Economics

Our Imaginary Debt Ceiling

Political posturing trumps economic sense.

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It is reprehensible how politicians waste our time with whimsical notions about "debt ceilings" and "budgets." A federal debt limit is much like other government guidelines—e.g., "speed limits" and "filing taxes"—that exist only theoretically. In the past decade, Congress has raised the debt limit—instituted in 1917 to restrain spending—10 times, and the U.S. has reached its ceiling 74 times since President Barack Obama's birth. So in other words, technically speaking, there is no ceiling. We might as well eliminate it.

It is likely that we will now witness another ridiculous debate on the topic, followed by another Republican surrender, because a measly $14.3 trillion cap won't do for a great nation. By now, you've also probably seen the quote from a once-chaste future president, arguing that even a debate about raising America's debt limit was a sign of failed leadership (Bush!). A signal, he claimed, that the U.S. government could not pay its own bills, that we were dependent on the assistance of foreigners to fund our "reckless" fiscal policies.

Obama was just kidding. Those were impetuous days in 2006 when Democrats railed against increasing the debt ceiling and Republicans—not yet having discovered The Road to Serfdom—were doing what they could to power it through. Today, via the magic of partisanship, the role reversal is complete.

But Americans, not yet properly tenderized by media and administration scaremongering, are still under the impression that a debt limit exists. And they like it. The majority of them, according to a CBS News/New York Times poll, oppose raising it. Just 27 percent of Americans think it should be increased, while 63 percent oppose doing so—a number encompassing 64 percent of independents and 48 percent of Democrats, all of whom, no doubt, are members of a nascent rightist militia movement.

Obama, as usual, claims that "economists"—by which he means Austan Goolsbee—contend that disaster looms if we play games with this arbitrary number we always ignore. (This administration is just jam-packed with soothsayers and futurists, always relying on the unknown and the unverifiable as the core of its argument. The recession, for instance, would have been far worse if we hadn't spent as many billions on green infrastructure that "saved" jobs and may one day create energy.)

Today President Nostradamus contends that not raising the debt limit would have a catastrophic economic impact. This, many argue with the help of history, is simply untrue. The United States has hit the debt limit four times in recent history, and it survived without any damage to the capital markets as they waited for a deal to be struck. The debt could still be paid with tax revenue. But that would mean cutting spending.

Some economists—such as Jagadeesh Gokhale, former senior economic adviser to the Federal Reserve Bank of Cleveland—have argued that "a temporarily frozen debt limit could … signal U.S. lawmakers' resolve to get our fiscal house in order. It may even reassure investors about long-term U.S. economic prospects." Immeasurable debt, on the other hand…

This kind of thinking crashes against every sacred progressive ideal the president advocates. But no worries, Republicans have already telegraphed that opposing a hike in the debt limit is nothing more than leverage for a larger deal. It is doubtful, then, that they will have the stomach to hold the line when the moment of truth comes on the debt ceiling.

If it existed. Which, technically, it doesn't. Not if we raise it every time we hit it.

David Harsanyi is a columnist at The Blaze. Follow him on Twitter @davidharsanyi.

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  1. Should we just eliminate it altogether?

    And give the titty babies one less thing to whine about?

    1. Look, a pointless and moronic statement from rectal. Who could have predicted that? Who?

      1. epi, set your kitten free.

  2. No, we should not eliminate it. To do so just lets the “spend as fast as possible” crowd have no limits of any kind.

    At some point, we need to restrain the expanse of the Fed. We need to have an honest discussion about restraint of scope and about duration of action. We need to be at a place where we can look at some program and stop it when it ceases to be a priority.

    Without some limit as to what they can borrow from us, and everyone else in the world, Congress will never get to that point.

    1. To do so just lets the “spend as fast as possible” crowd have no limits of any kind.

      It’s kind of like the Bill of Rights. Just because many would like to ignore it, doesn’t mean it should be eliminated.

    2. Let Tony fucking spend as much as they want. I eagerly await what happens. I will enjoy it.

      1. Because you won’t have to pay for it, old man…

  3. By the way, if you spend a little time looking around the Treasury web sites at the various documents, you can easily see that Geithner has already been playing shenanigans for a while now.

    In February and March of this year, the government reported a staggering combined deficit of around $410 billion, yet the “official” national debt figure has somehow amazingly managed to only rise about $214 billion over that same span.

  4. This time is different guys. Seriously, don’t be extreme and radical or any other buzzword. You don’t want to play games with the life of the elderly. School buses run on debt and if we don’t raise the limit all the children will die.

    1. Motor vehicles run on greenbacks now? Cool!

  5. “If it existed. Which, technically, it doesn’t. Not if we raise it every time we hit it.”

