Rethinking the Federal Debt Ceiling
Senator Manchin wants to take on his own party and President Obama by showing his resolve to not vote to increase the debt ceiling limit. While I appreciate his frustration with the spending binge that will result in another huge deficit of $1.6 trillion this fiscal year, ending September 30, 2011, anything that would shut down the federal government would only hurt our credit rating and immediately increase the cost of borrowing—not at all good for an entity with $15 trillion in debt and projecting at least another $5 trillion by 2017. A better approach would be to bring the debt ceiling bill up every month, to keep borrowing and spending on a very short leash, and to educate the American people about our spending habits each month.
In chapter one of my book, Unaccountable Congress: It Doesn’t Add Up, I warn against the credit card mentality that pervades Washington’s actions: turning every Member’s voting card into a credit card without limit. (In fact, I called a Member’s plastic voting card “The Most Expensive Credit Card in the World”.) Now if there’s one thing the people understand with regard to their finances, it’s a credit card limit. However, a big difference is that a citizen’s credit card has a limit that only the bank can change—whether he or she likes it or not. Not so with government spending, which can continue unabated as long as Congress passes a law to raise the debt limit. The last time this was done, the Obama Administration was able to spend another $1.9 trillion more than the tax and other revenues raised for the same period, without stopping—that is until the debt limit is reached in a few weeks. This is when Congress will again have a unique opportunity to “put some brakes” on the Obama Administration’s spending binge—which has added another $3 trillion to the national debt over the last 2 years, putting the national debt well over $15 trillion already.
The bottom line in all of this is that interest on the national debt will become so onerous in five to ten years, with expected inflation, that it may consume all discretionary spending in the annual budget. So while Senator Manchin wants to show his resolve and stop government spending in its tracks, we need to come up with a strategy that allows for essential government services to continue while still reducing the deficits and national debt over the next ten years. I believe the only way to do this is to bring the debt ceiling bill up for a vote every month, as a “sword of Damocles” on government spending. This, along with putting all government spending and commitments to spend on the budget and “on the books,” is the only way to reduce deficit spending and the huge federal debt in a meaningful way over the next ten years and retain our “triple A” rating for treasury bills, bonds, and notes.