Every year now, or more often, there is a big showdown over whether Congress will raise the debt ceiling. It is a stupid way to run any organization, let alone one that wants to hang on to its status as world leader.
This year, President Trump and members of Congress put the question off until December (Merry Christmas). That’s better than another round of irresponsible games with the world economy, especially while the country is dealing with rockem-sockem Harvey and Irma. Here’s an even better solution -- get rid of the debt ceiling altogether.
We’re probably whistling in the wind here, but consider:
First, getting rid of the debt ceiling doesn’t mean you like debt, or believe the United States should just keep borrowing to pay for all of its commitments. Just like a household that is overspending, the nation would be healthier if it improved its debt-to-income ratio.
But the debt ceiling doesn’t accomplish that. It’s just a rule that the country currently cannot responsibly follow, so moving it every year is just political theater.
The world is too complex for the United States to throw a fit one day and decide it’s not going to pay the bills. Even when Congress pushes past its deadline and there is a government shutdown, not everything is truly shut down. There is a lot of inconvenience, lost opportunity and extra expense closing national parks and not taking people’s calls, but the most essential things continue. That’s because it is too big a deal for the United States to truly pull out of the world economy, even for a day. Imagine an end to Social Security, health care, the Army, FBI, paying debt service to China and other lenders. The whole world would go into recession, or worse.
But there is a cost. The United States enjoys a position in the world because of its values and traditions, but also because it has been a stable government with a stable currency. People around the world like to park their wealth in American dollars because they trust America. (That also contributes to the whole world learning English.)
But every time Congress plays games with that stability, people have reason to wonder if America has had its day, and maybe its time to find another currency.
In other words, as Robert Smith recently observed on NPR’s podcast “Planet Money” podcast, “There’s only so many times you can do that and keep the world’s trust.”
It is the job of Congress to set the nation’s budget. For a long time now, members of Congress have disagreed about how much money should be spent on things like food assistance and health care for people who have trouble affording those things on their own. Some members want to bring down the debt by cutting that spending. Others want to raise the nation’s income to cover costs by taxing the wealthiest Americans -- upper millionaires and billionaires.
That’s the unresolved issue before Congress every year, the one obscured by the damaging made-for-TV drama over the debt ceiling.