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Why bring up the debt-ceiling controversy now? After all, that controversy was just recently resolved by Congress’s decision to raise the debt ceiling yet again, in order to enable U.S. officials to continue adding more debt to the nation’s credit card. Given that the new debt ceiling won’t arise until sometime in 2024, why revisit the issue now?
The reason is to show the utter hypocrisy and gamesmanship of the Chicken Littles who dramatically exclaim, time after time when the debt ceiling is reached, that it must be raised again. Otherwise, they exclaim, the federal government will be forced to default on its debt, which, they say, will cause the sky to fall, make the United States fall into the ocean, and bring catastrophe to the rest of the world.
The purpose of a debt ceiling
The debt ceiling is an implicit acknowledgment by Congress that too much debt is a bad thing. The purpose of the ceiling is to prevent Congress from incurring an amount of debt that exceeds the ceiling. That is, the ceiling serves as the maximum amount of debt that the government is permitted to incur.
What happens if the debt ceiling is reached and not raised? In that case, the government must match tax revenues with expenditures. The expenditures will no longer be permitted to exceed the tax revenues. In other words, no more borrowing, which would necessarily mean that the total debt would not exceed the debt ceiling.
Hypocrisy and gamesmanship
So, where does the hypocrisy and gamesmanship of the Chicken Littles come into play? Notice that after Congress agreed to raise the debt ceiling yet again, the Chicken Littles went into silent mode. They are silent with respect to out-of-control federal spending. They feel that they don’t need to oppose the continued out-of-control federal spending and debt spree. They know that once the debt ceiling is reached again in 2024, all they have to do is pull out their tried-and-true Chicken Little playbook and begin crying, “Default! Default! Default” and achieve, once again, yet another lifting of the debt ceiling. The strategy is based on the notion that since the “Default!” exclamations has been so effective in securing increases in the debt ceiling in the past, they can continue to be used to secure increases in the debt ceiling in the future.
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After all, the Chicken Littles do have another option: They could be saying: “U.S. officials need to slash federal spending now because once the new debt ceiling is reached in 2024, they won’t be able to incur any more debt.”
Federal debt and obligations
Meanwhile, the federal debt has now reached $33.7 trillion. That doesn’t include Social Security obligations, which amount to another $26 trillion, and Medicare obligations, which amount to another $40 trillion.
With annual federal expenditures now at $6.2 trillion, it’s worth noting that the three biggest budget items, none of which Congress will touch, are Social Security ($1.4 trillion), Medicare ($1.3 trillion), and military/war ($825 billion).
The feds are now spending $1.7 trillion more than what they are receiving in tax revenues, which means that they are adding another $1.7 trillion to the national debt load. Did I mention that interest on the national debt is now $675 billion per year, especially given the Federal Reserve’s monetary antics?
None of this can end well, as any nation that has saddled itself with too much debt can attest. But the Chicken Littles don’t care. As far as they are concerned, the federal government should continue spending and borrowing to its heart’s content.
The real issue
Finally, it bears emphasizing that the real issue Americans should be addressing though is not the out-of-control federal spending and debt but rather the more fundamental issue of what the federal government should be doing and not doing. Should it be sending money and armaments to foreign regimes? Should it be taking care of people’s retirement and healthcare? Should it be waging a war on poverty? Should it be waging a war on drugs? Should it be trying to equalize wealth? Should America dismantle the national-security state and restore a limited-government republic? Should America abandon its foreign policy of foreign interventionism?
If America were to embrace the genuine libertarian answers to such questions, the spending-and-debt controversy would resolve itself.