The Debt Ceiling Drama Explained

February 4, 2023 11:15am

There is a well-publicized fight going on in Washington right now that is presented with the typical Leftist bias of the propaganda press. And that is the binary decision about whether Republicans will vote to responsibly raise the debt ceiling or irresponsibly throw a temper tantrum which will destroy the country and plunge the world into a deep economic depression. Of course, the reality is not that binary. But since the fake news won't explain it properly, I will.

Every so often, the U.S. Treasury approaches the maximum debt it is allowed to incur under the law. And every so often Congress votes to increase that amount - what is known as the debt ceiling. The Democrats keep saying there should be no such thing as a debt ceiling because the increase in the federal government's credit line is only needed because Congress has previously spent money it didn't have, thus necessitating an increase in the amount the Treasury has to borrow.

But although that description is correct - that increasing the debt ceiling does not in and of itself increase spending, and that the additional debt is needed to fund obligations the Congress has already made, it is completely irresponsible to simply keep spending and borrowing and spending and borrowing and spending and borrowing. And it is at these periodic times when the debt ceiling needs to be raised that a conversation about stopping, or at least slowing, the crazy deficit spending needs to occur.

It is an opportunity to address the pain of borrowing without the pleasure of simultaneous spending. To put it in household terms, the time to have a conversation about having too much debt is not on the showroom floor at the car dealership when you're gonna justify more debt because you're drooling over that fancy car and don't care what it costs. If the bank will loan you the money, you're gonna drive that car home no matter how irresponsible that additional debt is. The time to have a conversation about debt is at the kitchen table when you're looking at stacks of bills, and you realize you don't have sufficient cash to pay 'em all. THAT'S when the responsible conversation should occur.

Well, the debate about the debt ceiling is the kitchen table piled high with stacks of bills. There aren't constituents begging for more freebies or colleagues on both sides of the aisles looking to buy more votes with taxpayer money. So what the Republicans are trying to do with their stance on the debt ceiling is to force spending cuts into the conversation. But the Democrats want to just keep spending as if money grew on trees.

But there are serious constitutional issues at play here too. Article 1, Section 8, Clause 1 of the Constitution of the United States grants Congress the power to pay the debts of the United States. And Section 4 of the Fourteenth Amendment makes defaulting on the debt unconstitutional. The exact words are "the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

The reason that language was included in the post-Civil War 14th Amendment was to 1) assure America's creditors that the debts the Union incurred to finance the Civil War would be repaid, 2) to void any and all debt incurred by the Confederacy to finance its side of the war, and 3) to prevent any claims for compensation over emancipated slaves. In fact, the second part of that section of the 14th Amendment states, "but neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

But for the purposes of this discussion, we'll focus on the first part. The validity of the public debt of the United States shall not be questioned. What the words "shall not be questioned" mean is that the debts must be paid no matter what. Period. End of story. It is unconstitutional for the United States to NOT pay its debts. That's quite clear. And that's one of the reasons we enjoy such a high credit rating and such low borrowing costs compared to other nations. It's not the only factor, however. The size of our economy, the strength and stability of our Republic, the fact that the U.S. dollar is used globally for most oil transactions, and that sales on the various U.S. stock exchanges are denominated in dollars, plus other factors, all contribute to the ability of the U.S. government to easily borrow money at costs that are much lower than what most other nations must pay.

But here's the rub. Although the Constitution says we have to pay our debts, there is no penalty if we don't. To be clear, we'd pay a penalty in the form of market turmoil, higher interest rates, and probably a hit to our GDP. But in terms of there being a direct penalty imposed on the people who violate that requirement of the 14th Amendment, there isn't one.

But let's be real. We all know... I know... you know... McCarthy knows... and Biden knows... we all know that the debt ceiling will be raised before America defaults on its debt. We all know that the whole public fight about the debt ceiling is political posturing. It always has been every time there's a fight about it. It is now. And it always will be. It's a show. That doesn't mean McCarthy and the Republicans should just cave. They should engage in this battle because it's the only way the Republicans are going to call attention to the outrageous spending of the 116th and 117th Congresses.

The 116th Congress was 2019 and 2020. It had a slim Republican majority in the Senate and a significant Democrat majority in the House. It was the Congress that was responsible for the absurd giveaways of the COVID bailouts and ridiculously high unemployment benefits during the government-mandated shutdowns.

