Asking the right questions about the debt limit

Despite hitting the $31.4 trillion limit on our nation’s credit card on Jan. 19, the national debt will continue to grow by an average of more than $20 billion every week. The Treasury Department continues to cut checks to federal agencies using what are known as “extraordinary measures” to avoid having to operate strictly within the limits of the record revenue flowing into the government. But these balance sheet gimmicks will eventually expire, and that will happen sometime between June and September, depending on who you ask.

As we approach the looming deadline, there will be relentless frantic reporting about what breaching the debt limit really means. The hyperbolic speculation will range from whether the stock market will crash, to whether Social Security checks or food stamps will stop going out, to whether soldiers will get paid, to whether federal monuments and parks will be shut down. Before we move to the talking head hysteria and flashing red countdown clocks from 24-hour cable news, we should take a step back and look at what this debate is really all about.

When will we stop borrowing money?

According to the Congressional Budget Office, Washington took in nearly $4.9 trillion last year while spending about $5.9 trillion. Despite the dishonest rhetoric surrounding President Trump’s tax cuts, revenue to the federal government has been growing rapidly since 2018. Had we just frozen spending at the pre-COVID fiscal year 2019 level of about $4.9 trillion, we would already have a balanced budget.

In fact, the rate of tax collections has been growing faster than the rate of growth in the economy, with19.6 percent of our economic output going to the federal government in Fiscal Year 2022. Despite record revenue generated by growth-oriented Republican tax policy, taxpayer contributions still can’t keep up with Washington’s appetite for spending. The deficit for the first four months of fiscal year 2023 is already $418 billion. In his first two years, President Biden’s Build Back Bankrupt Plan, phony infrastructure bill, and so-called Inflation Reduction Act together increased spending by $3.84 trillion. In short, this is a shakedown of American taxpayers.

While the Democrats are unquestionably greater offenders, spending is historically a bipartisan problem. Not only did some Republicans join with Democrats to pass the infrastructure bill last year, but in December, the Senate GOP joined with Democrats on the $1.7 trillion omnibus stuffed with more than 7,200 pork projects previously known as earmarks. And the big spenders simply patted themselves on the back for making a deal, keeping the lights on, and showing they are capable of “governing.” 

What will happen if we have our own debt crisis?

We witnessed what happened in countries like Greece and Spain when creditors lost faith in their governments’ ability to pay its debts. Many economists say that a debt crisis like those countries experienced cannot happen to the world’s leading economy. They argue that creditors will continue lending us money because they need the United States to be strong. A collapse here, they say, would create a worldwide crisis which no one wants to contemplate. Therefore, some of the “experts” do not consider a U.S. default to be a realistic fear.

But what happens when Social Security and Medicare become insolvent? Either the taxpayer has to make up the difference, or beneficiaries will experience massive cuts in benefits. The most recent Trustee report from Social Security says that in 2034, if nothing changes, beneficiaries will only receive 77 percent of their benefits. Most of the politicians driving the reckless spending today will be out of office by the time that happens in 11 years.

Why are we leaving this debt burden to future generations of Americans?

The biggest advocates for spending taxpayer dollars have no plan or intention to pay it back. In June 2021, now-former House Budget Committee Chairman John Yarmuth (D-Ky.) insisted that Congress “didn’t have to balance our checkbook” because “we are like the banker in Monopoly.” 

Some Democrats may say increasing taxes on the rich and on corporations would shrink the deficit. But even if you accept the premise that massive tax increases wouldn’t tank the economy, and therefore reduce the actual amount of taxes collected, there simply aren’t enough rich people and big corporations to make up for all the deficit spending which is set to top $2 trillion per year in the near future, let alone pay off any of our existing debt.

The bottom line is this: the longer we wait to address the debt and the long-term risk it poses to our country, the harder it will get to fix it. Those of us who believe in fiscal discipline and ending the cycle of deficit spending and increasing debt would like to have serious conversations about our future outside of the debt limit debate.  However, the forces driving the status quo in Washington do not want to change. Therefore, we have no choice but to use this debt ceiling opportunity to force a responsible path forward for the American people. The recklessness is coming from those who pretend Washington does not have a spending problem.

Bob Good represents Virginia’s 5th District and is a member of the Budget Committee.