Hello! Hello! Hello! Welcome to episode lucky 13…

I’m going to start today with a story. Please bear with me; I promise to get to a point.

Imagine there is a credit card. It must be paid annually, and if it isn’t it stops working. It belongs to your parent, and they are responsible for the payment. But this parent is elderly and sick. They can no longer take care of themselves, and this card covers all their needs. You and your sibling both have access to this card and each pay half of the bill. The card has no limit, other than the limit you and your sibling decide. 

You agree with your sibling on the maximum amount that can be charged. Both you and your sibling are often reckless spenders. You buy your parent more expensive things and occasionally buy yourself something nice. One or both of you are always spending more than the self-imposed limit. You both give each other a hard time when you spend on yourselves, but for the most part, look the other way. 

You and your sibling share the responsibility for taking care of your parent’s needs. The bill is always much higher than the agreed-upon limit. Typically, you both agree to pay the higher amount and move on. You are both responsible for the reckless spending, after all. 

Occasionally (usually when they have had less time to help with your parent) your sibling says they won’t pay for it. They make the argument that it doesn’t take that much to take care of your parent. They point out everything you bought for yourself. They ignore the things they bought for themselves.

As the due date gets closer, you worry that you won’t be able to pay the bill. You know that if you can’t pay the bill, your parent’s rent, medicine, food, and utilities can’t be paid. You and your sibling argue, and it isn’t until your parent has been evicted that they finally agree to pay their half. 

No, this isn’t an episode of the twilight zone or a setup for a math problem. This is a very real situation we end up in all too often. This argument consumes the nation too often when we have a divided government. 

This is the fight over the debt ceiling. 

First, let’s talk about what the debt ceiling is. 

The debt ceiling (or debt limit) is a limit to the amount of money the federal government can borrow to pay its debts. It is Congress’s responsibility to determine the debt ceiling. This borrowed money isn’t used for new spending. This borrowing is to cover money already spent.

This covers obligations like Social Security, Medicare, and veteran benefits, among many others. In other words, it is money that we owe no matter which party sits in the White House. 

Congress first created a debt ceiling in 1917. It was a compromise during World War I. It authorized bond sales to support the war effort. In 1939, a debt ceiling more akin to what we know today passed. It was in anticipation of entering World War II. The original limit was $45 billion. From this point forward, it became more or less routine to raise it when necessary.

Since 1960, this limit has been raised 78 times . A Democrat-controlled White House has been responsible for 29 of those increases. A Republican-controlled White House has been responsible for 49 increases.

Fast forward to more modern politics. Ronald Reagan campaigned on lowering the debt. During his time in office, the debt ceiling increased more than a dozen times and reached $2.8 trillion. Under Bush Sr., it increased to $4 trillion. Under Clinton, it reached $6 trillion. Under W. Bush, it moved up to $11 trillion. Under Obama, it became $18 trillion. Under Trump, it was raised to $22 trillion. Currently, it sits at $31.4 trillion, a number we hit on January nineteenth. 

You may be wondering why every time this happens it’s such a big deal. Why does this matter to me? Before I answer that question on a more political level, go back to the earlier example I provided. What happens when the credit card isn’t paid? More simply put… 

What happens when you don’t pay your bills? 

When you or I don’t pay our bills, you get some very angry creditors. You might be evicted from your home. You might have your car repossessed. Your phone may be cut off. You may not be able to eat or buy clothes. You may have to forego needed medical treatment. You may even go to jail. At the very least, the interest grows and you owe exponentially more than you did before. That’s not even considering if you owe money to less scrupulous people. 

When the United States doesn’t pay its bills, it affects the world. As a quick aside, let’s talk about how the federal government handles money. This is a bit convoluted, but I’ll try to make it quick. The Budget is an annual process beginning in November or December. This budget is for the following fiscal year (beginning October 1st).

It is important to note that Congress has what we call the “power of the purse.” Specifically, the Constitution assigns the House of Representatives responsibility for appropriating government funds. 

Article 1, Section 7, Clause 1 states: “All Bills for raising Revenue shall originate in the House of Representatives.” 

Article 1, Section 9, Clause 7 states: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law…”

This doesn’t mean that the Senate or even the President doesn’t play a part. The Senate may propose amendments and must also vote to approve it. The President has no Constitutionally mandated role other than to sign or veto the bill. However, the budget process has evolved over the 200+ years we have existed. The Budget and Accounting Act of 1921 changed the President's role. It tasked the President with submitting an annual budget to Congress.

Originally, the President had to submit it by the first day of each Congress’s regular session. Title 31 defined it more specifically. Title 31 is a code created by the Bank Secrecy Act of 1970. An update in 1982 gave the President a window. This window begins on the first Monday in January and ends on the first Monday in February. In 1986, an act passed requiring Congress to pass a budget by April 15.