    You might want to reexamine the definition of “technically”

  6. But there is no objective reason not to raise it, just vague arguments about how we’re spending too much. Those arguments aren’t even sincere. First, Republicans don’t deserve to be taken seriously on budget policy since they have proven, time and again, to be big spending debt-exploding hypocrites. Second, they’re just using this vote as leverage to try to enact their long-desired policy goal of gutting the welfare state, not for any fiscally prudent reasons, but because they literally think the poor and elderly have it too good in this country and that billionaires are oppressed.

    I had thought it was rather audacious to attempt their big push toward finally enacting the nightmarish darwinian hellscape they’ve longed for for so long (aka “freedom”) during a Democratic administration. But then they are probably rightly worried that their policies may not exactly guarantee future majorities. No time like the present.

    1. Yer funny

    2. “I had thought it was rather audacious to attempt their big push toward finally enacting the nightmarish darwinian hellscape they’ve longed for for so long (aka “freedom”)”
      JESUS, Tony!! Even for you! Counting the money in your wallet before buying the kiddies candy is a “Hellscape”? JEEEEZ!

      1. Republicans have not once provided any evidence that they know how to balance a budget.

        Republicans do not care about balancing the budget. That’s just their convenient excuse they use in the service of extorting the policies they want, none of which will address debt meaningfully. Because they don’t actually care about it.

        1. Republicans eat kitten stew.
          Republicans oppose abortion because they play soccer with infants.
          Republicans only go to the hospital to laugh at sick people.
          Republicans get their exercise stacking old people like cord wood.
          Republican burn text books for warmth and because they are against education.

          Republicans are evil.

          1. Evil or stupid, pick one. The outcome is the same.

            1. No no no. Evil produces a neater, more orderly nightmarish darwinian hellscape. Stupid produces a much messier nightmarish darwinian hellscape.

            2. Tony, you’re calling republicans stupid while in the meantime arguing that the debt ceiling should be raised because republicans aren’t serious about not raising it. So…you’re advocating the policies of stupid people? that’s a surprise?

          2. Its okay if you play soccer with Brazilian super babies.

    3. Those arguments aren’t even sincere.

      If an argument is not sincere, it doesn’t mean all arguments are not sincere regardless of the source.

      Just because an an argument not sincere, does not mean it isn’t valid.

      To say Republican argumnents are not sincere (or presumably even right) has no bearing on whether or not there are good (even overwhelming) arguments against it.

      There is more in the world than Democrats and Republicans.

      1. Stranglely enough, I don’t think Tony’s yet caught on to that.

    4. “But there is no objective reason not to raise it, just vague arguments about how we’re spending too much.”

      What would be an objective reason not to raise it, then?

      1. More to the actual point of Harsanyi’s article, what’s the purpose of even having a debt limit in the first place? Funny how Tony never bothered touching that one.

  7. nightmarish darwinian hellscape they’ve longed for for so long (aka “freedom”)

    Such an insight into the mind of the totalitarian.

    This makes me wonder: If we can track down OBL, I bet we can track down totalitarian psychopaths here in the US. Why would we track them down? No reason. Just, umm, curious.

    1. You’re right, it is rather like a totalitarian psychopath to try to pass off a nightmarish ideological hellscape as freedom.

      1. Yes, because the inner cities are such wonderful places, where single mothers can produce all the children they want, and their thug baby daddies can carry on their criminal enterprises, without being tied down by supporting their offspring. Yes, that is working out just fine.

      2. I can only imagine the horror of not being forced to pay for things that I don’t want!
        Such totalitarianism!
        I’d be so much freer if I had to pay for even more things that I don’t want!
        The more taxes I pay, the more regulation I must follow, the more that is prohibited of me by law, the freer I am!
        Government is God!

        1. I don’t want to pay for a bloated war machine, which the GOP has no intention of deflating. It’s all about choices. What you don’t get to choose is to have government do everything you specifically want it to. You get one 300,000,000th of a say and that’s the fairest possible way it could be.

          1. Don’t liberals trash the Constitution because it was written by slave holders? But they have no problem with being a slave to the majority? Savage is right, liberalism is a mental disorder.

            1. Are you asserting that it would be fairer if you had more of a say than everyone else in your government?

              1. No, it would be more fair, and lawful, if the majority couldn’t help itself to my property.

                1. Who says it’s your property?

                  1. Whoever has the most guns?
                    The majority?

                  2. Tony, are you arguing that individuals do not have property rights? If so, who determines how resources are allocated? Governments? In that case, there are no limits to government power. And your welfare state and the Republican warfare state are equally valid uses of government power. Is that the conclusion you want to come to?

                    1. People do have property rights, because government is there to make the concept a reality. Yes, government helps determine how resources are allocated. That’s essentially its main job.

                      There can be limits on state power, just depends on what limits are put in place. They’re certainly not limited by principles alone.

