Politicians of both parties are currently embroiled in one of Washington’s dumbest traditions: the “debate” over raising the federal debt limit. It’s a dangerous game that has been played many times, and even though legislators have never actually let the U.S. slide into default, there have been costs.
Ten years ago, just the risk of default led Standard and Poor’s to downgrade the government’s AAA sovereign-debt rating for the first and only time. The day it did so, the Dow fell 5.6% and the S&P 500 fell 6.7%. This year, Moody’s Analytics warns that a default would wipe out $15 trillion in household wealth and cost nearly six million jobs, launching a new recession overnight.
And none of this is necessary. The debt limit has been raised 78 times since 1960, under presidents of both parties. Extension does not authorize new spending, nor does it increase the debt itself. All it does is lift an arbitrary cap on borrowing to pay for spending that has already been authorized.
The limit was established in 1917 in an effort to reduce further borrowing. Since the federal debt today is more than 200 times what it was then, in real dollars, that clearly hasn’t worked. Profligate spending is a legitimate issue for debate. But playing politics with the full faith and credit of the United States is the height of recklessness and governmental malpractice.
While most votes to raise the debt limit have been bipartisan, Senate Majority Leader McConnell has been trying to force President Biden to raise the cap this time with only Democratic votes, hoping for an issue for 2022 campaign ads. In a letter to Biden, McConnell links the debt limit to Democratic spending bills, writing, “Since your party wishes to govern alone, it must handle the debt limit alone as well.”
McConnell points out that as a senator during the George W. Bush administration, Biden joined Democrats “in opposing debt limit increases and made Republicans do it ourselves.” However, more recent votes on the limit have been bipartisan; none of the three most recent votes received fewer than 240 votes in the House and 67 votes in the Senate.
Minority Leader Schumer says McConnell and Republicans “have completely abdicated their responsibility to the nation,” and blamed the GOP and former President Trump for the swelling debt. As for Biden, when asked if he can guarantee the U.S. will not default, he said, “No, I can’t. That’s up to Mitch McConnell.”
None of these “leaders” are living up to the name. The risk is too great for political games.
No Labels National Co-Chair Gov. Larry Hogan (R-MD) writes in the Washington Examiner that “the current debacle on the infrastructure bill vote” was Biden’s “choice. Instead of taking a major bipartisan win, he created this mess. … In today’s toxic political environment, major bipartisan achievements do not happen on their own. That takes leadership. Unfortunately, the president was not willing to provide it.”