Eliminate the debt ceiling

It doesn’t help balance the budget and only risks financial ruin

All the back and forth between Democrats and Republicans over raising the federal debt limit — as the Oct. 18 default date loomed — has been exhausting. Though lawmakers struck a short-term deal Thursday, avoiding a government shutdown, the bickering is likely to start up again two months down the road, as the new December deadline approaches.

If left unresolved then, it’s going to extract a terrible financial toll on the nation, not just because of potential delays in much-needed benefits from Social Security and Medicaid and in payments to states for basic services from schools to roads, but because it’s going to shortchange bondholders — and their wrath will have consequences.

Just the brinksmanship that’s been played so far over the debt limit may well prove costly in higher interest rates on downgraded U.S. debt for years to come. The world expects the United States to pay its bills and if it doesn’t (or even acts like it won’t), there are global repercussions.

The most ridiculous part about such standoffs is that there is nothing gained from it. That’s because the debt limit has nothing to do with future spending. Let’s underscore that point: This isn’t about how or how much the federal government spends from now on, this is about paying bills that are already due. Requiring congressional approval of borrowing started around World War I, and the debt ceiling has been raised 100 times — almost always routinely and in a bipartisan fashion.

Even when Congress last found itself debating the debt ceiling in 2019, it was raised with Democratic and Republican votes. Republicans didn’t seem quite so upset about paying debts when they had a fellow Republican in the White House who would have been seriously inconvenienced by an impasse. Now, it appears they think Americans will hear trigger words like “debt” and “spending” and figure this is just liberals run amok. And that would be an understandable criticism of the pending infrastructure and budget reconciliation bills that potentially represent trillions of dollars in added spending — if it weren’t incorrect.

The problem is that one has nothing to do with the other. It’s more akin to already having a $28 trillion balance on your credit card. The bank expects you to eventually pay it off and instead of keeping that commitment and at least paying the interest, you toss the bill in the trash. Your debt doesn’t cease to exist. The money is still owed. Denial isn’t a sound repayment strategy only a costly one.

You think members of Congress don’t know this? Of course, they do. And yet here we are anyway because some think they’ll be rewarded by their supporters for showing faux toughness. Filibustering a bill to raise the debt limit? That’s just insanity, but that’s exactly what Senate Republicans are willing to do. If Democrats have to go it alone to raise the debt limit, they absolutely should. Someone has to act responsibly. Chalk it up to the rule that two wrongs don’t make a right.

We don’t often find ourselves in complete agreement with both JPMorgan Chase Chief Executive Jamie Dimon and U.S. Treasury Secretary Janet Yellen, but they are correct in their views expressed separately this past week that the whole debt ceiling concept needs to be put aside.

These periodic and totally unnecessary standoffs are just partisan politics and a particularly costly form of it. Congress can’t be trusted to raise the debt ceiling — we’ve now seen ample proof of that — so let’s get rid of it entirely or at least make increases automatic whenever a spending bill is approved.

If Americans oppose new spending or new tax policies, they can always kick their elected officials out of office. That’s the real check and balance on budgetary decisions and sticking with that kind of fiscal and political discipline will surely result in fewer self-inflicted economic crises coming out of Capitol Hill.

Just the brinksmanship that’s been played so far over the debt limit may well prove costly in higher interest rates on downgraded U.S. debt for years to come.