Here He Comes to Save the Day! Mighty Mnuchin Is on His Way

The treasury secretary has managed to put off debt ceiling calamity, but otherwise failed to embraced needed spending reforms.

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Treasury Sec. Steve Mnuchin
Dennis Brack/Newscom

Treasury Secretary Steven Mnuchin claims he has been using his "superpowers" to keep the federal government from defaulting on its debt since April, when the federal debt hit the debt ceiling. This self-labeled superhero is trying to give lawmakers some time until they raise the debt limit, letting them continue to spend above their means. In reality, the superhero thing to do would be to persuade Congress to implement some fiscally responsible reforms that would get us out of the mess we're in, including the perpetual debate about the debt ceiling.

As of today, the federal government owes nearly $20 trillion to foreign and domestic investors. According to the Congressional Budget Office, this is just the beginning; by 2047, our debt will be 150 percent of our gross domestic product—up from a little over 100 percent today—thanks primarily to an aging population and poorly structured entitlement programs. Call me crazy, but I think these numbers speak for themselves, in terms of our need to stop spending money we don't have.

Ironically, the debt ceiling hasn't done much to limit debt accumulation. It was raised 78 times between 1962 and 2012. It was even suspended altogether during the past three years. Not only is the debt ceiling on the rise but also over time the speed of its rise is increasing. From 1989 to 2001, on average the debt ceiling was raised by over $250 billion per year. Between 2002 and 2012, the average debt ceiling increase not only climbed every year but also reached over $1 trillion per year, more than double its previous maximum. (Note: These data don't include the years 2013-17, as the debt ceiling was suspended numerous times in that period.)

The importance of the debt ceiling, however, is less about the role it plays as a constraint on the debt and more about the way it forces a conversation about our debt problem and the need for a solution.

To Mnuchin's credit, unlike his two immediate predecessors, he didn't claim that the debt ceiling had to be raised the minute our debt hit the limit on April 28. Instead, without any drama, he promptly implemented a series of measures (these measures are what he calls his superpowers) to allow more time for lawmakers to raise the debt ceiling. Unfortunately, like his predecessors, he's taking the easy road and asking Congress for a "clean debt ceiling increase" before we hit the Sept. 29 deadline.

The refusal to include institutional reforms and spending caps along with an increase in the government's borrowing authority is, of course, how we got in this mess in the first place. I understand that lawmakers would rather spend as if there's no tomorrow, but I'd hope that the treasury secretary would be more realistic. Apparently not. Mnuchin is no different from his predecessors in failing to demand that we stop kicking the can down the road, forcing future generations to somehow address the problem instead.

During a hearing in July, Mnuchin announced that he has no intention of prioritizing payments to avoid a default until lawmakers reach an agreement about what measures should be used to pay for some of that new future debt. "I think that doesn't make sense," he noted. "The government should honor all of its obligations, and the debt limit should be raised."

I agree that we shouldn't default on our debt, but doing nothing to control government spending is what doesn't make sense. Besides, as the secretary must know, Treasury can prioritize payments, starting with interest on our debt. Last October, Treasury collected $222 billion, and interest payments were $23 billion, leaving plenty of money to pay for the military, Social Security, Medicare, Medicaid and some non-defense discretionary spending. Something similar will happen this October once we breach the debt ceiling. So unless Treasury wants us to default, we won't.

But make no mistake; the negative effects of failing to control our future debt—such as slow growth, higher unemployment and higher taxes—won't be felt immediately, but they'll be real for future generations. As such, the superhero thing to do is to call for action today rather than continue decades of unaccountable, unlimited funding for bloated and unsustainable entitlement programs, such as Medicare and Social Security.

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  1. A bit disingenuous laying the blame on the Treas Sec. Trump is his boss, and if Trump doesn’t want to cut spending, his only real choices are to quit, to buck his boss and get fired, or try to do his job as defined by his Boss.

    1. He is culpable for his own behavior. “Just following orders” has been a rather bad defense historically. The man is a millionaire many times over. It isn’t as if getting fired means his family doesn’t eat. He is basically doing something he no doubt knows is wrong to ensure his own prestige and power. I think it is more than fair to blame him for that.

