The Debt “Ceiling” is Unconstitutional

You missed the point.

Think about the situation when you buy a home. You make that purchase based on your ability to make mortgage payments.

If you then stop earning income, you will be in trouble.

With the USA, we bought the conquest of Iraq and Afg, we bought an absolutely GIGANTIC military (far more than can be rationally justiied), we bought a faster COVID recovery, we bought faster recovery from the 2008 crash, we bought healthcare for those who don't have the income required by our healthcare system, etc., etc.

THEN, we cut our revenue. In fact, we cut the revenue from the wealthiest among us.

When we cut that revenue, we had ALREADY bought those other things.

Now, McCarthy doesn't want to pay for it.

With your house, you could sell it and go live within your new much lower income.

But, what the USA has purchased can't be returned for cash like that. We can't take Iraq to the "returns" counter.

 

Sorry. Once again, we as a federal legislature agreed to spend that money.

We can't now take it back to the "returns" counter or put it on eBay.

What we CAN do, is pay for it like we agreed to do when we made the purchases.

 

Nope. Having America default on our debt has MAJOR serious long term ramifications.

 

Correct. However the path on which the government travels now will cause even worse "major serious long term ramificationa." If default is the only way to get spending under control then it is a benefit despite those ramifications. Nothing else has caused federal government to practice good fiscal policy. All they need to do to raise the debt limit is to pass the house bill. Default is on the senate now.

 

"We (you can exclude me from that) spent money without either having it available or borrowing it. We put a charge on our credit card with no certainty we could pay it in the future. Think about it. Your argument makes the fiscal policy look even worse. You and I can't do that. Government shoudn't be able to do that either.

 

When congress buys something on credit, how are they supposed to evaluate the possibility that the next congress is going to reduce our ability to make the payments?

We've made serious cuts in taxes. When we reduce revenue, our debt is going to be worse.

During the Clinton administration we had achieved a reasonable balance between what we spent and what revenue we were collecting.

Since then, we've spent huge amounts on stuff like conquering Iraq and Afg, and at the same time cutting the taxes of the wealthy among us.

THAT was not sustainable.

Even Obama allowed temporary tax cuts made for the purpose of addressing the 2008 recession into permanent reductions in our ability to pay for what we had already purchased.

Today, the wealthy have major influence on our congress, because it takes enormous amounts of money to get elected in our system It's no surprise that congress can not resist the pressure to cut their taxes. It's time we ended the legal purchasing of congress by those who have the wealth to buy it.

 

By borrowing it before they spend it. Duh.

The idea is to implement less spending.

That is a matter of opnion.

Then we shouldn't have done it because we couldn't afford it.

Where were the corresponding spending cuts.

So end it. I don't approve of it either.

 

The budget deficits, that keep adding to the debt, should also be eliminated.


If interest rates shoot up, the U.S. could easily find itself in a situation where 25% of all government revenues are going just to pay the interest on the debt.
Some people may not understand this, but that would be unimaginable. Right not even being able to cut the budget by 4% would be extremely painful and half the politicians would be screaming about how draconian that would be. Even Republican politicians would probably never be able to do that.

 

I think you have some misunderstanding.

The debt ceiling does not really take away authority from Congress.
Congress could still pass any budget they wanted, but they would also have to vote to increase the debt ceiling at the same time.

Congress could also just pass any budget they wanted by itself, but that would not translate into a meaningful budget if the Treasury does not have the funds to pay for it.

If Congress passes a budget, that would not automatically give the executive branch legal authority to collect extra taxes to pay for that budget, would it? So why would you think it would give them authority to borrow more money?

You can't just have Congress tell the government how much money to spend but not tell them where that money is going to come from.
Of course, if there is any savings in the general fund of the Treasury, they will automatically take money from that.

I suppose there is Constitutional question of whether the President is needed to sign a budget, but right now the routine answer to that is yes. So it is the same exact process and requirements to get a budget passed as it is to raise the debt ceiling.

 

You need to explain what you mean when you suggest that the government should do that.

Exactly what is it that you expect the legislature to do to account for individual program costs.

We also have to limit the idea that we can cut revenue AFTER having bought various products.

You can't borrow to buy a house and then quit your job.

The legislature determined that we could afford the bills they pass.

We decided to spend TRILLIONS on Iraq and Afg. We decided that money was no object. WE decided that.

THEN, we decided to cut revenue permanently!!!

Our legislature already decided what it was that we needed, and passed bills for that.

When the legislature (and presidents) then decided to cut revenue, they established NO process for determining what it was that we bought that will now not be funded.

And, for good reason. It's not like the legislature could decide NOT to have conquered Iraq or decided not to help people devastated by the 2008 recession, COVID, weather disasters, or decided to have a less gigantic military expenditure, etc. Those were all sunk costs. There was nothing to "take back to the returns counter".

 

Yes it is unconstitutional, though not for the reasons you lament. This crap had its beginnings under Gerald Ford. Ford as it happens veto ad at that time pork ladened interior. Congress proved unable to pass it over his veto. And from that time on instead of passing each government departments funding bill sep finding

What happens when the tax code is used more to modify behavior than to generate revenue.

