The United States has now reached the $31.4 trillion debt ceiling set by Congress, according to Treasury Secretary Janet Yellen. This means that without congressional action to either suspend or increase the debt ceiling, the federal government will lack the legal authority to borrow any more money to meet its financial obligations.
The Treasury Department can buy a few more months before the country can no longer pay its bills and goes into default by employing some accounting maneuvers that it likes to call “extraordinary measures.” But by June or so, the nation will run into a fiscal brick wall.
“The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. government months into the future,” Ms. Yellen said. “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
The $31.4 trillion national debt the U.S government already owes is at a record high. The federal government debt-to-Gross Domestic Product (GDP) ratio for 2022 was 129%, which means that the United States government owes significantly more than the annual economic output produced by the entire country.
The massive emergency spending on COVID relief coupled with the shutdown of virtually the entire economy during the height of the pandemic caused the federal government debt-to-GDP ratio to jump from 107% in 2019 to as high as 129% in 2020. But even with the pandemic in the rearview mirror and the rebounding economy that President Biden is so fond of bragging about, the debt-to-GDP ratio was the same 129% in 2022, according to Trading Economics. And Trading Economics is forecasting ratios of 133% and 134% for 2023 and 2024 respectively! Chalk up the fiscal mess in which we now find ourselves to the reckless spendthrifts in the Biden administration and the last Democrat-controlled Congress.
We are on an unsustainable trajectory towards even more stratospheric total debt levels and debt-to-GDP ratios if nothing is done to reverse the current rate of deficit spending.
Yet the Biden administration expects Congress to just roll over and either suspend or increase the debt ceiling with no strings attached. Both the Biden administration and congressional Democrats refuse to negotiate with Republicans to place any brakes on the runaway spending that has accelerated since President Biden took office.
Fortunately, the Republican House majority will not roll over. They have had it with the annual ritual of passing huge omnibus appropriation bills unveiled by congressional leaders at the last minute, which the leaders expect the rank-and-file to approve sight unseen. It is time to restore the “regular order” process for budgeting and appropriations under which the House carefully considers each spending bill one at a time before approving the bill and sending it on to the Senate.
Without steep spending cuts and major reforms to the budget and appropriations process, the House Republican majority is prepared to say no to suspending or increasing the debt ceiling.
“I think it is reckless and wholly irresponsible to just increase the line of credit without adding guardrails and fiscal reforms of all kinds to begin restraining the spending and bending the debt curve,” Texas Republican Representative Jodey C. Arrington, the incoming chairman of the Budget Committee, said. His colleague, Missouri Republican Representative Jason Smith, chairman of the Ways and Means Committee, said that “President Biden should be spending this time working with House Republicans to address the debt ceiling in a way that imposes some fiscal sanity.”
President Biden talks a big game about his willingness to reach across the aisle and pursue bipartisan solutions to national problems for the benefit of the American people. Taking real action to finally get a grip on the dangerous, record high national debt provides just such an opportunity. But President Biden chose instead to go into campaign mode and attack Republicans as “fiscally demented.”
President Biden repeated his attempt to take credit for the previous year’s reduction of the budget deficit “by $350 billion,” a meritless boast that led the Washington Post previously to award him “Three Pinocchios.” This president, who has presided over decades-high inflation triggered in large part by Democrats’ reckless spending, then took an undeserved victory lap for the “$1 trillion-plus” reduction in the deficit this past year. A fourth Pinocchio should be on the way.
President Biden personally had little to do with these lower deficits, which occurred mostly because of the expiration of certain special relief measures enacted during the height of the COVID-19 pandemic and the reopening of the economy. Biden and the previous Democrat-controlled House and Democrat-controlled Senate made the deficits worse than they would have been without their spending sprees. Let’s not forget the $1.9 trillion American Rescue Plan Act, the $738 billion Inflation Reduction Act, the $1.7 trillion omnibus appropriations bill that President Biden signed into law last December, and Biden’s student debt payment pauses.
