McConnell, Republicans, Wrong On The Debt Ceiling

Last week, Senate Minority Leader Mitch McConnell either showed his lack of understanding of the debt ceiling, or he showed his lack of respect for Americans by lying about it.

For months, the President has been saying all he wants is to raise taxes on the top two percent so he can tackle the debt and the deficit. Yesterday, he finally revealed that’s not really his true intent. By demanding the power to raise the debt limit whenever he wants by as much as he wants, he showed what he’s really after is assuming unprecedented power to spend taxpayer dollars without any limit.

This isn’t about getting a handle on deficits or debt for him. It’s about spending even more than he already is. Why else would he demand the power to raise the debt limit on his own?

And by the way, why on earth would we even consider giving a President who’s brought us four years of trillion dollar deficits unchecked authority to borrow – he’s the last person who should have limitless borrowing power.

Look: the only way we ever cut spending around here is by using the debate over the debt limit to do it. Now the President wants to remove that spur to cut altogether. It gets in the way of his spending plans.

I assure you: it’s not going to happen. The American people want Washington to get spending under control. And the debt limit is the best tool we have to make the President take that demand seriously.

The American people want us to fight to cut spending. It’s a fight they deserve. We’re happy to have it.

– Mitch McConnell, as provided by Real Clear Politics

Senate Minority Leader Mitch McConnell - photo by Talk Radio News Service

I’m pretty sure McConnell knows how the debt ceiling works, therefore he was disingenuous at best when he made the above remarks.

THE DEBT CEILING

What is the debt ceiling?

First, let me explain what the debt ceiling isn’t. The debt ceiling (or debt limit) is not a cap on spending. Let me repeat. The debt ceiling does not stop congress from passing spending bills. Got that? OK, next.

 

If the debt ceiling doesn’t stop the federal government from spending more money, then what is its function?

This is a great question, I wish there was an equally great answer, but unfortunately there is not.

The debt ceiling is an artificial limit on how much money the Treasury Department can borrow to pay the bills of the federal government. It’s important to distinguish between spending and borrowing. If you don’t have the money to pay for more spending you either don’t spend or you have to borrow. The debt ceiling only limits how much you can borrow, not how much you can spend.

So if congress passes a spending bill that is not paid for and at the same time the debt ceiling is not raised when required, that spending cannot happen. At first that might sound desirable, and apparently it is desirable for many Republicans, but this is no way to control spending. A failure to increase the debt ceiling when required can and will result in the Untied States defaulting on it’s obligations.

And there’s another problem. It’s not just new spending bills that are affected. ALL federal spending is potentially affected by the debt ceiling. It doesn’t matter whether it’s a bill passed in 2012 or a bill passed in 1962, if it’s still a government program and costs money, it can be potentially affected by the debt ceiling.

To sum up, the debt ceiling puts a limit on the Treasury Department’s ability to borrow more money to pay the federal government’s bills. Indeed, the Treasury Department is part of the executive branch of government, but it is not the executive branch that authorizes new spending. That is the task of congress.

 

That’s all well and good, but how about a source?

Sure. Will the U.S. Treasury Department suffice?

The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.

Debt Limit – United States Treasury

 

OK, so this sounds stupid. The debt ceiling doesn’t stop congress from spending more money, it only stops the federal government from paying for the things it has already authorized (bought)?

Yep. That pretty much sums it up.

 

And wait, I thought McConnell and Republicans blame President Obama for all the spending and the debt?

There’s plenty of blame to go around, but the biggest catalyst of the massive federal deficits over the past few years has been the effects of the Great Recession. Tax revenue is down while at the same time government assistance (unemployment benefits) are up.

But you need to remember one thing, it is congress that is authorized to collect taxes and spend money, not the president. Republicans can blame President Obama, but by doing so they show their lack of knowledge of a simple and fundamental clause in the U.S. Constitution:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

So when congressional Republicans decry out of control spending, they need only look in the mirror to find someone to blame.

photo by Talk Radio News Service

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EconomyGovernmentPolitics

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