An easy way to avoid debt-ceiling fights: Balance the budget
Every couple years, the debt ceiling debate dominates the news, and understandably. The United States government cannot cover its financial obligations and avoid defaulting on its debts at the rapid rate it burns through cash. So it borrows massive amounts of money, and in doing so, the U.S. bumps up against the debt ceiling, which is an arbitrary cap limiting how much cash it can borrow.
Repeatedly, Congress has increased or suspended the debt ceiling, but often only after staging long stand-offs and using the debt ceiling to exact policy concessions. This has pushed the nation uncomfortably close to defaulting, which would have catastrophic economic consequences. That has elicited some ridiculous hot takes, including one from The New York Times.
The recent Times piece began lucidly enough by urging lawmakers to figure out a way to “end the drama” surrounding future debt ceiling fights, and even admitted that “Reducing the national debt is an important long-term goal.” These are both sentiments that all Americans should support. Good on the Times, but the article quickly drifted away from reason and toward idiocy.
In true partisan fashion, the Times lamented that Democrats didn’t raise the debt ceiling when they had the chance, which has since forced them to work with Republicans to come to a bipartisan compromise (Oh, the horror!). Short of letting congressional Democrats have carte blanche, the Times’ strategy to end future debt ceiling controversies boils down to letting the president bypass Congress.
Thankfully, it didn’t come to this in the most recent debt-ceiling fight. Congress and President Joe Biden came to an agreement to let the government keep borrowing money, and the Times supported the deal with a caveat. Biden once “told reporters that he’d consider declaring the debt ceiling unconstitutional under the 14th Amendment’s debt clause and letting the courts decide whether he is right,” The New York Times noted. “Mr. Biden and his legal experts need to follow through on his interest in testing a constitutional solution and try to stop the debt crisis from returning.”
Biden’s Treasury Secretary Janet Yellen called such a strategy “legally questionable,” and Biden probably agrees, given that he didn’t employ this never-before-attempted approach. Despite some intelligent people on the political left and right scoffing at this plan, The New York Times appeared to endorse it when a much more reasonable way to end the drama exists—balancing the federal budget. This would effectively remove the debt ceiling from becoming a relevant issue.
In 2000, the United States was on track to pay off the national debt by 2010, but matters turned terribly wrong. The last time the feds balanced a budget was in 2001, and now you might be more likely to hear economists talking about the risk of hyper-inflation in the country’s future than paying off its debt. To date, the country owes over $31 trillion—a number so large that it is difficult to wrap one’s mind around.
This equates to around $240,000 of debt per U.S. taxpayer or $94,000 for every American citizen. In fiscal year 2023, the federal government is projected to collect around $4.8 trillion, but spend around 6.4 trillion. What’s more, it will cost taxpayers over $660 billion just to cover our debt interest payments, which is projected to dramatically rise.
This kind of budgeting has been business as usual for a couple decades, but don’t think for a minute that it is a partisan problem. President George W. Bush added $5.85 trillion to the national debt, Barack Obama $8.6 trillion, Donald J. Trump $6.7 trillion in only four years, and Biden has already added trillions more.
This is entirely unsustainable, and there are serious implications of maintaining the status quo. As the U.S. borrows more, it becomes less attractive to lenders, which could hurt our ability to borrow money in times of emergency. Moreover, rising debts could potentially put American prosperity at risk as the country has less to invest in its future and directs more toward interest payments. This also creates a competitive disadvantage as countries such as Russia and China shoulder far less debt.
The national debt—if left on its current trajectory—presents a real threat to the country and our economy. Sadly, there’s little serious talk in D.C. about balancing the budget. Instead, every couple years, lawmakers argue over the debt ceiling and, if we are lucky, make marginal budget cuts. To be fair, raising the debt ceiling is far better than defaulting on debts and throwing the economy into chaos. But in the long-run, balancing the budget is the only way to responsibly “end the drama” and put the country on more stable footing.