The U.S. government’s record of excessive spending and ballooning deficits has put us in dire financial straits. Something has to be done.
But politicians shouldn’t use the debt-ceiling decision as a bargaining chip in their fight over government spending.
Raising the debt ceiling is a formality that allows government to pay the bills that Congress has already approved paying. To refuse to raise the limit is akin to letting the country bounce its checks. If it wants to control spending, Congress needs to say no before it makes the “purchase,” not when the bill is due.
To not pay those bills could have catastrophic impact on the global marketplace, economists believe. Some politicians say that point of view is overstated. If they won’t believe economic predictors, how about history?
The last time we edged this close to default, in 2011, the impact was serious, if not disastrous. For the first time ever, the U.S. credit rating was downgraded. The stock market tanked. It cost us billions more to borrow money after that, and consumer confidence was badly shaken. And that’s how it looked when the crisis was, at the last minute, averted.
But all that, apparently, was not enough of a negative outcome to have Congress avoid another debt ceiling crisis. In fact, Congress decided to lump the conversations on government spending and budgeting and the debt ceiling and the Affordable Health Care Act all into one big debate. This is a legislative body that can’t find agreement on small points of contention. How on earth will it untangle this web? Even if the extension discussed on Thursday takes place, and the Oct. 17 debt-ceiling deadline is met, another debt-ceiling decision will be just around the corner.
If the government goes into default, strides made toward economic recovery will be reversed, and the world will view our government as grossly incompetent. And the U.S. government could actually default on its debts.
Is this debt ceiling crisis a threat of our own making?
Is the whole thing a little bizarre?
But is the threat real?
It absolutely is.
Congress should tackle reining in government spending — but not by refusing to act on the debt ceiling.