Oh joy! I like to follow the headlines and separate the political theatre from the national policy that’s at stake.
The political theatre behind the debt ceiling theatrical production currently playing for the American public is political posturing. We should all ask our selves: Do we want government that plays political games behind the “debt ceiling,” or do we want government to get to the business of raising revenue, cutting spending (including international “conflicts”), improving infra-structure, restoring financial market protections, etc.?
Me, I say, cut the comedy; get to the business of governing. And, not through back room “debt ceiling” deals. We want to know exactly who is asking for what concessions, what are going to be the costs, upsides, downsides, trade offs, etc….and would it be too much to ask for a national discussion or conversation about these domestic policies?
Playbill for the Debt Ceiling Production: the excerpt below is all you need to know about the debt ceiling.
The debt ceiling is a legal cap on the amount of money the U.S. Treasury can borrow to fund existing government functions. It essentially authorizes the Treasury to borrow the money necessary to pay the bills incurred by the federal government.
Where it came from: Before 1917, Congress authorized the Treasury to issue bonds for specific purposes. But that meant approving every bond separately. To fund World War I, Congress decided to give the Treasury more latitude by instituting caps on how much it could borrow through each type of bond, rather than forcing it to get every new bond approved separately. In 1939, this was changed so that most bonds were bound by the same limit, effectively creating the general debt ceiling we have today.
How it has worked: The debt ceiling has traditionally been raised as a matter of course whenever Congress passes spending bills requiring more borrowing, though the opposition party has often voted against increases to signal its opposition to the majority’s deficit spending. Between 1940 and 2010, we have increased the debt limit more than 70 times, and from 1979 to 1995, a House rule proposed by Rep. Dick Gephardt made increases automatic by raising the ceiling whenever new spending is approved. The new Republican majority repealed this rule in 1995 to use raising the debt ceiling as leverage in getting President Clinton to agree to spending cuts.
Why it’s an issue now: Currently, the debt limit is set at $14.3 trillion. Around Aug. 2, the Treasury will exhaust that borrowing authority. Because spending currently exceeds revenues by almost 45 percent, if that happens, we will either have to default on our debt or stop funding a substantial portion of the government. Congress could simply choose to raise the debt ceiling, but like the 1995 House GOP, the 2011 House GOP is insisting that it will not increase the debt ceiling without large spending cuts from President Barack Obama.
Do we need a debt ceiling? Strictly speaking, no. The debt ceiling is unique to America. In other countries, when the legislature passes a law, the Treasury is given automatic authority to carry it out. A number of former Treasury secretaries have said it should be abolished, including Larry Summers, who said, “I think that given that Congress has to approve all spending and all tax changes, there is not much logic to the debt ceiling.”
Does the debt ceiling reduce deficits? In general, no. The nonpartisan Congressional Budget Office examined this issue and concluded that “setting a limit on the debt is an ineffective means of controlling deficits because the decisions that necessitate borrowing are made through other legislative actions. By the time an increase in the debt ceiling comes up for approval, it is too late to avoid paying the government’s pending bills without incurring serious negative consequences.”
Is the debt ceiling unconstitutional? A number of commentators have suggested that the 14th Amendment, which states that “the validity of the public debt of the United States … shall not be questioned,” renders the debt ceiling unconstitutional. Others have disagreed, saying the Constitution gives Congress the sole power “to borrow money on the credit of the United States.”
— The Washington Post