Here is where it starts to get convoluted. The President may miss their deadline. Congress may miss their deadlines. Sometimes they blow well past their deadlines. Sometimes we don't pass a budget. This is when we end up with what are called “continuing resolutions.” As the name suggests, these continue funding at a previous year's level. These are temporary until a budget can be passed.

The budget includes mandatory spending, discretionary spending, and debt interest payments. Mandatory spending far exceeds discretionary spending. The only difference between the two is the way the bills authorizing them are written. It is not an indication of importance, but much of the mandatory spending is very important. It includes social security, Medicare, veteran disability compensation, and many others. 

Suffice it to say the budget process is complicated. 

Armed with that knowledge, I’m hoping it will be easier to understand the debt ceiling. So, let’s talk about what happens when we crash into the debt ceiling. When the debt ceiling is reached, our government has, for all intents and purposes, run out of money. I know, that sounds ridiculous but that is in essence what has happened. When we hit the debt ceiling, we have spent or borrowed more money than Congress allows. This ceiling is determined by a literal Act of Congress.

I hear you. “Blah, blah, blah… why does this affect me? Why should I care?”

Once the debt ceiling is reached as it was on the nineteenth, we are still responsible for our debts. The US Treasury must find a way to pay its bills. To ensure we do not default on our debts, they begin what is called “extraordinary measures.” Sadly, “extraordinary measures” haven’t been as extraordinary as they should be.

Let me try to explain “extraordinary measures.” Imagine your household runs out of money for the month and you still have a week before your next paycheck. You need gas to take the kids to school and you to work. You need food. You need to pay the electric bill. So how do you make it to the next month? 

First, you check the couch cushions and all the pockets in your dirty laundry. You begrudgingly pull some money out of your kid’s college fund. With that and the few dollars you still have in your bank account, you make a plan. You put eight dollars of gas in the car, just enough to get where you need to go if you don’t run the heat. You head to the grocery store with your coupons. You buy ramen, sandwich meat, a loaf of bread, and hotdogs (sliced bread will have to do for buns). This should get you through the week. You pay half the electricity bill. Then you pray they don’t turn off the electricity in the three days it will take between the due date and payday.

You rob Peter to pay Paul. Unfortunately, this is something most of us are all too familiar with in today’s economy. 

This is what “extraordinary measures” are, except on a trillion-dollar scale. Once we hit the debt ceiling, it is the responsibility of the Treasury to find ways to pay debts for as long as possible. According to Treasury Secretary Janet Yellen, that “as long as possible” is early June. 

So, what does the federal government’s version of robbing Peter to pay Paul look like? The Treasury ceases investments into different government funds. This includes government employee retirement plans, and health plans for retired postal workers. They also move money between different government agencies. This ensures things like retirement, healthcare, disability, social security, and Medicare benefits continue.
The catch is that once the current debt crisis ends all that money must be put back. 
When it’s all said and done, this is the best-case scenario once we’ve hit the debt ceiling. So now let’s look at what happens if we hit early June and Congress is still working to screw the People. What happens when the government runs out of money and funds to rob?

If that happens, the government will be unable to pay its debts and will go into default. Fortunately, this has never happened. Unfortunately, there is always a first time for everything. Here is what it would mean:

	Tax returns would not be issued. 
	Social Security payments would stop.
	The military would not be paid.
	Federal employees would not be paid.
	Veteran pensions and disability compensations would stop. 
	Millions on food assistance programs would go hungry. 

These are just a few of the things what would happen in the United States. Unfortunately, a default on US debt could be catastrophic for the world as well. 

The US dollar is the world’s most dominant reserve currency. Central banks keep the US dollar in large quantities due to its relative stability. Like the Lannisters from Game of Thrones, the United States pays its debts. If we didn’t, the results would reverberate around the world. 

The current state of the world following Covid is tenuous at best. Inflation is rampant around the world. We are still suffering from supply shortages due to the pandemic. We’ve seen an increase in natural disasters and unpredictable weather events. We have watched as Russia invades Ukraine. All these are straining economies around the world. A sudden drop in the value of the dollar and the loss of US investments? Both could cripple even the strongest governments.

In the longer term (or sooner, depending on the economist you listen to), the affect would be even worse. A default would lead to a downgrade of the US’s credit rating. In 2011, there was just a hint that we might default, and our credit rating was downgraded from AAA to AA+. Who knows how much an actual default would affect us?

This matters because it means that borrowing money in the future will cost us even more. Lenders would have less faith in our ability to repay and would charge us higher interest. Loans and investments secured by the US dollar would become worthless and cost more. It might even lead to a movement to remove the dollar as the dominant currency in the world. This would make trade much more expensive for us. We would have to convert our currency to engage on the global market. 

