In national emergencies Congress can exceed tax expenditures and run deficits. What Reagan taught was simple, the deficit itself is not the problem, but the depth, the reach and scope of government on civil society IS.
This is why confiscatory taxation, or more importantly, the philosophy animating the convictions of progressives is so dangerous. Their’s no limiting principal. Taxes will never catch up to the spendthrift mores of any political class. This is why conservatives often use moral terminology when criticizing excessive annual spending, we lose more of our sovereignty each time. Just ask State Governers.
This is why raising the debt ceiling is such a bad idea. Raising the debt limit allows Congressional members “a way out” from having to accept responsibility for large public expenditures. We’ve surpassed $17 trillion this year alone. And that dosen’t even mention the social mandates which are around $50 trillion. Do the math. We don’t have an economy THAT LARGE.
Debt ceilings provide a false sense of security. But this sentiment never acknowledges the reason why we SURPASS the ceiling every year. We run chronic deficits because our economy isn’t growing.
The Federal Reserve has helped in keeping interest rates low. The interest paid to U.S. Treasury holders (U.S. bondholders) determines that requisite revenue needed to service such debt. By keeping the rate low, the Central Bank is helping a spendthrift Congress continue financing mandates/expenditures that are clearly broken. If the interest rate should rise, more debt instruments must be issued.
The debt burden on the economy is measured in relation to GDP. The CBO now states that our current account of issued debt is 70% of annual GDP. Before the 2007 recession it was 39%.
Ok, so what’s the problem?
A growing and unsustainable debt level manifests an expansion of government. Philosophically, this means that government must confiscate more sovereignty from civil society to fuel its expansion.
The debt ceiling has not been an effective instrument in controlling debt. It has lead to a dreadful complacency.
Most states require a balanced budget, the growth of federal mandates to the exclusion of federalism only exacerbates state budgets. All that’s left are budgetary gimmicks.
A real debt ceiling limit would control spending directly. A rule would be to bring government outlays into historic ratios relative to GDP.
Let’s start there.