And then the 117th Congress had a 50-50 split between Republicans and Democrats in the Senate, but Kamala Harris' tie-breaking votes really gave full control to the Democrats. The House had a solid Democrat majority, and Biden held The White House. And what did that one-party rule do? They spent addition trillions on even more unnecessary so-called "COVID relief" bills; the climate change agenda that was called the "Inflation Reduction Act" so people who knew nothing about it but the title would support it; and they added TRILLIONS in unfunded spending. And that reckless fiscal policy simply cannot continue. Now, don't think for a minute the Republicans are innocent here. BOTH parties spend money faster than drunken sailors - because when drunk sailors run out of money, they stop drinking. But politicians of both parties keep spending. So both parties are to blame. It's just that Democrats are to blame more.

And in the end, all that spending necessitates borrowing. And all that borrowing necessitates increasing the debt ceiling. And that's where we are now; with a partisan fight in Washington that, as usual, is being misrepresented by the fake news to make the Republicans look like the bad guys and to make the Democrats look like our saviors.

But Speaker McCarthy cannot prevent a House vote on the debt ceiling if enough House members want it put to a vote. If a majority of House members wanted a straight up or down vote on just the debt limit, they could force it to the floor over the Speakers objection via a discharge petition. And that could be done if all Democrats plus a half dozen Republicans joined together in a voting block. Democrats would love to do that because it would greatly undermine the power of the Speaker and weaken him in the eyes of his conference. But for now, Republicans are holding together, and Democrats are enjoying the media's portrayal of Republicans as evil and bitter partisans who want to destroy this country.

The real debt ceiling problem is that Republicans are being accused by the Democrats and their allies in the propaganda press as being nothing but obstructionists who are going to cause a default which would trigger economic destruction. Although Republicans always get the short end of the stick when there are partisan fights, the Speaker is not without options. What he should do is pass a bill in the House - which can be done with zero votes from Democrats - that raises the debt ceiling but also includes the requirements for the spending cuts he is demanding. That would then put the issue of the debt ceiling in front of the Senate.

And that would mean it would be the Senate not voting to raise the debt ceiling. The reason the Senate would be unwilling to raise the debt ceiling is because they object to certain cuts that would be included in that House bill. But that is how the process works. In a bicameral legislature, both parties need to agree to every jot and tittle of a bill. They need to be identical. But it would give the Republicans an advantage of holding at least some moral high ground in that they could honestly say "What do you mean Republicans are refusing to raise the debt ceiling? We already passed legislation that raises the debt ceiling! It is the Senate Democrats and the President who are refusing to go along with it."

Yet while that would be factually true, the fake news would continue to blame Republicans for it. Because that's what the fake news always does. It's kind of like when there are government shutdowns. The Democrats and their allies in the fake news always blame the Republicans. Democrats never receive blame for it, even though the reason the government has shut down is because the House, Senate, and President have not agreed upon identical legislation to keep it open. That's how our government works! So if you're not a bitter partisan, you blame all three: the House, the Senate, and the President because those three all need to agree before a bill can become law. But the fake news is comprised of bitter partisans. And most Americans are too ignorant to know they're being played for fools.

Democrats and the media - but I repeat myself - have told you the Democrats want to responsibly raise the debt ceiling but irresponsible Republican don't. But how have the Democrats voted vis a vis the debt ceiling when they were in the minority and under a Republican president?

Well, Joe Biden, in 2006 when he was a Senator, voted AGAINST raising the debt ceiling. So did Chuck Schumer. In 2006, EVERY Democrat in Congress voted against raising the debt limit. In 2004, all but two Democrats voted against raising the debt limit. In 2003, all but three Senate Democrats voted against raising the debt limit. Yet Democrats now say refusing to raise the debt ceiling is akin to treason. Yeah, but remember, if it wasn't for double standards, Democrats would have no standards at all.

We are absolutely, one-hundred percent NOT going to default on our debt. Anyone who tells you otherwise is engaging in fear-mongering for partisan gain. Unfortunately, that includes almost all the so-called "news" media. So why am I telling you this? Because unlike the fake news whose goal is not to inform but to inflame, I want you to know the truth, the whole truth, and nothing but the truth.