On January 19, we bumped into the debt ceiling, exceeding the statutory limit of $31.4 trillion in debt that can be incurred by the U.S. Treasury. It didn’t seem like a bad bump — we hardly noticed.
But we should have noticed. $31.4 trillion is an incomprehensibly huge amount of money; for example, that would be the combined wealth of 31,400 billionaires (if that many existed — there are only about 3,000 in the world). The interest payment — the cost just to carry the current debt, not to pay it off — is more than one billion dollars per day. Per day!
So far, the public seems relatively unconcerned, probably because we’re not yet feeling any pain. As in years past, we’ll no doubt find a way to resolve the debt ceiling obstacle and avoid a disastrous default. But for every organization, large or small, there is a point at which ever-increasing debt becomes unsustainable — and we are perilously close.
We don’t have a ceiling problem; we have a debt problem. The nation’s financial predicament is quite analogous (albeit on a grand scale) to the credit card dilemma faced by many Americans. You or I can run out of borrowing power by maxing out our Visa card. The tempting solution is to simply acquire another credit card (easily done) and keep right on spending. But, of course, that’s no solution at all. Continuing to spend more than we can afford will only make it worse.
In 1917, our government attacked that same over-borrowing risk — particularly as caused by multiple, simultaneous congressional spending authorizations — by adopting our current debt ceiling process. (Before that, we had generally adhered to the quaint custom of spending only what we could afford.) It was a sensible step, but it’s obviously not much of a ceiling — the statutory borrowing limit has been increased nearly 100 times. The last major debt ceiling crisis was in 2013, just 10 years ago; since then, the limit has nearly doubled — and we still can’t stay under it.
The debt ceiling’s ineffectiveness does not suggest that we should simply abandon it (as many Democrats urge). That process serves as a periodic call to action to deal with our unsustainable spending habit. The proper response, of course, is not to turn off the warning light — it’s to stop the bleeding.
That prompts the question of where, exactly, we can cut back on spending. A cursory look at the ledger shows that nearly two-thirds of our spending goes to so-called entitlements, and that portion of the budget is the fastest growing and least controllable. The entitlement sector includes Social Security and Medicare (both already subsidized by taxpayers, and both with looming shortfalls), and a long list of other government-paid services and benefits. Entitlement spending is important to many; it’s not sacred.
Even the label “entitlement” should give us pause. The word itself implies that such spending is untouchable, that its recipients have an inalienable right to it. While that is how entitlements are perceived by many, we know that is not always the case. However well intended, the degree of government largesse provided (and routinely expanded) by entitlement programs has in many cases been determined arbitrarily and doled out in implicit exchange for political favor.
Clearly, entitlements are part of the problem — a big part — and addressing them must be part of the solution. Therein lies the rub because even a modest, sensible reduction in entitlement spending is universally regarded as political No Man’s Land — political suicide. Elected officials, Left or Right, just don’t go there. And that must change.
No one is “entitled” to bankrupt our nation.
The necessary path is crystal clear. Both sides know that we must repay our creditors, simply because we have committed to do so. Default is out of the question. We all know that we must rein in unsustainable spending before it brings financial ruin.
Thus, we are left with a classic leadership challenge — the unpopular but essential course of action. Wouldn’t it be nice for once to exempt such matters from partisan bickering and opportunism?
So far, no such luck. We senselessly argue about which administration, current or past, is most at fault for our debt problem. (Answer: It’s been a true Democrat and Republican collaborative effort.) Our president calls Republicans “demented” for even suggesting that fixing the debt ceiling must be linked to a meaningful reduction in spending. Rather than face mathematical reality, Senate Majority Leader Chuck Schumer taunts his Republican colleagues to go first: “Just tell us what you plan to cut — and you’ll quickly learn how many Americans won’t tolerate those cuts.”
Schumer is right — it will be tough, no matter who goes first. That’s called leadership.
