Knox NThe debt ceiling crisis is intentional | David Moon
David Moon – May 19, 2023
The U.S. regularly faces a “debt ceiling crisis” because our elected officials would rather make a point than make a difference. Members of both parties relish this regular game of political chicken; otherwise they wouldn’t keep doing it. And the president could likely end it with a directive to the attorney general, just as a president unilaterally started this dangerous charade 43 years ago.
When the federal government threatens a shutdown, there are two issues at play: the debt ceiling and funding gaps. For more than 200 years they were never used to manufacture a “crisis” that politicians could then take credit for solving.
After setting the first debt ceiling in 1936, Congress raised the limit only three years later. Since then, it has raised it another 82 times, just as it will eventually raise it an 83rd time in the next few weeks.
Each time the U.S. approached the statutory debt limit in the 1950s, Congress would simply approve a temporary waiver of the ceiling. That is, it voted to just ignore the law for a little while.
That changed in 1980 when, despite Democrats controlling both the House and Senate, President Jimmy Carter could not persuade Congress to pass an appropriations bill for the Federal Trade Commission. Carter’s attorney general, Benjamin Civiletti, then cited a provision in the 1884 Antideficiency Act as justification to overrule a longstanding opinion that federal agencies could continue operating during gaps in appropriation funding. Carter ordered the FTC shut down, furloughing about 1,600 federal employees, then threatened a complete government shutdown. Congress blinked and funded the FTC.
Politicians had discovered a new way to embarrass their opponents and achieve political goals. Since 1980, every potential funding gap or debt ceiling violation has provided an opportunity for politicians to boldly reveal their immaturity and short-sightedness.
In 1995 there was a debt limit situation that rivaled today’s political theater. The Treasury secretary canceled security auctions and dipped into government retirement funds for cash needs. A similar contrived crisis was miraculously resolved in 2002 using many of the same tactics and gimmicks as in 1995.
The U.S. will pay its bills, and since the federal government spends 30% more than it takes in, that requires borrowing money. (Other solutions theoretically include reducing spending, increasing taxes or selling assets to pay down debt.)
When the other party controls the White House, legislators always argue that the debt ceiling is a necessary tool to prevent out-of-control spending – except that there is no evidence that it does. Borrowing money tops the short list of things at which politicians excel. There is a much simpler way for Congress to prevent out-of-control spending: don’t pass appropriations bills that include out-of-control spending.