Debt and politics

First, the debt:
Each year the Congress blesses an extravagant number of programs that keep America going, from the farm bill and highways through health care, housing, education, welfare and so on. The cost of these programs usually outruns the money available to pay for them. The Treasury Department then borrows money (sells bonds) to cover the difference. The country can pay its bills and bond holders have a reliable investment and steady returns.
Over time, the budget deficits add to the national debt, now near $31 trillion and running up against the federal debt limit, a stricture controlled by the Congress. The debt limit will need to be raised early next year to extend the borrowing authority of the Treasury Department.
Raising the debt limit has been a necessary, if guarded, procedure in Congress. According to the Treasury Department, Congress has raised the limit 78 times since 1960.The alternative is bleak. Failing an extension would prompt an American default, shatter global financial markets and risk a recession tsunami. American credit would plummet, and the dollar with it.
A study last year, before Congress last raised the limit, said such a failure could erase $15 trillion in wealth and cost up to six million jobs. Try raising sympathy for a farm bill, or federal revenue sharing after that.
In October 2015, the federal debt was $18.1 trillion. By the summer of 2022 it was $23 trillion. Congress raised the debt limit last year by $2.5 trillion. Estimates say the debt may reach the $31 trillion ceiling in less than a year.
During the Biden administration, $5 trillion has been added to deficits. This includes the president’s $2 trillion (Covid) economic stimulus bill, a list of trillions in spending initiatives approved by Congress, and student-loan debt forgiveness estimated to cost $400 billion over 30 years.
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Now the politics:
House and Senate Republicans have threatened to play fast and loose with the debt limit. With a razor-thin majority in the House and almost half the Senate, they may threaten President Biden with holding the debt ceiling hostage to force cuts in such federal programs as Social Security and Medicare, and clean energy platforms; they may slow or reverse plans to boost Internal Revenue Service enforcement of tax laws, or squeeze social welfare components from a farm bill. And they have threatened to cut, or end, aid to Ukraine.
The nation’s credit and the global markets have become chits in high-stakes brinkmanship. Given the rampant lunacy in Congress, default is possible.
Imagine: The U.S. government, a $6.3 trillion annual enterprise, rifling the sock drawer and scratching about the sofa pillows for money to pay its big bills, including Social Security payments, federal salaries and interest on the debt.
The “conservatives” in Congress insist on trading spending cuts for raising the debt limit. The antagonists fail to see that the federal debt is a by-product of spending authorized by the House and Senate. The government borrows to pay bills rung up by the Congress and ordered on credit. The debt ceiling is a bit like the limit on a credit card. The government has maxed out.
Republicans have hoped to use every deadline next year to cut spending and address rising prices, immigration, education, and energy independence.
The issue is not one-sided, because unattended debt brings pain and dilemma. The spending fights will stress Democrats in the House and Senate. Officials in the Biden administration are divided on the issue of debt, extension, and the ceiling itself.
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Saying no to a credit increase is the Congress’ way of saying we bought all this stuff but now we don’t want to pay for it. This does nothing to resolve the issue of spending in the first place, but should the United States be known as the world’s wealthiest deadbeat?
Obstructionists in Congress don’t care. Procrastination and political gridlock again threaten to keep Congress from raising the debt ceiling.
There is no reason to stiff the credit ceiling. The budget deficit in fiscal 2022 was $1.38 trillion, half the deficit in 2021 and $1.8 trillion lower than the deficit that Biden inherited from Trump.
The deficit is fueled by spending (including tax cuts) that outpaces revenue. Our over-spending (Pentagon) and under-taxing (loopholes for the wealthy) only add to the deficit and the debt.
We have a deficit problem and a credit problem. Above all we have a problem in the Congress, where self interest rules and the national interest goes begging.