By Lee Hamilton
Back when I was in Congress, I got a call from a constituent one day. I’d recently voted to raise the nation’s debt ceiling, and the man was more than irate. “Don’t you understand that we’ve got a serious spending and debt problem in this country?” he asked. “Why did you cast this idiotic vote?”
He was right about the problem. But he was wrong about the vote. With Congress fast approaching another debt-ceiling vote and yet one more “fiscal cliff” drama taking shape, I’d like to explain why that is.
The key thing to understand is that raising the debt ceiling is not about increasing spending. It’s about paying the bills for purchases we’ve already made. Refusing to increase the debt ceiling is like putting your child in day care so you can work, getting your transmission repaired so you can get there, and buying work boots and a hard hat so you can stay safe — and then telling your preschool, mechanic and local storekeeper you have no intention of paying them. Only, if our nation were to do this, the results would include plummeting investment, rocketing interest rates, and an economic downturn that could be catastrophic.
We do have to find a long-term path to deficit reduction — through spending reductions, increased taxes, or a combination of the two. But using the debt ceiling as a means of reining in excessive spending has not worked since an aggregate ceiling was put in place almost 80 years ago.
Indeed, I’d argue that the nation would be better off scrapping the debt ceiling altogether. I know of no other major country that has a debt ceiling requirement. It has become a political football.
This yearly battle isn’t worth it. The issue isn’t the debt ceiling. It’s the debt itself — and deficit spending. Our political efforts should go toward finding long-term solutions that restrain spending and boost tax revenue. With all the built-in spending we have — Social Security, Medicare, defense spending and the like — the deficit problem is only going to get worse if we don’t address it now.
It’s worrisome that there appears to be no plan to address the debt ceiling in Congress, despite urgent pleas from the president’s economic advisers to do so by the end of July. It’s even more worrisome that congressional leaders don’t appear ready to address the core need: realistic, long-term deficit reduction.
Lee Hamilton is a senior advisor for the Indiana University Center on Representative Government; a Distinguished Scholar, IU School of Global and International Studies; and a professor of practice, IU School of Public and Environmental Affairs. He was a member of the U.S. House of Representatives for 34 years.