The "Debt Ceiling" Again

"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." (U.S. Constitution, 14th Amendment, Section 4).

As predictable as night following day and George Santos telling lies, nowadays when Republicans are in position to do so they threaten to default on "the public debt of the United States, authorized by law." The prospect of another round of performative posturing in this regard re-emerged recently when Treasury Secretary Janet Yellen notified Congress, in a letter to the Speaker of the House, that the U.S. will soon reach its legal debt limit (the amount of money which the U.S. government can borrow to meet its existing financial obligations).

In the same communication, Secretary Yellen said that the Treasury will begin “taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” extraordinary measures which she suggested will work for some limited amount of time, probably through early June. Despite such temporary measures, she warned that it will be “critical that Congress act in a timely manner to increase or suspend the debt limit.”

“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” Yellen wrote. Why? Because “failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.” 

Well, we have all seen this soap opera before. Congress routinely has passed legislation which requires further spending, which typically calls for further borrowing. Unfortunately, instead of automatically (as it should) authorizing additional borrowing in tandem with the decision to spend, Congress must separately authorize the government to borrow what it needs to pay its bills by raising an artificially imposed legislative debt ceiling. When, as it inevitably must, the legal debt limit is reached, the only way to keep paying the government's bills and avoid default and the catastrophic economic consequences default would entail is to raise this debt ceiling. The alternative - the repeated Republican threat to hold the debt ceiling hostage and threaten default -  is irresponsible and ought to be unthinkable. 

Despite the way some Republicans have hypocritically tried to frame this issue, this is not a matter for negotiation. The time to negotiate the price of a product is prior to purchase. Once it has been purchased and taken possession of, there can be no "negotiation" about whether to pay the credit card bill. This has become, as Ezra Klein once wrote, "a cocked gun that reckless legislators could use to hold their own country hostage unless they got what they want."

Most countries do not operate this way, and whatever one believes about "American Exceptionalism," the U.S, doesn't have to either. The debt limit could be indexed to rise automatically, or it could be suspended, or better yet abolished.

So, while it is right to excoriate the Republicans for exposing "the full faith and credit of the United States,” by irresponsibly threatening to refuse pay the government's bills for expenses already appropriated and spent, it is also true that this might have been avoided had the Democrats, for example, acted when they had the chance to raise the debt ceiling in advance during the last lame duck session, or better yet had acted to suspend it for the duration, or even better had abolished it completely. Congress likes to leave problems to be solved at the last minute, an approach to legislating that is proving increasingly dangerous.