      1. You can blame Munchin for his actions, sure. But blaming him for the entire budgetary process, for not unilaterally submitting a balanced budget? That’s the pointless part.

    2. That’s under the assumption Trump has any idea what the hell he’s doing or cares about anything but audience sizes.

    3. Not the job of the Treasury Secretary.
      Not the job of the President.
      Belongs solely to congress.
      Article one, section eight; To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

      1. It is the job of the president (that is to say it is within the powers of the office) to advise, admonish, cajole and otherwise try to influence Congress to act on the program he/she believes is in the nation’s best interests (Reagan’s TV speech resulted in a flood of mail to Congress and almost certainly tipped the scales on the Kemp-Roth tax cuts).

        Yes, it’s true he’s not a Westminster style Prime minister who can just whip the party faithful and the coalition partners in Parliament into compliance nor is he a French-style President with a puppet Prime minister who will do the same.

        But the office does hold huge moral authority and when the president makes his policy wishes known the people, and Congress, listen. They may not react positively, but they do listen and the debating points are at least clearly defined.

  2. I think I might have been sex trafficked. What should I do?

    1. Pay the fine, and try to get the points on your ticket reduced to save on insurance.

  3. What religion are Mnuchkins?

    1. Are we talking before or after Dorothy dropped a house on that witch?

  4. Deficits don’t matter when the GOP owns Congress and the White House, silly people.

    1. Aw they do. Democrats and courts have bent over backwards to stop spending cuts.

      Remember Trump’s budget proposals to cut various federal budgets and all the wailing the left did?

      Ending the filibuster and passing a federal budget that cuts agencies would be the best thing Republicans could do. Leave the Democrats out of the equation entirely. Democrats will not be gaining control of the House or Senate anytime soon.

      1. You couldn’t even get a simple Republican majority to repeal and replace Obamacare. It’s cute, however, that you talk of the GOP as if it were a party with ideas instead of the decaying corporate-shill race-baiting corpse it is.

        1. I seldom agree with you but must in this case. I really cannot believe the GOP will ever cut the budget no matter what sort of majority they get. They may cut some agencies but will then simply shift the money to agencies they favor. The taxpayers still end up with sand in the vaseline.

        2. You mean decaying ideas like medicare for all? Minimum wage? Fear of the volcano god?

          Funny how it took a supermajority of dems to get barrycare passed. Even funnier is that it’s still failing. But I’m sure more race card will cover up reality.

      2. In what universe have Republicans ever demonstrated an earnest commitment to eliminating the deficit? They often talk of cutting programs they don’t like, though those never seem to be the ones that actually cost a lot of money. But invariably republican administrations have cut revenues to the Treasury (by cutting taxes) while also increasing spending (see Medicare part D, defense spending).

        It’s positively quaint to pretend that this president or the party as a whole have now or ever had any genuine interest in actual fiscal responsibility.

  5. Cut spending!

    1. Name one thing you want to cut that you personally benefit from. Or will this prescription always and forever be for other people?

      1. Federal transportation budget. They could cut that budget and still have enough to repair roads and bridges; they would just have to do without new roads or rail projects that just happen to go through land owned by members of the pertinent Congressional committees.

      2. I have school aged children… eliminate the department of education.
        I someday will supposedly get social security… I’d be willing to give up all that I’ve invested if I could stop future investing now and move to private accounts.
        I someday will supposedly get Medicare… Phase it out
        I benefit from our defense department… End the war in Afghanistan and cut the budget by 20% for starters.
        I have “benefited” from x-ray vision and pat downs from my local TSA agents… End the department and let airports and airlines handle their own security.

        Need I really go on?

        1. I was going to list defense, but I’m hard put to see what benefit I get from it given the way the money is used.

          Likewise, some will insist that education benefits everyone, including childless folk like myself, but the shitty results call that into serious question. I don’t think anybody, parent or not, benefits from the Dept of Education.

          1. The teacher’s union benefits from the department of education

          2. Education spending is less than 3% of the annual budget (not counting “emergency” spending that is not offset on disasters, wars). So cut away. It’s not even a rounding error.

