If Congress approves the budget deal signed by President Joe Biden and House Speaker Kevin McCarthy, it should bring only a brief sigh of relief from the American public. Returning the nation to fiscal sanity rather than exhaustion will require removing the arcane and archaic debt ceiling.
After months of haggling over the debt ceiling, Biden and McCarthy reached an apparent agreement last weekend. If it did not, the United States would not be able to pay its obligations to investors, the military and employees. At worst, it would trigger a global depression; at best, it would brand the US government as an unreliable debtor and cause long-lasting economic problems.
In other words, allowing the money to run out, as it likely would on June 5, should not be seen as an option. However, Republicans in Congress have dangled that option in an irresponsible effort to cut federal spending.
Indeed, it is necessary to talk about the reduction of expenditure; the national debt is nearly $32 trillion, more than $95,000 per citizen. But the debt ceiling is not about future spending; it’s about obligations already passed by Congress and the nation’s ability to pay its bills.
Elected officials and members of the public who insist that government should be run like a business, an absurd proposition, should reject the idea that the nation is defaulting on its debts. A corporation that cannot pay its bills declares bankruptcy and faces the possibility of going out of business.
But Republicans in Congress have spent months using the debt ceiling as a cudgel. It’s a hypocritical strategy, considering they passed an increase in the debt limit three times while Donald Trump was president. Despite an economy that was doing well at the time, Trump-backed tax breaks greatly increased the deficit, but Republicans raised the debt limit without 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 non-defense discretionary spending, which makes up about 16 percent of the federal budget.
The deal reached by Biden and McCarthy imposes spending limits, but they are not as severe as those in a bill passed by the House. He will put a two-year pause on budget increases for most federal agencies and, rightly, call for unspent COVID relief funds to be brought back.
Both Democrats and Republicans, analysts say, got part of what they wanted, which is the purpose of the negotiations.
At this point, it is unclear whether the deal will be approved by Congress. Some far-right members of the House have denounced the plan and have promised to prevent its passage.
But when the nation finally pulls itself back from the economic abyss, it should question the purpose of a debt ceiling.
Enacted during World War I, the ceiling was created so that Congress would not have to continue approving debt issues. It has since become a useless wedge used not to avoid debt but as a threat to keep the government from paying its bills. Denmark is the only other country with a debt limit at a fixed 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, like a guillotine over the American economy, adds a threat that serves no purpose.