                    2. Property rights existed long before governments did. It just took a couple of millenia before governments caught on.

                      Try “The Mystery of Capital.” Property exists well outside of the legal framework. Being legal just makes it easier to defend.

                    3. Yes, there can be limits to state power. However, in the absence of property rights as the guiding principle, these limits must always be capricious. I should have said there are no rational principles by which limits can be placed on state power.

                    4. People do have property rights, because government is there to make the concept a reality.

                      People had property rights in this country long before the modern progressive conception of “goverment” came along.

          2. No, letting people choose how much they want to support different government programs directly, while minimizing free riding, would be fairest, and freest.

            When the person who contributes nothing to government wants the same say as the person contributing a large amount of the resources it requires to do its work, that’s arrogance, not fairness.

            1. The wealthy already have disproportionate influence on government as a function of their being wealthy. There is no need to take us even further down the road to oligarchy by giving them more votes than the poor.

              1. Wow, Tony. This is extremely obtuse, even by your standards. It should be obvious that the influence of the wealthy on government is a function of the size and scope of government. When government has a hand in everything, of course the wealthy will use their wealth to influence its policies. Decrease the scope of government and you decrease the influence of the wealthy on national policies. Is it that hard to understand?

                1. But the government is supposed to control the wealthy people who control it. The government represents The People. It’s The People against The Rich, man.
                  The government needs more power to control The Rich, take back their ill-gotten gains, and give them back to The People.
                  The problem right now is that The Rich control the government.
                  But if we give more power to the government, then it can control The Rich who control it.
                  That’s because the government, which is controlled by The Rich, represents The People, and needs more power to control The Rich who control it.

                  See?

                2. Yes it is hard to understand because it’s blatant doublespeak. Reducing the power of government just removes the middle man and allows the other powerful interests to do what they were gonna do anyway, only more cheaply.

                  1. That’s right Tony! We need more government getting in the way of these powerful interests, or at least raising their costs. This way when those powerful interests bring their goods and services to market, the price is higher than it otherwise would be. This is good because it means consumers’ dollars don’t go as far. Wouldn’t want people having access to inexpensive stuff would we? No! The more expensive the better! That’s why we need more taxes! Just to make stuff more expensive so people will buy less! More regulation! Raise the cost of business so there are fewer jobs and what goods and services they provide cost even more!

                    More government!

                    Woo hoo!

                    1. Any business has to operate in the environment it finds itself. That includes a regulatory environment. If that means you can’t sell poisoned food, sorry. Nobody is guaranteed anything in the marketplace. Libertarians shouldn’t be in the business of defending the business status quo from higher costs. It makes you look like their stooges rather than people who believe in a robustly free marketplace.

                    2. Why would a business want to sell poisoned food? Talk about killing your customers…

                      Market forces will prevent businesses from cheating. Consumer reporting (which is one of the private networks big money-makers) helps to this end. Regulation only slows market forces and reduces profits from legitimate ventures, encouraging unsavory practices.

                    3. Libertarians aren’t in the business of defending the business status quo. I don’t think you’ll find many here who would argue for subsidies and other advantages accrued by politically connected businesses.

                      You seem to be saying that libertarians should defend your “progressive” notions because they would rectify an environment which favors the wealthy. I fail to see how this is a great idea. The solution to bad legislation is more bad legislation to correct these problems? There’s nothing inconsistent about denouncing the status quo while also denouncing attempts to change it in the wrong direction.

                    4. 1 – The sole justifiable role of government is to provide a framework for the enforcement of contracts, the punishment of violence and fraud, and national defense.

                      2 – Nobody gets any say, not even a 300,000,000th, because this is not a fucking democracy, you dumb piece of dog shit. There is no policy one way or another in an ideal republic. There are no superfluous and morally indefensible agencies of government. Government may only do that which is SPECIFICALLY and UTTERLY AND ENTIRELY UNAMBIGUOUSLY STATED in supreme, unchangeable law.

                      What the God-spanking-fuck don’t you understand about this?

                      Government MAY NOT, SHOULD NOT, and CANNOT be allowed to have anything even near the sort of power or influence necessary to determine or influence the allocation of resources. Ever. This is the sum of liberty. An arbitrary group of governmental servants cannot decide to legislate their masters’ property into forfeiture. This is essentially what your dumb fucking ass is proposing. Go fucking die in a pit.

                    5. supreme, unchangeable law.

                      Sorry, I don’t believe in your sky daddy.

                    6. I’m an atheist, you moron – supreme law that can’t be altered by anybody, including a hyper-majority. Please don’t fucking tell me you’re not even familiar with the American constitutional principle of natural, inalienable rights and perpetually small, constrained, and frugal government? Because that would be just fucking sad on a whole new level.

