Our Imaginary Debt Ceiling
Political posturing trumps economic sense.
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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