Congress Should Limit Spending, Not Debt Ceiling | Opinion

Here we go again.

Americans have not had to endure the hardships of a debt ceiling vote in years. This is because, when Donald Trump was President and both parties spent with abandon, Congress and the President agreed to suspend the debt ceiling for two years, ending July 31 of this year.

Now the cap is again a political issue.

With Joe Biden in the White House and both a $ 1,000 billion in compromises infrastructure bill and a Democrat-backed spending package of $ 3.5 trillion on the table, Republican lawmakers are again raising the cap as a potential political club. Republican Senate Leader Mitch McConnell and other party leaders say they will not vote to increase it, especially if the Democrats are looking for another ceiling suspension until 2022 using continuous resolution.

But this weapon is too dangerous to wield, simply because the consequences of the nation’s default on its debts are terrible to complicate.

Also, this is not the right fight. The time to oppose the debt is when spending bills are passed. The way to successfully tackle debt is through consistent, principled, credible action, and letting voters know what’s at stake, not by ignoring the cap when your party controls the White House, and then changing position when the other party takes control.

The United States has too much debt. This should be obvious to any American concerned with fiscal responsibility. The national debt is $ 28.7 trillion and is growing rapidly. No one knows when it will start to erode global confidence in the dollar or when interest payments on debt will start to fall. undermine economic growth. But there is a limit somewhere.

While the debt ceiling is a practical and high-profile symbol of this debt, and it offers lawmakers the only chance to vote solely on the concept of growing debt, the truth is that the ceiling itself represents determination. of the nation to cover the debts it already has. incurred. Voting against it would be like telling the bank not to increase your credit limit when you’ve already overspended.

This should be considered separately from the big spending bills to consider – bills that will require higher spending limits in the future.

No one knows exactly what would happen if the nation ran out of money to pay its obligations. Economists generally think the result would be, at the very least, a severe recession.

Writing in the Wall Street Journal this week, Secretary of the Treasury Janet Yellen describes such a scenario. The elderly would stop receiving social security checks. Families who rely on child tax credits would see these benefits delayed. The soldiers would stop being paid.

Perhaps more importantly, such a move would damage global confidence in the United States. Despite hesitation over the debt ceiling 80 times since 1960, according to Yellen’s calculation, the nation has never defaulted. It would only take once to destroy this record, and the result could be the need to offer a higher rate of return on Treasury securities in order to satisfy investors. This would result in higher interest rates on everything from auto loans to mortgages to credit cards.

On the one hand, it is a threat that could force a compromise on spending that the nation cannot afford. On the other hand, threatening the nation with ruin seems worse than taking on more debt.

Funding for government operations is expected to run out on October 1. We hope that the American representatives will be able to resolve this problem well before that date.

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