Kelly Hawes
Late last year, Congress was staring down yet another deadline to avoid what pretty much everyone agreed would be a disastrous default on our nation’s debt.
For months, Republicans had been using the debt limit to attack the spending programs put forward by Democrats. Senate Minority Leader Mitch McConnell was insistent that he would not be a party to any effort to mitigate what he described as “the consequences of Democratic mismanagement.”
Never mind that the debt had been building for decades and was actually the work of both political parties.
The Associated Press reported at the time that an analysis of U.S. Department of the Treasury records showed the debt had grown by nearly $8 trillion just during the four years of the Trump administration. The nonpartisan Tax Policy Center estimated that as much as a quarter of that could be attributed to tax cuts approved by Republicans in 2017.
Majority Leader Chuck Schumer and the Democrats pointed out that this was a bipartisan problem in need of a bipartisan solution, but Republicans didn’t see it that way. U.S. Rep. Kevin Brady of Texas more or less summed up his party’s position.
“Democrats have known this day is coming for two years and did absolutely nothing,” he said.
Schumer and McConnell eventually struck a deal. McConnell would round up enough votes to approve a one-time, fast-track process for raising the debt limit on two conditions: Democrats would have to pass the increase without a single Republican vote, and they would have to set a specific dollar amount for the increase.
Not everyone was happy about it. Republican Sen. John Kennedy, who voted against the arrangement, called it “a choice between voting for a heart attack or cancer.”
In the end, Democrats approved a new debt limit, and everyone breathed a sigh of relief. The economy had dodged another bullet.
This drama hasn’t changed much through the years. Some version of it has been playing out periodically for more than a century.
First established in 1917, the debt ceiling has never really controlled federal spending or the amount the nation needs to borrow to meet its obligations. Those obligations have already been established.
The debt limit is more of a temporary brake on spending. It sets a limit on how much the Treasury Department can borrow until Congress takes further action.
For a long time, the limit was a date on the calendar, a time at which the Treasury Department would be forced to stop borrowing. Now, it’s a specific dollar amount, $31.4 trillion.
As recently as June, the Bipartisan Policy Center estimated the Treasury wouldn’t run out of money until sometime in the third quarter of next year. Now, it’s saying that date might come sooner.
“The developments since we made our projection in June are likely to have pushed things forward from what they otherwise would have been, but we don’t really have a good sense of how much yet,” said Shai Akabas, the center’s director of economic policy.
Despite the cloudy forecast, he said, two facts are clear.
“First, the debt limit has manifestly failed to restrain federal borrowing,” he said. “Second, the limit has created periodic crises that have consumed Congress’ time and dragged the United States to the brink of defaulting on our obligations.”
Treasury Secretary Janet Yellen offered a similar assessment when Congress was staring down the same sort of deadline almost 14 months ago.
“It’s become increasingly damaging to America to have a debt ceiling,” she said. “It’s led to a series of politically dangerous conflicts that have caused Americans and global markets to question whether or not America is serious about paying its bills. It’s flirting with a self-inflicted crisis.”
In other words, we’ve seen this show before. It’s time for Congress to rewrite the script.
Kelly Hawes is a columnist for CNHI News Indiana.