I haven’t even talked about how things would get worse here in the United States… 

	Stock prices would drop drastically affecting retirement accounts and savings.
	Millions of jobs would be lost driving the unemployment rate up.
	Interest rates would rise, affecting car loans, mortgages, credit cards, and business investments. This is in addition to the inflation we are already experiencing. (That would also increase drastically, by the way.)
	We would see a shrinkage in our GDP. In 2021, it was estimated that this could be up to four percent. The targeted annual growth rate for the GDP is two to three percent. A default would effectively wipe out two plus years of growth. 
	The inflation so called “soft landing” that economists hope for would be out the window. We would be plunged into a recession worse than 2008.

We would feel the repercussions of a default for generations.

Now in the interest of full disclosure, we don’t know the full extent of what would happen. Fortunately, we have never gotten that far. We do know that it wouldn’t be good, and it would absolutely make things worse than they are now. I don’t know about you, but I’m not sure we would survive a worse financial situation than we are in now.

You may be thinking to yourself, “if it’s this important, why is this even a discussion?” Or you may be thinking, “I have to pay my bills. Why doesn’t Congress?” Like most things in Washington, it comes down to partisan politics. 

Why do we risk default on the debts of the United States? Why do we risk an economic disaster on par or worse than the Great Depression? Why do we risk the People’s government to play partisan games?

Look no further than this comment from Republican representative Chip Roy of Texas. “Look, you only have so many leverage and negotiation points. The debt ceiling is one of those.”

No, Congressman Roy. The debt ceiling is not leverage. It is a roadblock to our responsibility as a nation to pay our bills.

It is not leverage to get legislation passed. It is not leverage to get one over on the other party. It is certainly not leverage to hold the People hostage so you can play partisan games in Washington. 

The time to debate the debt ceiling is before the budgets are passed. Once the budget is passed and the money appropriated, you have missed your chance to change it. If you don’t have the votes to change the budget, make your case to the People and get more like-minded people elected. Until then, do your job and protect the People from default. 

These partisan games in 2011 already cost our nation its AAA credit rating. The Government Accountability Office says this increased borrowing costs by $1.3 billion. In 2013, the debt limit standoff cost the People between 40 and more than 70 million dollars.

This time of partisan games played to the detriment of the American People MUST come to an end.

You may be saying to yourself: 

“They are only trying to get government spending under control. What’s wrong with that?”

Even if that was all it was, it would not be appropriate. The debt ceiling is about money already spent. The debt ceiling is about paying money already owed to the People. Raising the debt ceiling is a component of the general welfare of the American People. 
But we know that isn’t the case. I already told you that since 1960, the debt limit has been raised 78 times. Among those 78 times, not including this year, we have had three what we would call “debt ceiling crises.”

They took place in 1995, 2011, and 2013. 

In 1995, Congress failed in their duty to pass a budget and a debt ceiling increase before the new fiscal year. The House Speaker was Republican Newt Gingrich. He demanded spending cuts from Democrat President Bill Clinton’s proposed budget. The impasse led to two government shutdowns. The standoff finally ended in January of 1996 when the budget passed, and the debt ceiling raised. 

In 2011, the House Speaker was Republican John Boehner. He demanded deficit reduction from Democratic President Barack Obama. After six months of tense negotiations, they reached an agreement. What did we get for our trouble? A lower credit rating and less than effective sequestration legislation. We were told this legislation would prevent this from happening again. It didn’t. 

Many consider the 44th president’s decision to negotiate the debt ceiling a huge mistake. Some equate it to negotiating with a terrorist.

In 2013, we get a rematch of Obama versus Boehner. Again, the fight was about spending reduction. This time, the targeted programs included Medicare and Social Security among others. Their biggest bugbear was the Patient Protection and Affordable Care Act. Republicans hoped to defund it into nonexistence . A deal was reached, but not until a government shutdown sent 800,000 Americans on unpaid leave for two weeks. After several months of political theater, they suspended the debt ceiling until 2015.

Now we face a new debt ceiling standoff.

In the red corner, weighing in at 17 years of government obstruction: Speaker Kevin McCarthy. In the blue corner, at over 50 years of government obstruction: President Joe Biden. 

Again, Republicans want to cut discretionary spending but without touching defense spending. In case you don’t realize it, defense spending is the largest portion of discretionary spending (nearly half). It is impossible to reach Republican spending demands without reducing defense. That is, unless we also cut into mandatory spending. 

Do you see? Do you see the pattern? Republicans control the House and Democrats control the White House. Forecast: Debt ceiling crisis likely. It is nothing more than political grandstanding at its worst. 

No, before you ask, it isn’t that it never occurs when the opposite is true. In 2019, Democrat Speaker Nancy Pelosi worked with Republican President Donald Trump. They reached an agreement, without drama, to suspend the debt ceiling until 2021. 

