Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
In Praise of the Debt Ceiling
Todd P. Steen
July 29, 2011
by Todd P. Steen
The United States is one of the very few countries in the world that has a debt ceiling. The time when our level of debt approaches the ceiling is typically a period of bluster and political wrangling that quickly is forgotten after the ceiling is increased (it has been raised ten times in the last ten years). For example, then-Senator Barack Obama (as well as every other Democratic senator) voted against an increase in the ceiling back in 2006, citing his principled opposition to raising it. This year, he has suggested that raising the ceiling is one of the most important things that we have to do as a nation. This change of face on the debt ceiling is so common among politicians in both parties that President Obama's reversal of position barely garnered a second glance.
As a result, the debt ceiling is often seen as anachronistic, useless, or worse. Moody’s, the international credit rating agency, has called for the United States to abolish the debt ceiling altogether. This year, however, the debt ceiling has played a very useful role: it has forced a discussion on the fiscal future of our nation. Does anyone believe that our government would be talking about beginning to bring our fiscal house in order this summer if the debt ceiling limit wasn't upon us?
Currently the federal government is borrowing around forty-three percent of every dollar that it spends. According to the “alternative fiscal scenario” projections (those seen by many as the more realistic) by the nonpartisan Congressional Budget Office, the national debt held by the public will exceed our GDP by the year 2021; by 2035 it will be at 190 percent of GDP. Clearly this amount of debt is unsustainable. What do we do?
As we examine the implications of public justice regarding the negotiations over the debt ceiling, we must be careful not to define justice solely with regards to the situation of our current generation. This mistake has led us to overemphasize current conditions at the expense of the future. We have come to believe that we can justify limitless borrowing to provide additional health care, defense spending, retirement provision, and lower tax rates. Running a budget deficit every year, however, whether the economy is growing or in recession, steals possibilities from those in the future, especially from the poor. Interest payments become an ever increasing part of future budgets, crowding out choices for future generations.
Currently just under half of the population pays no federal income tax at all, and federal income tax rates are capped at thirty-five percent. Nearly twenty percent of all personal income comes in the form of government assistance. Will those luxuries be afforded to our citizens twenty years from now? Probably not. Loving our neighbor as ourselves can not involve stealing from our and our neighbor's children. Public justice in fiscal matters cannot mean handing off the bill for current expenditures to our daughters and sons.
Twenty years from now, will our children look back at our actions and praise us? Will they say that we were good stewards, and that we acted justly with regard to their interests? Or will they be like the young people in Greece and Portugal, who perceive that they have no future and no hope, in whose countries discussions of justice have been superseded by the difficulties of debt management.
One would hope that good financial stewardship could be accomplished voluntarily without the requirement of legal statutes to make it happen. Unfortunately, in our sinful world, we find that is not always the case. As our political dialogue grows more heated and our political system becomes more fractured, legal requirements such as the debt ceiling, hard caps, or balanced budget requirements (with all of their foibles) may be more necessary than ever.
I am confident that some agreement on the debt ceiling will happen before the impending deadline. I am also confident that many of our nation's most serious fiscal problems will be kicked down the road some more, to be left for future generations to handle.
—Todd P. Steen is Granger Professor of Economics at Hope College, Holland, Michigan, and serves as managing editor of Christian Scholar’s Review.
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”