On January 31, the Congressional Budget Office released a report indicating that the federal government will hit its debt ceiling in early March, at least a month earlier than originally predicted. This change is due to almost $15 billion in lost tax revenue from the mid-December tax cuts, a critical legislative victory for Republicans. Despite pushing the budget deficit closer to $1 trillion, the GOP tax bill has steadily grown in popularity since its proposal, from 26% approval in mid-December, to 34% a few weeks ago, to 44% approval today, the same as the percentage of respondents disapproving. But the debt problem continues to grow.
The United States must continue to borrow money in order to continue operating, a reality reinforced on Tuesday when Treasury Secretary Mnuchin urged Congress to raise the debt ceiling by the end of February, but everyone knows there is a limit. That limit is supposed to be the debt ceiling, but it seems as though every time we come close, Congress never fails to change the rules and spend more money, money we do not have. At the time of publication, foreign nations held more than 6 trillion in U.S. debt, and the national debt creeps ever-closer to $21 trillion: that’s about $65,000 per citizen. And all of that debt does not come cheap; the portion of the federal budget occupied by interest payments grows each and every year.
When the US hits the debt ceiling, the Treasury must resort to ‘extraordinary measures’ to continue to procure money on the government’s behalf, and once those measures are exhausted, the government defaults. Due to our position astride the world economy, the implications of defaulting are so disastrous that we have never gotten close, but such a situation becomes ever-more likely every time Congress raises the debt ceiling and continues to spend.
Why do we have it then? It serves only as a consistent reminder that Congress is shirking its duty to the American people, shackling coming generations with a problem they seem unable to deal with today.
Some amount of debt is healthy, and deficit spending is often helpful to bring a country out of recession, but no responsible budget involves spending $1 trillion more than you have in the bank. The debt ceiling is only useful if Congress is willing to stick to it or if there is a President who has the courage to propose a deficit-neutral or surplus budget. Of course, it is not easy, but the path we are following now is sowing the seeds of a future disaster.