Here's a telling fact about our current budget situation: If Congress does not agree to raise the debt limit, thus making it possible for the federal government to borrow again once the current $16.4 trillion limit is hit, the federal government will only be able to pay about 60 percent of its bills. That's according to the Bipartisan Policy Center, which has published an apocalyptic report in advance of the debt ceiling showdown warning of the consequences should Congress fail to raise the debt ceiling later this year.
Forget the coming showdown for a minute and focus on the first number: The BPC report wants readers to understand how bad it would be if Congress failed to raise the debt limit. But here's another way to think about it: Without the option to borrow, the government can only finance 60 percent of its operations and obligations in the short term. More than a third of that spending goes right onto the national credit card.
That sort of reliance on borrowing is why annual deficits are so high. It's why total federal debt levels keep growing. It's why the Congressional Budget Office describes our debt trajectory as "unsustainable." It's why it is so important to focus on spending — not just on our long-term entitlement obligations, but now. This year. We're already spending so much that in near-term, 40 percent of it has to go on the credit card. That's how utterly dependent on borrowing, and how utterly unable to reduce spending, our federal government already is.
Lots of the attention in Washington right now is focused on what President Obama will do next — specifically whether he'll negotiate over raising the debt limit. He says he won't, but he's said that before and never followed through. Republicans, meanwhile, say a no-conditions debt limit hike is a no-go.
It's an impasse. And it makes for juicy political drama. But in some ways it's a distraction from the real spending and borrowing problem that got us into this mess. Because the bigger, more important question isn't just what Obama and Republicans in Congress will do this time. It's what, if anything, they'll do to better manage federal financing — and prevent us from getting into a debt-driven hole like this again.