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Why Is There Still A Debt Ceiling?
Blame opportunistic politicians.
The political world is headed towards a breaking point on the debt ceiling. The Republican House and the Democratic Senate are trying to agree to a package that would raise the ceiling and prevent the nation from default. Democrats are mostly united in their desire to pay off the nation’s obligations without agreeing to substantial cuts in social programs. Republicans, on the other hand, are not exactly sure what they want. The most likely Republican demand is chaos, a protracted struggle that would undermine the Biden administration and lead to more power for the party’s most radical members.
Discourse around the debt ceiling has focused on Republican demands as well as the Democratic ability to circumvent them. Some observers, including Democratic Senator Joe Manchin of West Virginia, believe that a deal may be possible to reduce the deficit while avoiding cuts to Social Security and Medicare. He proposed that Democrats agree to raising the cap on Social Security-related payroll taxes, which currently extend to the first $160,200 of a person’s income. This move will likely not mollify Republican opponents, however, who are trying as hard as they can to not offer a direct proposal of their own.
The question of the debt ceiling’s very existence still remains. Why does such a problematic, vestigial institution remain to undermine elected officials? And why has it taken so long to get rid of the limit, one that could doom Republicans as well as Democrats?
The problem with the debt ceiling is that American political leaders do not believe that Americans can rightly distinguish the idea of a “debt ceiling” from the idea of debt itself. In general, Americans do not like high deficits. They believe in the traditional Protestant values of thrift, sobriety, and saving. While they are not interested in making the cuts or tax hikes necessary to reduce deficits, Americans do not want to be directly reminded of how much money the government has to borrow in order to make the 21st century economy work.
Therefore, the idea of a debt ceiling is attractive. The debt ceiling is an arbitrary cap that is not tied to the amounts that Congress has already appropriated or agreed to borrow and pay back. But according to the basic framework held by…
