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Treasury Secretary Jacob J. Lew is now saying Congress will have to act to raise the nation’s debt limit by the end of this month. That’s a big shift from the last time the debt ceiling was raised, three and a half months ago. Then, the Congressional Budget Office predicted we’d have enough money till June. But no. Thanks to Washington’s addiction to out-of-control spending, the money will be gone by March.
Once again, Congress will have to debate a debt hike bill, and we will be treated to the usual circus. We’ll hear cries of “default!” if fiscal conservatives even breathe a wish for spending reforms to reduce future borrowing, and “cruelty!” if they should actually propose some reforms.
What should Congress do?
First of all, ignore the D.C. malarkey. Spending reforms can’t wait. The national debt has surpassed $17 trillion. If we don’t at least freeze spending soon, interest payments on the debt will eventually consume all incoming tax receipts, and the government will go bankrupt — that is, if we don’t experience a Greece-style economic collapse first. The time for spending cuts is now.
Attaching real spending reforms to the debt limit isn’t extreme, it’s a Washington tradition — or was, before President Barack Obama.
The next debt bill should not be “clean.” It should cut spending. It should defund Obamacare or send a balanced-budget amendment to the states. At the very least, it should freeze spending, which would balance the budget in just four years.
As for the specter of default, it’s time to call the left’s bluff. The Treasury takes in far more than it needs to pay all our bondholders on time and in full. If Congress ever hits the debt ceiling, there will be no default; there will be a temporary cash crunch affecting non-debt-related payments while a bipartisan deal is negotiated. That’s not the end of the world, and markets know it.
But the most important thing Congress should do is take back its constitutional powers.
That’s right. Over the past three years, congressional Republicans have silently ceded the government’s borrowing power to Obama.
Article 1 of the U.S. Constitution explicitly grants Congress—not the president—the power to control taxes, spending and borrowing. Yet, two recent GOP “reforms” have effectively shifted the borrowing power to the president. That shift not only undermines what little fiscal restraint we have left, it fundamentally undermines the checks and balances our Founders deemed essential to preserving our liberty.
1. The Boehner Substitution: The first reform came early last year, when Speaker John A. Boehner, R-Ohio, engineered the elimination of the dollar cap on the debt limit, substituting a date limit. Now the president can borrow as much as he wants, until a specific date, at which time a new dollar cap is automatically imposed. By itself, this idea isn’t awful. It’s supposed to give Congress more certainty about when the debt ceiling will be hit and stop the president from playing games with the date. But for reasons I’ll explain, it doesn’t work. Instead, it just amplifies the troubles caused by ...