                    7. Government MAY NOT, SHOULD NOT, and CANNOT be allowed to have anything even near the sort of power or influence necessary to determine or influence the allocation of resources

                      So it can’t raise an army and it can’t build roads and it can’t do anything and thus you’re a lazy attempt at an anarchist so why should I listen to you.

                    8. Army? I mentioned national defense pretty clearly, fuckwit. Read next time. Roads? Oldest dipshit distraction point in the statist book.

                    9. It is absolutely plausible that business interests will make a calculation of customer deaths vs. profits that is different from community standards. It is just plain evident that market forces don’t prevent cheating, because cheating happens all the time. Your claim about regulations causing cheating is ridiculous. That’s just like saying other things that cut into profits cause cheating. Maybe we should prevent cheating in the first place?

                    10. Nobody is guaranteed anything in the marketplace.

                      Funny how progressives have been fighting against this reality for decades on both the social and economic level. Apparently you only think this matters when it results in outcomes that you prefer.

  8. Without some limit as to what they can borrow from us, and everyone else in the world, Congress will never get to that point.

    Congress might not, but the bond market will (and probably already has). Of course, the failure of our bonds in the market can be papered over by having the Treasury buy them, for awhile, but this just ensures that the inevitable collapse includes both our bonds and our currency.

    There is a limit. Oh yes, there is. The only thing that changes is the consequences of hitting the wall.

  9. They would have to cut entitlement spending. And that won’t happen.

    1. You’re right. They’re riding this barrel all the way over the falls. We get to say “told you so” when it crashes on the rocks below.

      1. I’m almost certain that a complete implosion of the entitlement system is required before people wake up.

        1. Well, this is what it boils down to. To stop borrowing more money, we have to stop spending more than we take in. To go further, and begin to pay down existing debt, spending would have to be cut in half. There is no way to do this without cutting entitlements, because they make up 60% of all spending.

          I don’t think most Americans realize this. Something like 59% of Americans are getting a government check of one type or another. Just last year, out of revenues of $2,200 billion, the government sent checks to Americans totaling $2,300 billion. We’ve already begun to print/borrow, even at that level, before any other government spending even enters the picture.

          People talk about de-funding Planned Parenthood or NPR, or reducing foreign aid, but those are tiny little drops in the bucket. As much as people say they are concerned about the debt and want the government to reduce spending, they fall silent when they realize it’s their own check that would be cut in half. For that reason, the political will to solve the problem will never exist. So I have to agree with you, DK, we will never apply the brakes. Therefore, the car won’t stop until it crashes into the wall.

  10. The debt ceiling is useful if only to underscore the hypocrisy of Congress. It should NOT be increased.

  11. Hey, Harsnayi, you piece of shit, l?fasz a seggedbe.

    1. Hey Max, you pederast, go back to beating off to your anthropomorphic Manga figure.

  12. The public doesn’t realize how bad the situation is so politicians will keep playing games. The only way to fix that is for *you* to help spread the word since the mainstream media doesn’t and most people aren’t like we news/politics junkies since:

    “POLL REVEALS: Americans Are Still In Deep Denial About The Deficit” http://read.bi/h6QDGR If they realized how bad it is politicians would need to act. Non politics-junkies tune out numbers in the $trillions so we need to rephrase the issue:
    The federal government will need >$1 million per household to pay its IOUs!
    > $116 trillion =”official” debt plus money  short for future social security, medicare, etc
    Even its “official debt” of $14.2 trillion  is $123,754 per household!
    Details at StopNationalDebt.com with links to contact congress & complain.

    Be among the first to join the new Facebook cause “Stop National Debt” : http://www.causes.com/causes/6…..ional-debt
    since if you don’t spread the word, who will?
    We need to spread the word virally to educate non news-junkies.

  13. Governments, for all their flaws, make much better decisions when it comes to property and resources than private entities ever could. This is why government ownership and/or direction of the means of production is sound economic policy. The free market, as envisioned by the dumbshits in the Continental Congress, is a recipe for civilizational disaster. That’s something you idiots are going to have to come to terms with.

    1. Examples, please? Did government ever do something that a free, competitive market didn’t do better (or was forbidden the chance to try)?

      Please, do tell me how socialism is working out in India and Africa. The Soviet Union did so nicely, too. And just so you know, China only took off because the privatized a large portion of their economy.

    2. The free market, as envisioned by the dumbshits in the Continental Congress, is a recipe for civilizational disaster. That’s something you idiots are going to have to come to terms with.

      Obvious flame there.

  14. “China only took off because the privatized a large portion of their economy.”

    That’s true, but under tight state control. The state capitalist model seems to be working pretty well in China. Accounting for reality is a bitch in your little market-fundamentalist cult, isn’t it?

    1. SIEG HEIL, SIEG HEIL, SIEG HEIL!

  15. To my mind Obama wants to change everuthing in America.

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