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What people need to know about the Debt Ceiling

What people need to know about the Debt Ceiling

As with most things political, there are a lot of simplistic – and too often untrue — partisan narratives dominating the political discourse.  It is a little like consuming a book by only reading the chapter titles.

The Debt Ceiling is a device designed to keep our government from spending too much money – more than we can afford.  (I should pause until you stop laughing).  Currently, more than 40 percent of our federal expenditures are paid with borrowed money – a legacy gift to our children and grandchildren and great grandch … oh, you get the idea.

Some say it is just like a credit card with a limit – and voting to raise the Debt Ceiling is just like increasing the limit.  Not exactly.

With a credit card, you are forced to stop spending (borrowing) when you reach the limit.  In this case, the folks in Washington have already spent money waaay beyond any limit.  In other words, we have spent (appropriated) a LOT more money than we could ever hope to cover with taxes.  Raising the Debt Ceiling is more like raising your credit card limit AFTER you spend waaay beyond your means.    

The Debt Ceiling is rather meaningless since it is always raised to cover extravagant spending and unanticipated costs – and it will be again.  The political brouhaha over raising the Ceiling is nothing more than political banter designed to impose liabilities on the other side to influence future elections.  The idea that it restrains spending is utterly ridiculous.  

The only thing that can restrain spending is members of Congress with a modicum of fiscal responsibility.  It also requires voters who will not succumb to the siren allure of getting supposedly “free stuff” from Uncle Sam – and will elect fiscally responsible legislators. As Benjamin Franklin wisely noted:  “When the people find that they can vote themselves money that will herald the end of the republic.”

The only positive purpose to the debate over raising the Debt Ceiling is that it does draw attention to the reckless spending carried on by our elected officials in Washington.  That is why many of those legislators want to abolish the very concept of a Debt Ceiling.  One proposal would have the President raise the Debt Ceiling on his or her own – and Congress could only vote to reject his action. It would save legislators having to address the issue because they would never vote to stop such an increase in the Debt Ceiling.  Others suggest that there just be no Ceiling – just spend and borrow without any thought of accountability.

Those who want to raise the Debt Ceiling without political fanfare tend to be those who engage in reckless spending in the belief that public greed expressed as a need will always prevail with the voter.  Ben Franklin understood that.

Those favoring Ceiling raising as a routine practice make two cases.  They hyperbolically describe the immediate Draconian consequences of not raising the Ceiling.  There can be serious consequences, but they are not as severe or as immediate as the big spenders suggest.  That is just fearmongering.

They also say that the Ceiling must be raised because it covers money already spent – obligations to government bond holders, military pay, and contractor invoices.  It does cover past spending – in this case from President Trump to previous administrations. It also covers money spent by President Biden – that $1.9 trillion stimulus package passed earlier this year.  

They allege that it has nothing to do with future spending.  Au contraire.

It also has to do with future spending. In that sense, it IS like your credit card. When you raise the limit on your credit card, it is to cover FUTURE expenditures.  You will see that when the Congress finally increases the Debt Ceiling.  Check out the future Ceiling.  It will be waaay above the current obligations. 

It will be raised to cover all that infrastructure and welfare spending proposed by Biden. Oh … I know Biden keeps emphasizing that his entire multi-trillion-dollar legislation is ALL PAID FOR.  You can rest assured, however, that the next couple votes to raise the Debt Ceiling will be due to the fact that Biden’s “Build Back Better” will have billions of dollars in deficits due to either more expenses than anticipated or lower revenues than anticipated – and most likely both.

If you follow the news, you will know that one of the Democrats talking-points is that we should not be even talking about the cost of the Biden program, but only the benefits – those things that appeal to our human desire for more … and more … and more – especially when we are misled to believe that WE are not paying for it.  

It is tough to say “no” to money even when you know it will come back to kick us in the rear in the form of inflation and higher taxes.  I thought it was bad policy to send me $3600 I did not absolutely need – but I took it.  If I were a member of Congress, however, I would have voted against at least some of that money that was not means tested.

However … the very value of the money and the “free stuff” we are getting will be wiped out by increasing inflationary costs – and the tax money you and I – or future generations — shell out to pay for the “free stuff.”

The discourse over the Debt Ceiling is merely a form of political Kabuki Theater.  If there is any value to the debate, it is to remind us that Uncle Sam is spending too much money – and we and future generations will pay for it in many ways. We will always cover our obligations by raising the relatively meaningless Debt Ceiling.

The fact that we are dealing with the Debt Ceiling while the $5 to $9 trillion Biden legislative packages are being considered in Congress should have us running to the phones and our email to sent messages to our congressional representatives in the House and Senate to defeat Biden’s BIG BAD “Build Back Better” (and Broker) legislative agenda.  We should be raising the roof rather than the Debt Ceiling.

This commentary only deals with the economics.  The Biden legislation is also another huge regulatory power-grab for the benefit of the Washington elite establishment.  But that’s for a future commentary.

So, there ‘tis.

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry Horist Larry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.


  1. frank stetson

    “The Debt Ceiling is a device designed to keep our government from spending too much money.”
    No it isn’t.

    It’s very specifically a limit on the total amount that the federal government can borrow to fulfill its financial obligations from past spending. While perhaps subtle, there’s a big difference there, economically speaking at least.

    For example, lift or increase the debt ceiling does not authorize ANY new spending. It finances EXISTING obligations. You know, the ones that the entire CONGRESS just approved.

    It’s actually an artifact of Wilson’s 180 to enter WWI to appease Congress re spending for that War. No other country in the world has such a silly procedure. The debt ceiling is not in the Constitution, the Bill of Rights, was not even invented until 1917, to placate those in Congress opposing the War or allowing a free hand for Presidential debt creation in that War. And there it was, it wouldn’t go away.

    So, Congress still approves spending and could care less about the Debt Ceiling in that regard. And the Debt Ceiling provides a fictional cap where we can authorize spending well over the ceiling, and then correct the ceiling later. But the real action is in the spending bills, the Debt Ceiling is a procedure that has been artificially politically weaponized by the minority party, either one, to score political points on excess spending AFTER agreeing to spend the money excessively already.

    It’s a retrospective view and procedure that no other country in the world has. Why? Because it does not make logical or economic common sense whatsoever.

    On this one Larry, your article is confused and therefore moot, IMO. Like our politicians, you seem to be grandstanding while avoiding the real issue of spending. The Debt Ceiling process is one issue, and should be ended, since it really has little to do with spending.

    The spending issues abound, especially the infrastructure bill and the bbb bill; that’s the discussion. The debt ceiling is a red herring that both sides enjoy politicizing since in it’s definitional misunderstanding, it’s the perfect foil to make so many economic arguments for political PR.

    OR , as you said: Kabuki Theatre.

    • larry Horist

      Frank …. to one of your points. You say the Debt Ceiling is NOT to curb or limit spending — but to merely cover the money already spent. If that was the case, they would have to raise the Debt Ceiling every day to cover the latest expenditures. The Ceiling is raised to cover anticipated future spending. The reason we have to raise it is because the spending always exceeds the forecast and the spending is never paid for. That will be the case with Biden’s proposals. We will have to see how much the new Ceiling is to get a hint of the future spending — although it will again exceed forecasts.

  2. Phyll cook

    Killing babies wasn’t in the constitution either. But activists justices made it happen