            To attack the deficit, you need to raise taxes and eliminate Medicare and Medicaid. I don’t think that’s going to happen under this administration or any other.

  6. In reality, the superhero thing to do would be to persuade Congress to implement some fiscally responsible reforms that would get us out of the mess we’re in

    That really would require superpowers. Like mind control. Otherwise, it’ll never happen.

  7. The importance of the debt ceiling, however, is less about the role it plays as a constraint on the debt and more about the way it forces a conversation about our debt problem and the need for a solution.

    A conversation that never goes anywhere. So I’d say it’s no more useful for that purpose than it is for constraining spending.

  8. I will gladly pay you never for some government today.

  9. In the last paragraph, I thought she might (finally) add another key potential negative effect of failing to get federal debt under control – but she left it out. I’m referring to harmful inflation. Will Veronique ever discuss the issues of federal spending and federal debt within the proper operational context – meaning our fiat currency system?

  10. the way it forces a conversation about our debt problem and the need for a solution

    Except the debt ceiling does the exact opposite, by creating a fiction that the accumulation of debt is somehow distinct from the appropriations process, so congress critters can vote for more spending every year and still claim they’re serious about reducing the debt because they voted against raising the debt ceiling.

  11. The only mention of taxes here is as a negative consequence of debt, as if taxes raise themselves (and are always bad). We do have one of the highest debt-to-GDP ratios since WWII (but not nearly that high). The problem isn’t just that we let old people live too long, though. If you put debt as a top priority but refuse to entertain raising taxes as part of the solution, then you’re not being serious, you’re being a disingenuous Norquistian shill. That’s true even if it’s an unbreakable iron rule around here.

    1. I don’t see any place you can raise enough additional revenue to make much of a dent. Even if that can be done, some way would have to be found to stop Congress from simply spending the new revenue on new projects. We all know they won’t just apply the money to the existing debt.

    2. We already raised taxes asshole. And we increased spending even faster. Being a typical pelosi pissant you can never find anything to cut. Your great welfare state is unsustainable even if the middle class starts paying its fair share.

  12. Needz moar photos of Mnuchin and his family.

  13. For having a Ph.D., it is amazing she obviously has no clue what Social Security is. Even though we need to spend less money, the absence of knowledge on this simple point makes anything she says much less credible.

    1. Please enlighten us. Tell me the one about how you’re just getting back what you put in.

  14. The writer’s solution to “call for action today rather than continue decades of unaccountable, unlimited funding for bloated and unsustainable entitlement programs, such as Medicare and Social Security” sure has worked great in the past hasn’t it? Let’s continue this solution every year. Notice the writer does not even mention our interventionist foreign policies, which is where most of the money goes.

    No the best possible thing to happen would be for the government to default on its debt.

    A true default would mean the USG couldn’t pay its soldiers and they would have to come home. Peace would break out in the world. It would mean new borrowing would be almost impossible because potential lenders would be worried about getting their money back. It would mean citizens would not support wasteful programs any more.

    A default is the only solution to our out-of-control government. Expecting self-discipline from politicians is a fools errand.

    1. Most of the money goes to welfare. SS alone is 1tt. Medicare is ghe same size as defense. Medicaid is nearly the same size as defense. Food stamps alone are one seventh the size of defense.

      The sad thing is that your numeracy is the rule and not the exception, and THAT is the reason we can’t get spending under control.

  15. From 1989 to 2001, on average the debt ceiling was raised by over $250 billion per year. Between 2002 and 2012, the average debt ceiling increase not only climbed every year but also reached over $1 trillion per year, more than double its previous maximum.

    Interesting partitioning of era and use of absolute figures; kinda misses the point on the policy.

    Try 1981 to 1993, 1993 to 2001, 2001 to 2009 and then 2009 to now.

    To Mnuchin’s credit, unlike his two immediate predecessors, he didn’t claim that the debt ceiling had to be raised the minute our debt hit the limit on April 28. Instead, without any drama, he promptly implemented a series of measures (these measures are what he calls his superpowers) to allow more time for lawmakers to raise the debt ceiling.

    Oddly, I remember Geithner doing that very thing, but then he was working for a Democrat, so you probably do not remember that at reason.com

    1. Fuck off, troll.

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