 

I think any Constitutional issue is going to center entirely around whether the President's approval is required. Something that is a moot point in the current political situation.

Even under a strict interpretation of the Constitution, you still need both Houses of Congress to agree to pass a budget or to raise the debt ceiling.

Arguing it is a Constitutional violation is absurd. You would argue Congress could agree to pass a budget that spends more money than they have, but not be able to agree about raising the debt ceiling or raising taxes to pay for that?

If this were a Republican President standing in the way of raising the debt ceiling, you might have a point, but that is not the current situation.

 

Using the tax code to modify behavior is one of the better approaches we have.

Corporations and individuals can choose whether to work under the tax code or just pay the tax.

With regulation, the corporation doesn't have that choice.

 

The debt ceiling has been ineffective from the day it was established - regardless of the congress or the president.

The fundamental problem is that congress refuses to pay for those things that it already purchased.

Both Republican and Democratic congresses and presidents have done this, though Republicans are far more interested in the "not paying" aspect as they cut revenue by slicing the taxes paid by the rich and failing to go after their cheating that is costing hundreds of billions of dollars PER YEAR.

Republicans have even at times BRAGGED about starving the federal budget by refusing to pay for what they AGREED to buy.

When we spent TRILLIONS on the war in Iraq and Afg. we had NO rational justification for deciding not to pay for that - as one example.

 

If they want to spend money they don't have and need to borrow it, that should happen before they spend it, not afterward. You can't move into the house you borrowed to buy until you have the loan. You are the one trying to compare government to home mortgages.

Put an end to those that they can't afford. Not pass programs they can't afford. Pay attention to the 10th amendment. That sort of thing.

We have to limit the idea that unlimited spending is good for the nation when it is only good for votes for the spenders.

Of course you can but if you don't make the mortgage payments you may lose the house.

No they didn't.

You are suggesting I approve of spending trillions to defend other peoples' countries without any payment? Why is that? We have cut a little revenue. There is a long way to go.

Actually it decided that the spending would improve the congress people's chances of re-election.

You are trying to express to me that the government engages in fiscal irresponsibility? I've been trying to express that to you right along.

Yes they could have decided that way and should have. Fiscal irresponsibility again. Spending non existent money again. Another hammer blow to the future of the economy ---AGAIN! It should be illegal for federal government to provide money for individuals unless those individuals are on the payroll. Read the 10th amendment. That sort of thing belongs in the states, not the federal government.

 

No doubt about that. It is a game congress people play to insure they can spend to their heart's content. Perhaps they need to begin developing budgets.

Why should government be able to buy on credit without first securing the credit? It is a very bad idea.

Are you not aware that the house has already passed the raise in the debt limit in a bill? That was republicans doing that. The bill requires future spending cuts but that is a good thing, not a bad thing. Starving federal government appears to be the only thing that gets the attention of the professional spenders. The diet needs to be increased.

Rationality doesn't appear to apply to federal government. I'm surprised you don't know that.

 

You have to explain the exact accounting mechanism you want.

Today, it's well understood that stuff we buy decreases our ability to defray the national debt.

 

They DO secure the credit. The USA gets instant credit, essentially.

Again, you need to carefully identify exactly what you want your new system to be.

Maybe I'll agree if I knew precisely what you propose.

 

In my opinion, new credit can only be given if a law is passed. Otherwise it becomes a different type of credit. In a strict literal sense, one could say there are two types of credit, one approved by Congress, and one approved by law.
The Treasury is probably not going to act and issue actual notes, however, unless it is under the law (rather than vague Constitutional power).

To collect a new tax, I definitely think a law has to be passed. Congress can't just use its power to collect taxes to imprison someone outside the law.

 

Every bill that passes carries an understanding of how it is to be paid.

I think one of our main problems is that by whatever means, we AGREE to buy things. THEN we refuse to pay for what we purchased - by cutting revenue, etc.

 

If Congress sets a budget, why can they not also approve the means to finance that budget at the same time?

If Congress only just approved a budget, and assuming the Treasury has no savings, that does not automatically imply where the money is going to come from.

 

That is simply not true.

I could see four potential sources where money could come from. You can't pass a budget without telling where the money is going to come from.

Savings, taxes, borrowing, print more money

Savings would be the only obvious implication, I would think. (Assuming there are no laws attached to and restricting that savings account)

And you just can't collect more taxes without passing a new law, if a previous law prevents it. That would be threatening to put people in prison.

 

You have to say how they are going to do that.

Today, most spending comes out of the general fund. And, the general fund is paid for (in part) by taxes.

There isn't a mechanism for tracking each legislative change down to the piece of taxes that applies. Even if that were possible, it would be massive bookkeeping.

Plus, I don't see how that would change the efforts made by Republicans to cut our revenue.

 

No, it absolutely is true. Legislative expenditures come out of our general fund.

At the outset, we made a special fund for the Iraq and Afg wars, but that got folded into the general fund.

>> People do not like having the federal government taxing them and then putting that money in savings. And, I don't blame them.

 

The trouble is the amount of money in the general fund is negligible, and is a moot point in this argument.

Sure, for the sake of argument, and to make this simple, I'll concede Congress has the right to take all the money they want out of the general fund--all the money that's actually in there.