The Manhattan Institute’s Brian Riedl noted that we could be looking at a deficit exceeding $3 trillion within a decade, with rises in interest rates making things worse.
“Attacking Republicans, calling us ‘fiscally demented’ while Washington Democrats spent at historic levels during the Biden administration to fund their Green New Deal and other liberal priorities is hypocritical,” Texas Republican Rep. Ronny Jackson said in response to President Biden’s smear. “The new Republican House majority is dedicated to improving the lives of the American people by lowering taxes, balancing the budget, and working to get our country out of debt. Meanwhile, the Biden Administration is dead set on putting America LAST!”
The Republican House majority can start getting the ball rolling by demanding rollbacks of the more than 7,200 pork barrel earmarks, euphemistically known as community project funding. This move alone could save taxpayers as much as $15 billion.
Here is some more low-hanging fruit in the omnibus appropriations law that the Republican House majority can demand be pruned away as a condition for even considering an increase in the debt ceiling:
Eliminate the $575 million for “family planning/reproductive health” in areas where population growth “threatens biodiversity.” As North Carolina Republican Representative Dan Bishop said, “Malthusianism is a disturbing, anti-human ideology that should have ZERO place in any federal program.”
Get rid of the woke equity, inclusion, and diversity programs that will cost taxpayers too many millions of dollars.
Remove the $410 million allocated towards enhanced border security for Jordan, Lebanon, Egypt, Tunisia, and Oman. Any money set aside for enhanced border security should be used solely to secure the U.S.-Mexico border. However, protecting Americans from the flood of illegal immigrants and deadly fentanyl smuggled across the border would require repealing an outrageous provision in the omnibus appropriations law. This provision, which needs to go, currently prohibits acquiring, maintaining, or extending border security technology and capabilities, “except for technology and capabilities to improve Border Patrol processing.”
Bolstering border security capabilities to keep as many future migrants as possible from illegally entering the country should be America’s first priority. Certainly not admitting hordes of illegal immigrants and then spending many millions of dollars to improve the processing of their release into communities across the country, as the Biden administration has done. While they are at it, the Republican House majority should also insist on amending the omnibus appropriations law to close the immigration law’s most egregious asylum loopholes.
There are undoubtedly many more opportunities for spending cuts in the omnibus appropriations law for 2023 without touching Social Security or Medicare. But cutting individual expenditures alone this year is a band-aid solution to a much deeper problem – the lack of an effective structural appropriations mechanism to enforce fiscal discipline.
Republicans have promised to put forward a plan to balance the budget in 10 years. We have seen all kinds of deficit reduction plans before, which ended up going nowhere. Sequestration, which entails the automatic reduction of spending within broad non-exempt budget categories by a uniform percentage if appropriations exceed a fixed cap, has had little practical effect on restraining deficit spending.
One potential idea would be to set a target federal government debt-to-GDP ratio which, if exceeded, would automatically trigger mandatory discretionary spending reductions. Representative Brian Fitzpatrick, the Republican co-chair of the bipartisan Problem Solvers Caucus, made a suggestion along these lines during an interview on Fox News Sunday, which also included Problem Solvers Caucus co-chair Democratic Representative Josh Gottheimer.
The goal should be to reduce the federal debt-to-GDP ratio below 100% as quickly as possible. What the set ratio should ultimately be, the time allowed to reach it, and whether ratio milestones along the way should be established that must be satisfied to avoid mandatory spending cuts would need to be worked out. Waivers, if any, should require a two-thirds supermajority approval in both chambers.
Other proposals are sure to emerge. Some ideas for restraining spending and getting control over the federal government debt will make more sense than others. However, if President Biden refuses to negotiate anything meaningful to reverse the current trajectory of out-of-control deficit spending and the exploding federal government debt, the resulting fallout from a showdown leading to default will be entirely on him.