Trump’s Nixon-to-China idea on the debt limit
I admit that I’ve had nothing good to say about Donald Trump since he became president, but that could change. According to news reports, he is planning to abolish the debt limit. It’s a budgetary anachronism that does nothing to restrain the growth of debt and that threatens default when it isn’t raised in a timely manner, roiling financial markets and raising the cost of borrowing.
It is a precisely correct analogy to say that failure to raise the debt limit is equivalent to refusing to pay your credit card bill. The bill simply represents final payment for goods and services purchased previously. The spending already took place, the debt was already incurred. To protest one’s own indebtedness by failing to pay the bill is irresponsible at best and criminal at worst.
The president cannot spend a single penny unless Congress permits it. If there is a budget deficit, it is because Congress wanted one. It is as if Congress gave the president its credit card and told him to buy certain things — medical care for elderly Americans, arms for our soldiers, roads and bridges and so on.
The president bought those things as Congress told him to — it’s against the law for the president not to spend money appropriated by Congress. But when the bill came due, Congress was shocked that debt had been incurred. Proclaiming everlasting fidelity to fiscal responsibility, many members of Congress refuse to pay the bills that resulted from their own actions.
It is posturing in the extreme for members of Congress who voted for that spending to later vote against funding it on the grounds of fiscal responsibility. Failure to raise the debt limit is in fact the most fiscally irresponsible act imaginable.
Although the idea that both of our major political parties are equally irresponsible is grossly overstated in political conversations, it is unquestionably true in the case of the debt limit. As a practical matter, the party holding the White House has responsibility for raising it. Thus the hypocrisy shifts back and forth. For example, as a senator, Barack Obama denounced raising the debt limit under a Republican administration. Later, as president, he was forced to argue against his own position a few years earlier.
The debt limit needs to be abolished, but realistically only a Republican can do it because the GOP is more heavily invested in the idea of a balanced budget — even if its actions, especially on tax cuts, repeatedly belie its words. Thus, just as only the Republican Richard Nixon was able to open the diplomatic doors to then-Red China precisely because he had a reputation for being anti-communist, and liberal Democrat Bill Clinton was able to reform welfare, so too only a conservative Republican president can get rid of the debt limit.
Whether Trump follows through remains to be seen. But if he does, he will have done a very good thing for which he deserves credit — and the undying appreciation of every Treasury secretary in history.