The debt ceiling is the best bad option we've got right now

The debt ceiling is the best bad option we've got right now
© YouTube/The Wall Street Journal

Follow politics for any time at all, and you’re bound to be familiar with debt limit battles. Every few months, Congress has spent so much money that the obligatory limit on its debt must be raised, leading to weeks of posturing, an apocalyptic news cycle and pretty much anything except meaningfully reducing debt. 

This time, though, the fight ended not with a bang but a whimper, as a building standoff over hurricane relief needs, border wall demands and a limit that had to be raised by the end of September abruptly ended with President Trump deciding to go around Republican leaders and strike a deal with Democrats to raise the debt limit in exchange for Hurricane Harvey relief.

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Now, with rumors that the president may go ahead and make a deal to end the debt limit altogether, many Republicans in Congress are rightly furious, especially as administration officials like Office of Management and Budget Director Mick MulvaneyJohn (Mick) Michael MulvaneyTrump files to dismiss lawsuit from Bolton aide on impeachment testimony OMB official to testify in impeachment probe if subpoenaed after others refused Kent, Taylor say they're not 'Never Trumpers' after Trump Twitter offensive MORE, himself a staunch opponent of debt-limit hikes while in Congress, now defend the president’s move to hike the limit without offsetting spending cuts. 

 

It’s no secret that the debt limit is fatally flawed — because the debate takes place after the fact. Congress can refuse to fulfill existing obligations and risk default, but the process cannot be used to stop more debt from being accrued.

What’s more, as Mulvaney no doubt learned all too well in Congress, insisting on offsets in times of "emergency" tends to be a doomed endeavor, and situations like Hurricane Harvey aside, the definition of “emergency” is amorphous and ever-expanding, putting fiscal conservatives’ backs always against the wall. 

For practical and political reasons, Mulvaney was likely right to say, “It was not the time to have longer discussions about the larger fiscal issues,” though a combination of better mitigation planning and making certain emergency spending subject to spending caps could alleviate this concern.

You might say these potential solutions are politically infeasible, and you’d probably be right.

That’s why, for all the flaws with the debt limit as it is now, forcing a conversation on the nation’s rising spending and debt is immensely valuable, and it's a tool that fiscal conservatives should be wary of giving up without serious reforms in exchange. The debt limit may be a bad option, but it is the best bad option there currently is.

There are much better ways of doing things. The Center for a Responsible Federal Budget’s Maya MacGuineas suggests several, including tying debt limit hikes to the budget resolutions that would necessitate them, or reframing the limit in relation to GDP, a much more meaningful number.

In a larger sense, countries like Sweden and Switzerland offer examples of far more effective debt management through large-scale structural spending reform that target the root of the problem instead of its symptoms.

No serious observers can say the debt ceiling is perfect, or even really a ceiling. Certain “extraordinary measures” and economic fluctuations can delay the inevitable but not change it. Since 2010, the debt ceiling has already been suspended or raised eight times, and now it might be on its way out for good. 

There’s no question that debt limit standoffs can be risky for the national economy, but the deeply flawed process is the only thing in generations that has successfully forced a conversation on the much bigger economic risk of unsustainable spending and debt. 

As the national debt officially topped $20 trillion Monday, fiscal conservatives of all stripes should be wary of any sign that this tedious, broken and ultimately only remaining limit on spending and debt could be on its way out. 

Jonathan Bydlak is the founder and president of the Coalition to Reduce Spending, an advocate for lower federal spending, and the creator of SpendingTracker.org. A fiscal policy expert, he also served as director of fundraising on Ron Paul's 2008 presidential campaign. Follow him on Twitter @jbydlak and @Reduce_Spending.