One of the first items of business for the 112th Congress, and one of the first tests of those conservative leaders touting fiscal responsibility, will be a vote to raise the federal debt limit beyond its current mark of $14.3 trillion – a ceiling the government is expected to hit within the next few months.
The U.S. is unable to accumulate debt beyond the limit agreed to by Congress. If the amount of debt exceeds its respective ceiling, the government runs the risk of defaulting on financial obligations both here and abroad. Given that $14.3 trillion is a number almost too big for anyone to comprehend, allow me to further detail the severity of the issue at hand.
According to the Wall Street Journal, failing to raise the debt limit would “have a destabilizing effect on global markets” since the government wouldn’t be able to pay its bills. The U.S. has come close to defaulting three times in the past two decades, but Congress has never (ultimately) failed to raise the limit when necessary. In the 1990s, there was a standoff between Treasury Secretary Robert Rubin and House Speaker Newt Gingrich over the debt ceiling. While the cap was ultimately raised, there was a brief government shutdown and the Clinton Administration warned that the government might stop sending social security checks.
This will inevitably be a difficult vote for many of the incoming freshmen who largely won their races by promising to fight the big spending policies of the Obama Administration and current Congress. The debate is expected to be heated, but I hope that conservative Members will use the debt limit vote as leverage to push hundreds of billions in spending cuts. While Democrats still control the Senate, it’s much easier to introduce amendments in that chamber, and their shrunken majority could make it easier for some amendments to pass. Last year, Senator Tom Coburn introduced an amendment to the debt limit resolution that would have rescinded $120 billion worth of wasteful, duplicative programs, and he has already said that he will offer a similar measure this year. In the House, Republicans should utilize their new leadership role to ensure that good amendments hit the floor for a vote.
There are many who argue that raising the debt limit will reassure creditors and boost investor confidence but, in reality, it does just the opposite if the U.S. government can’t prove to those creditors and investors that it's taking significant strides to get our debt under control.