Jay Evensen
  • Front Page
  • Opinions
  • Second Thoughts
  • Portfolio
  • Awards
  • About

Why the heck do we even have a debt ceiling?

10/7/2013

0 Comments

 
Picture
Would the American people be better off if Congress didn’t have to worry about increasing the debt ceiling?

After all, increasing the debt ceiling isn’t a decision to increase spending. It’s a decision to pay debts already incurred. The real decisions come when Congress votes to fund programs or make other expenditures.

But because it exists, the debt ceiling has become a political tool that can be used, as it is now, to hold one’s political foes hostage.

Does that make sense?

Ezra Klein doesn’t think so. Writing on washingtonpost.com, he likes an idea briefly proposed two years ago by Republican Mitch McConnell, which would turn such decisions over to the president. He could raise the ceiling as he wishes unless Congress voted to stop him.

Because the president could veto any such attempt, Congress effectively would need a two-thirds majority to stop him.

McConnell’s original plan would have required the president to propose cuts that equal the increase in the ceiling, but that doesn’t matter much now as McConnell has abandoned the plan.

Klein argues the debt ceiling is dangerous. “If we crash through the debt ceiling, a global financial crisis could — and likely will — result. Even once we return to sanity and begin paying our bills again, America's borrowing costs are likely to be permanently higher, and the market's confidence in our political system is likely to be permanently harmed,” he wrote. He quoted other prominent financial experts who also would like to see the current ceiling gone. (Read the piece here.)

Speaking for the other side, American Enterprise Institute officials Kevin Hassett and Abby McCloskey wrote an op-ed in the Wall Street Journal that argues the current debt ceiling process serves “an important function.” (Read it here.)

First, they argue, it keeps lawmakers honest, forcing them to vote on something that at least acknowledges how they are spending money, rather than just increasing spending without any accountability.

Second, it can force lawmakers into action. “Since the consequences of government default are so severe, debt-limit legislation has always passed in the end, and it has often included important additional legislative accomplishments.”

Third, they argue the debt ceiling gives whichever party is in the minority an important bargaining chip that checks the power of the president.

That power would increase if the president were the sole decider on raising the ceiling, barring an almost impossible supermajority of lawmakers saying otherwise.

Before 1917, there was no debt ceiling. That’s because Congress personally approved the passage of every bond issuance. During WWI, Congress decided the president should be allowed to issue bonds on his own, but a ceiling was put in place to provide a sense of accountability and a guard against runaway spending.

Frankly, it still makes sense to have a limit in place that lawmakers have to physically vote to extend.

On a local level, this can be compared to a state law that requires city councils to call any plan to collect more revenue year over year a tax increase, even if the extra money comes in only because of inflation and property tax rates stay the same. The politicians have to sit through painful tax-hike public hearings and make a public vote.

Utah has such a law, and it has checked rising property tax rates quite well.

It’s true the United States would suffer immeasurably if it defaulted on its debts. From then on, debt would be much more expensive. Creditors would demand higher returns to make up for the risk of a future default. Credit worthiness is like innocence. Once you lose it, it’s gone.

And yet, the nation never has gone over that cliff. It has, however, increased spending over and over again. It seems to me that would just accelerate even more if Congress no longer had to pause to actually increase the limit.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    RSS Feed

    Search this site


    Like what you read here?

      Please subscribe below, and we'll let you know when there is a new opinion.

    Enter your email address:

    Delivered by FeedBurner

    Picture

    The author

    Jay Evensen is the Senior Editorial Columnist of the Deseret News. He has nearly 40 years experience as a reporter, editor and editorial writer in Oklahoma, New York City, Las Vegas and Salt Lake City. He also has been an adjunct journalism professor at Brigham Young and Weber State universities.

    Archives

    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012

    Categories

    All
    Campaign 2012
    Congress
    Crime
    Culture
    Iran
    Oil And Gas
    Poverty
    Steroids
    Taxes
    Utah
    Washington
    World Events
    World Events

    Links

    Deseret News
    Newslink
    Marianne Evensen's blog

Powered by Create your own unique website with customizable templates.