will require the elimination of the arcane and archaic debt ceiling.
After months of haggling over the debt ceiling, Biden and McCarthy reached an apparent deal last weekend. Failure to do so would mean the United States would be unable to pay its obligations to investors, the military and employees. At worst, it would trigger a global depression; at best, it would mark the U.S. government as an unreliable debtor and would cause long-lasting economic problems.
In other words, allowing the money to run out — as it likely would do June 5 — should not be viewed as an option. Yet Republicans in Congress have dangled that option in an irresponsible effort to cut federal spending.
Indeed, there is a need for talk about reducing spending; the national debt is nearly $32 trillion — more than $95,000 per citizen. But the debt ceiling is not about future spending; it is about obligations already approved by Congress and about the nation’s ability to pay its bills.
Elected officials and members of the public who insist that government should be run as a business — an absurd proposition — should reject the thought of the nation defaulting on its debts. A corporation that can’t pay its bills files for bankruptcy and faces the prospect of going out of business.
But Republicans in Congress have spent months using the debt ceiling as a cudgel. It is a hypocritical strategy, considering they approved an increase to the debt limit three times while Donald Trump was president. Despite a smooth-running economy at the time, Trump-supported tax breaks greatly increased the deficit, yet Republicans increased the debt limit with no preconditions.
Now, with a Democrat in the White House, they have turned the debt ceiling into a stage for political theater. They have demanded cuts to nondefense discretionary spending, which amounts for approximately 16 percent of the federal budget.
The deal reached by Biden and McCarthy imposes spending caps, but they are not as severe as those in a bill approved by the House. It will establish a two-year pause on budget increases for most federal agencies and — sensibly — will call for clawing back unspent COVID relief funds.
Both Democrats and Republicans, analysts say, got some of what they wanted — which is the purpose of negotiations.
At this point, it is not clear whether the agreement will be approved by Congress. Some far-right members of the House have decried the plan and vowed to prevent its passage.
But when the nation finally steps back from the economic abyss, it should question the purpose of a debt ceiling.
Enacted during World War I, the ceiling was created so Congress would not have to keep approving debt issuances. It has since become a pointless wedge used not to prevent debt but as a threat to prevent the government from paying its bills. Denmark is the only other country with a debt limit at a set amount rather than a percentage of GDP.
Both parties have failed in recent decades to control spending, to fix Social Security and to reduce the debt. Both parties have demonstrated a lack of fiscal restraint and have ignored responsible budgeting. But the presence of the debt ceiling, standing as a guillotine over the U.S. economy, adds a threat that serves no useful purpose.
