The president also claims that the debt-ceiling debate is about whether “Congress should pay the tab for a bill they’ve already racked up.” Wrong again.
As noted above, we are not actually paying the bills we’ve already run up but simply rolling over the borrowing on those bills and paying interest on our debts. Moreover, those bills amount to the $16.4 trillion we owe as of this month. Interest payments can also justifiably be considered part of past debts, and those payments will amount to roughly $220 billion this year. Even if we raised the debt ceiling to accommodate those interest payments — something that is not strictly necessary, as discussed above — that would mean a new debt ceiling of just $16.6 trillion for this year. The administration is seeking an increase to $18.5 trillion, which would theoretically allow borrowing through 2014.
The administration wants an increase in the debt ceiling beyond current debt and interest payments in order to accommodate additional spending and borrowing for this year and next. True, there is a certain element of hypocrisy to Congress’s appropriating money for this year and then refusing to carry out the borrowing necessary to pay for it. But there is nothing wrong with Congress’s forcing government not to spend money that it had planned on spending.
Finally, the president would have us believe that the debate over the debt ceiling is the unique product of Republican obstructionism. On Monday he asserted that Republicans are trying to “collect a ransom in exchange for not crashing the American economy.”
Even setting aside the president’s much-discussed vote against raising the debt ceiling when he was a senator, delays and conditions for raising the debt limit were relatively common and bipartisan well before the big fight of 2011. As far back as 1981, the New York Times was reporting, “Although the routine increase in the debt ceiling was essential to meet Government obligations already incurred, the vote is traditionally delayed to the 11th hour, with the minority party accusing the party in power of spendthrift ways”
In fact, the federal government actually did briefly default on its debt in 1979, in part as the result of a debt-ceiling impasse under a Democratic-controlled Congress. Since then, both Democratic and Republican Congresses have missed the deadline for debt-ceiling increases: briefly in 1981, three months in 1985, four and half months in 1996, and three months in 2002. And all sorts of conditions have been attached to debt-limit legislation. For example, in 1985, Congress added the Gramm-Rudman-Hollings spending limits to debt-limit legislation. The current impasse is hardly unprecedented.
Don’t get me wrong — failure to raise the debt limit would not be a good thing. Financial markets would likely react badly. We could even see another downgrade of the U.S.’s credit rating. Increased uncertainty would further slow economic growth. Unknown potential consequences abound.
But none of this would be worse than a failure to take meaningful action to reduce the debt, federal spending, and the growth of government. Indeed, if we want to see more credit downgrades, market turmoil, and slow growth, all we need do is continue on our present course.