The debt ceiling, AKA the debt limit is the amount of money our government is allowed to borrow to meet existing legal obligations, such as Social Security, Medicare benefits, salaries of the military, tax refunds, and interest on the national debt and other payments. Simply put it’s the way the government can finance obligations put into place by past presidents and the past houses of Congress. Mischaracterizing the debt ceiling is irresponsible and deceitful, second only to using it as a political football.
First, Let’s Be Clear: The Debt Limit is NOT a new spending limit, it’s a borrowing limit.
Congress has taken action to permanently raise, temporarily extend, or revise the definition of the debt limit 78 times since 1960; 49 times under Republican presidents, 29 times under Democrat presidents. Taking no action on the debt ceiling would trigger what experts call catastrophic economic consequences for Americans and the global economy. But that hasn’t stopped extreme members of the Republican party in Congress from using the debt ceiling to get their way in spending cuts.
President Biden says he will not haggle over the debt ceiling. In news reports, Biden said that about a quarter of U.S. debt over the past 200 years came in the four years of former president Donald Trump, who received votes from Democrats, no haggling needed.
Threatening to push the country into financial ruin apparently became a popular Republican tactic during the Obama administration. When the government hit its debt ceiling in 2011, a heavy price was paid in declining stock prices and a downgrade of our government’s credit rating---a first.
The debt ceiling was created by Congress in 1917 during WWI. It allowed the Treasury to issue bonds and take on debt without specific Congressional approval for total debt under the statutory debt ceiling.
A number of financial pundits and government watchers are calling for President Biden to prevent gaming of the debt ceiling by using common sense and The Constitution.
Former Labor Secretary and UC Berkeley Professor Robert Reich tweeted on January 19th-
Leonard Burman and William G. Gale of the Brookings Tax and Policy Center said the debt limit doesn’t cause the debt any more than a thermometer causes a fever. Debt grows when spending exceeds revenues. That’s it.
In their web post about the debt ceiling battle, they wrote: “Citizens and the media misunderstand the issues surrounding the debt limit. Policymakers often fuel this misunderstanding with misleading statements that distort the debate.”
Burman and Gale believe that Congress should abolish the debt limit and replace it with the simple, common-sense rule that automatically authorizes any borrowing necessary to implement any fiscal legislation that affects the federal deficit. They believe the “Gephardt rule” should be imposed. The Gephardt Rule, created by former Representative Dick Gephardt, was used in the past. It was a parliamentary rule that deemed the debt ceiling raised when a budget was passed. This resolved the contradiction of voting for appropriations but not voting to fund them. The rule stood until it was repealed by Congress in 1995.
All this Gaming is Dangerous
Back in 2017, the U.S. Chamber of Commerce called upon lawmakers to “scrap,” the debt ceiling:
“…rather than leveraging congressional action toward deficit reduction, the practical effect of the debt limit has been to manufacture a series of distracting and ultimately economically dangerous political crises while achieving little to nothing with respect to the aspirational purpose of reining in debt. The debt limit as a political and policy device is obsolete, yet it is and will remain a danger to the nation’s financial markets and economy broadly until we disarm it.”
New York Times columnist, Janelle Bouie believes President Biden should call the debt limit unconstitutional and invalid. In his piece, You Can Let Republicans Destroy the Economy, or You Can Call Their Bluff
“Biden should make the case that the debt limit, because of the threat it poses to the validity of the nation’s debt, is unconstitutional under the 14th Amendment. By this reasoning, Congress has no right to prevent the White House from faithfully executing the law and borrowing money in accordance with its own instructions. If and when the Treasury exhausts its extraordinary measures, it should simply keep issuing debt, in order for the federal government to do what it is obligated to do under the Constitution.”
Bouie says Biden could and should go further than rejecting Republican brinkmanship; he should reject the debt limit itself as an unconstitutional use of congressional power. The Constitution is not silent on the question of the nation’s debt. In addition to carrying out the law as written, the president must also respect the demands of Section 4 of the 14th Amendment, otherwise known as the public debt clause, which reads as follows:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
The public debt clause, like the rest of the 14th Amendment, is a direct result of the aftermath of the Civil War, passed in 1866 and ratified in 1868 under the military Reconstruction policies of the Republican Congress.
Bouie leans in on history with a quote from Ohio Senator Benjamin Wade, considered the “radical” Republican of his time (1851-1869) because he supported women’s suffrage, equality for Black Americans, and trade unions. (He would be a radical Republican in our times). After introducing his version of the public debt clause on the Senate floor Wade said,
“I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
And 150 years later we see the wisdom in Senator Wade’s words. I think all of us would feel safer if the national debt was under the guardianship of the U.S. Constitution and not in the hands of those who put their aims above the good of the country and the fiscal health of all Americans.