America needs a fiscal intervention.
A mere five months after President Joe Biden’s $740 billion Inflation Reduction Act was signed, the U.S. hit the debt ceiling
How did they not see this coming?
The debt ceiling is the maximum amount the federal government is able to borrow to finance its obligations. It’s somewhat akin to the limit on a credit card.
For the rest of us, maxing out on a credit card means cutting back and getting one’s fiscal act together. On Capitol Hill, many lawmakers are calling for the debt ceiling, now at $31.3 trillion, to be raised.
Try telling a bank that you can’t pay your loan, but if they increased the amount you could resume payments.
The term “debt ceiling” was not in the mix when the Inflation Reduction Act was debated. Rebates and tax credits for buying heat pumps, installing solar panels, and buying electric vehicles, yes. “How the heck are we going to afford all this,” no.
As the Heritage Foundation noted, the national debt is more than 120% of the nation’s entire economy — something that did not even happen in World War II.
The exploding annual deficits and debt are the result of runaway spending by a profligate Congress and president. In fiscal year 2019, federal spending was $4.4 trillion.
That grew to $6.6 trillion, $6.8 trillion, and $5.3 trillion in fiscal years 2020, 2021 and 2022, respectively.
Hitting the debt ceiling as we have shifts the attention from “how did this happen, again” to “if we don’t raise it now the government will be in default.” And no one wants that. It’s this measure of manipulative pressure that’s enabled the debt ceiling to continue its ascent, while having no effect on Capitol Hill’s addiction to spending.
Democrats want to raise the debt ceiling, Republicans do not.
Treasury Secretary Janet Yellen wrote to House Speaker Kevin McCarthy Thursday, informing him that her agency will implement extraordinary measures, halting reinvestment in some government pension programs, to bridge the finance gap.
She said the measures would last through June 5.
Cue the political posturing, impassioned speeches and denigration by Democrats of those who dare suggest fiscal responsibility as the solution. Lawmakers are experienced at taking things down to the wire, and we expect debate and rancor to run out the winter.
There will undoubtedly be calls to raise taxes in future, particularly of those liberals consider to be evading their “fair share.”
The Heritage Foundation points out that tax receipts are at a record high by any measure—in nominal terms, in real terms and as a percentage of gross domestic product. The government has never collected more money, but is still managing to spend it all, and then some
House Speaker Kevin McCarthy is firmly in the no increase group, and told reporters that the Biden administration should begin to negotiate ahead of this summer, when the default deadline hits.
“Why wouldn’t we sit down and change this behavior so that we would put ourselves on a more fiscally strong position?” McCarthy said.