Why Does the Debt Ceiling Exist At All?

The US debt ceiling, over which the Prez and Congress are having a political jujitsu match, only dates to 1939. It was originally installed to restrain federal gov’t spending and limit its size.

(I pause briefly while waiting for you to stop laughing).

Usually, this has never been a factor, since Congress routinely increased the ceiling without giving it a second thought. With a strong Tea Party wind blowing through the land, the debt ceiling is having a concrete effect on budget negotiations for the first time in my lifetime.

Yes, the current plan of ‘cut (spending), cap (put a permanent cap on the total size of the budget), and balance (the ol’ balanced budget amendment lives again)’ is of course the correct action. Still, it has little chance of surviving the Senate, much less a veto pen.

If, as it seems increasingly likely, we end up with a last minute compromise comprising a tax increase, debt ceiling increase, and cuts in the Federal budget in the out-years (which, somehow, never seem to materialize), what use is the debt ceiling? If it does not, in the end, make a real difference now (other than inspiring a round of Kabuki theater), then when, if ever?

In this case, we should simply get rid of the stupid thing. Its existence might make us feel good, but c’mon, let’s get real. I vote for Gramm-Rudman-Hollings as a useful tool that actually worked.