It also doesn’t mean that one party is morally opposed either. Republican Speaker Paul Ryan raised the debt ceiling in early 2017. He then suspended it later that year. On a related note, the national debt increased by nearly $8 trillion under the 45th President. With that, and outrageous tax cuts for the wealthy, it was obvious the debt wasn’t the Republicans’ concern.

The outrage over spending is nothing more than political spin. It is only the beginning of an argument to cut Social Security, Medicare, and other social safety nets. These programs represent the last vestige of a government For the People. 

You are probably asking yourself what the answer is. Do we let these fights occur every few years throwing government into turmoil? Should we permanently suspend the debt ceiling, so we don’t have to worry about it? 

Let me start by saying that I do not support permanently suspending the debt ceiling. That just isn’t the answer. It could lead to runaway spending. But we also cannot continue down the path we are on. The negative impact on the People, the world, and our economy is not sustainable. At some point, something will break. The credit downgrade in 2011 was just the first symptom of a much larger affliction. If we ever default, that will be a genie we can never put back in the bottle.

The only question is: “will it break this time or the next?” The way we are going, it’s not a question of if; it’s a question of when.

I don’t know about you, but I do not feel confident in a House of Representatives that took 15 rounds to elect a speaker. That hasn’t taken more than one round of voting since before the Civil War. 

If we can’t suspend the debt ceiling, what can we do? If deficit spending is the problem, how do we fix it? If adding debt is the concern, how do we ease it?

First, I would connect the debt ceiling to the budget. All budgets should require addressing the debt ceiling at the time of passage. Before a budget is even introduced to Congress, an army of experts have reviewed it. That is the role of the Congressional Budget Office and the Office of Management and Budget. They have worked out how much it will increase the national debt. There is no excuse for it to not be included in the budget bill when necessary. 

From 1979 to 1995, the “Gephardt Rule” deemed the debt ceiling raised when a budget was passed. It has been a controversial rule that has come and gone depending on who controls the House. It should instead be enshrined as a law. This ensures these issues are addressed before money is appropriated. 

If you are truly concerned about deficit spending, we need to take a look at our defense budget. As a veteran, I understand the need for a strong military, but we all know much of our defense spending is bloated. There is a reason we joke about million-dollar toilet seats. We spend more on defense than China, Russia, France, Germany, and five other countries… combined. We need to look at how much we spend on contractors and equipment that is obsolete before it is delivered.

If adding to the debt is your concern, this is the simplest fix of all. We need to increase taxes on corporations and the wealthy. This will ensure government programs are paid for. It also opens avenues to better ensure the general Welfare. This way we borrow less while also ensuring better quality of life for ALL Americans.  

There is also a little more controversial solution. There is an argument that the debt ceiling is unconstitutional. This is based on the fourteenth amendment, section four:
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

It continues in section five:

“The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.”

Section four seems to invalidate the debt ceiling because it denies the validity of our debt. The argument to the contrary is that section five states that it is up to Congress how to deal with it.

Section four also states:

"But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the Unites States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

It has been argued that this section of the 14th amendment was designed to prevent this very problem. This was a time of heightened partisan politics, much like we experience today. This amendment's language was chosen to prevent partisan hijacking of monetary policy. The perennial debt crisis is nothing more than a hijacking of monetary policy.

The debt ceiling is indeed a crisis . It is a crisis of partisan origins. For most of our history, the debt ceiling has been a matter of routine. The last thirty years have changed the process. We have seen a dangerous increase in partisan grandstanding over it. 

We must stop listening to the propaganda. We must understand that this crisis is a crisis only because partisan politics tells us so. We must realize that this crisis has an easy solution, even if it doesn’t offer a stage for political theater. That is all the debt ceiling is: a stage for partisan politicians, when not in power, to stand on and beat their chest. It’s a theatre for them to demand something they ignore when they are in power. It’s a way to make the People think they are doing more than yell. 

If they were working for the People, they would ensure the debt ceiling wasn’t a problem when the budget was passed. They wouldn’t wait until it’s too late and then make a political show out of it.

This is our political system in a nutshell: 

1.	Create a problem by inaction.
2.	Stand on your soapbox and blame the other side.
3.	Convince the American People that the other side is evil because they disagree with you.

They get nothing of substance done, but hey, they get reelected. After all, that’s what’s important, right?

Sadly, until We the People decide we want more from our politicians than seat warmers, it is. 

We must embrace our power. We must recognize and understand the reason we vote the way we vote. We must stop believing our only choice is a politician with an R or D after their name. 

Until then, nothing will get better. Until then, politics will stay ugly. Until then, our government will remain dysfunctional. 

We can make a difference, but only if we are dedicated and work together.

We the People are the Power.