The Washington PostDemocracy Dies in Darkness

Opinion Let’s drive a stake through the heart of the debt ceiling

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July 19, 2019 at 3:50 p.m. EDT
President Trump on July 19 said, “I can’t imagine anybody ever even thinking of using the debt ceiling as a negotiating wedge.” (Video: The Washington Post)

As the parties try to work out a budget for the next year or two, President Trump is appalled, outraged, gobsmacked that we might even consider not raising the debt ceiling and thereby defaulting on the obligations of the United States of America.

Here’s what Trump had to say about this in the Oval Office:

I said, I remember, to Senator Schumer and to Nancy Pelosi, “Would anybody ever use that to negotiate with?” They said, “Absolutely not. That’s a sacred element of our country.” They can’t use the debt ceiling to negotiate. [...] So when they start talking about using the debt ceiling as a wedge to negotiate things that they want, they have told me very strongly they would never use that. That’s a very, very sacred thing in our country, debt ceiling. We can never play with it.

I’m certain that conversation never took place, because if it had, Schumer and Pelosi would have said, “Actually, Republicans did just that a few years ago, and in fact you were cheering them on and telling them to be as reckless as possible, probably because Barack Obama was president.”

In any case, it’s pretty clear that what Trump means is not that the debt ceiling itself is sacred, but that the full faith and credit of the United States is sacred.

But now that he has come around, how about we really honor the sanctity of our economic reliability and just get rid of the debt ceiling once and for all? I’d even be happy to let Trump say he’s doing it to protect the country from dastardly Democrats, if it got the job done.

If you know anything about the debt ceiling, you know that it serves absolutely no practical purpose other than to act as a bomb sitting on a shelf in Washington, just waiting for someone to pick it up and drop it on the government. So let’s go through a quick explainer.

The debt ceiling’s roots go back to World War I, when the government needed to borrow money to fund the war and Congress put some constraints on the Treasury Department’s ability to do so; in 1939, they extended those limits to all government spending. And for most of the time between then and the election of Obama, the debt ceiling wasn’t really a threat to anyone.

It’s important to understand before we go further that the debt ceiling does not prevent the government from taking on more debt. The debt we carry is determined by the budget; the debt ceiling is an extra vote Congress has to take (or an extra provision they have to insert into a budget bill) that essentially says, “We authorize the Treasury to issue enough bonds to cover whatever portion of the spending we’ve already authorized that isn’t covered by the taxes we’ve authorized.”

So the debt ceiling does nothing except act as a tool for taking the entire country hostage, if one party is idiotic enough to do so. That’s why there’s only one other country in the OECD that has a debt ceiling (Denmark), and they keep theirs high enough so it can’t be used for nefarious purposes.

If you’re worried about debt, which Republicans pretend to be when there’s a Democrat in the White House, it’s the budget that’s your problem, not the debt ceiling. Raising the debt ceiling just allows us to pay the bills for what we’ve already decided to spend money on.

There is another problem, which is that Congress never increases the debt ceiling high enough to last more than a year or two, so we have to keep confronting this issue again and again. For 80 years or so that wasn’t such a big deal, because the debt ceiling was used mostly for symbolic purposes: When the vote came up, some members of the opposition would make speeches railing against the party in power’s profligate ways, and a few of them would vote no (Obama himself did that), but they made sure it was never enough to actually threaten default.

That is, until 2011, when deranged tea party Republicans forced a crisis in which they threatened not to increase the debt ceiling without brutal cuts to domestic spending, leading to market chaos and the downgrading of U.S. debt by the credit rating agency Standard & Poor’s for the first time in history.

With just days left before the United States was no longer able to pay its bills, which could have touched off a global economic meltdown (GOP Sen. Lindsey O. Graham (S.C.) said the result would be “financial collapse and calamity throughout the world”), Republicans finally gave in and raised the ceiling. Then we went through the whole thing again two years later.

Since we’re likely to hit the debt ceiling in September, this latest budget bill will include an increase in the ceiling; according to the latest reports they’re talking about raising it high enough to last two years.

But why stop there? Why don’t we just get rid of it altogether? How many opportunities do we have where Trump is actually taking the responsible position, at least for a moment?