Debt ceiling is cyclical disaster, nothing more

By Stefan Herlitz

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In the aftermath of the government shutdown debacle, we must consider what would have happened if Congress had failed to successfully raise the debt ceiling. Had the United States defaulted on its debts, the subsequent massive credit rating downgrade would result in immediate cuts to government expenditures and the utter collapse of the entire global financial system. Every few months, if the United States’ spending reaches the debt ceiling without Congress raising it again, the entire world economy will collapse, ushering in a crisis far worse than anything seen since the Great Depression.

The worst thing about the debt ceiling, however, is not the possibility of default or the implosion of the entire global financial system, but rather that the whole idea of the debt ceiling is completely arbitrary.

The United States is one of only two democratic countries on Earth that has a set debt ceiling. In Denmark, the only other country, the debt ceiling is meaningless: not only has Denmark’s debt ceiling been raised only once in its entire history (2010), but even then its national debt wasn’t particularly close to hitting the limit. In Denmark, the debt ceiling is just a formality, and they raised it just to be safe.

Only in the United States is it possible for lawmakers to draw up a budget, specifically delineate the amount of money each program is allocated, approve said budget and then vote against allowing the government to borrow enough money to pay for the expenses they just approved. The debt ceiling is not just an illogical over-complication of the system. It’s borderline criminal. As the system currently stands, the United States gets to play a massive game of political chicken every couple months, the result of which could be global financial ruin.

That is not how the budget is supposed to work. In a fiscally sane universe (i.e., the way every other democratic country does its budget), the government is allowed to borrow enough money it needs to pay for the programs approved in the budget. If the government happens to spend a bit more than it takes in in tax revenue, that government simply borrows the money. There’s no fuss, no partisan brinksmanship, no threat to the financial future of the human race. There is just making a budget, passing it and paying what you owe.

Sadly, the debt ceiling is not the only financial oddity that has become a major part of the United States’ political landscape. The government was recently shut down for more than two weeks as a result of the failure of Congress to pass a budget or continuing resolution to authorize spending government money. Hundreds of thousands of federal workers were furloughed, many federal services were closed and only a bare skeleton remained of programs that many people rely on. All of this because Congress couldn’t do its job and pass a budget. Instead of a bipartisan compromise that would allow the government’s doors to remain open while budgetary issues could be debated, we had instead yet another game of political chicken.

This shouldn’t be able to happen. It is the primary duty of Congress, the House of Representatives in particular, to authorize the government’s expenditures. Discussion over budget issues is what is supposed to be happening while the old budget is still active, so a new budget can be passed before its expiration. Clearly, Congress has failed its task.

What’s particularly disturbing about this failure is that Congress can simply sit back and allow it to happen. Short of impeachment, there is nothing that forces Congress to pass a budget, and since only Congress has the power to impeach itself, members can just sit back and wait until the next Congressional election in hope of having a Congress more in their favor before passing a budget. No other organization could conceivably function like this—even the UMass Student Government Association, with a budget of $2.7 million per year, has measures in its bylaws that force it to pass a budget every year. In the annual SGA budget hearing, if the initial budget proposal is not passed, the meeting keeps going until a budget is passed, forcing compromise.

With the budget process consistently stalled, the government always teetering on shutdown and the debt ceiling looming yet again, the United States—really, the entire world economy—is in dire straits. Our current political environment places far too much value on grandstanding, sound bytes and “doubling down,” while compromise, the only realistic solution, is dismissed. After all of these calamitous fiscal events, which happen with startling frequency, I think it’s time to realize that our budgetary process needs fixing, and eliminating the debt ceiling, with its arbitrary threat to ravage the world’s finances, is a good place to start.

Stefan Herlitz is a Collegian columnist and can be reached [email protected]