Congressional Chicken or Egg?
The Democrats (and some others) have been screaming for all the country to hear that the upcoming debt ceiling vote should not have to be. After all, once Congress passes a law that involves paying for something, and the President signs it, the country has an obligation to “pay its bills”, right?
Wrong. This rationale is utter nonsense, as Congress has the sequence of events exactly backward. If Congress passes any law that would have the effect of increasing the country’s debt above the plainly existing (for all to see) debt limit, and has not first dealt with the obligation of how to get the debt ceiling increased so that the bills could be paid, Congress and all the members who have voted for those bills have abrogated their fiduciary responsibility.
For more than 100 years until WWI, Congress was obligated under law to approve each spending measure that resulted in accrued debt. Bonds were either approved or not approved, which kept spending and debt limits in check. That procedure is no longer in affect today. That is unfortunate.
For those who advocate for an unlimited debt ceiling, one should place their same arguments in an individual or business context. For instance, if a family only has $1,000 of available cash reserves, and for some reason commits itself to spend $1,200, where does the blame lie? And from where does the extra $200 come? And should that family have a continuous, open-ended stream of money to spend as it sees fit? Or look at it from a business perspective — every business wants to spend to succeed. However, without the prudence and final decisions of the Chief Financial Officer who is obligated to operate under yearly and long-term budgets, the business runs the risk of swiftly becoming insolvent.
The same common sense should be applied to Congress as it once was. Do we spend before we know how we are going to pay for it, or do we know how we are going to pay for it before we spend? Let’s please get our sequence straight and financial house in order.
Crossposted at alanjoelny.com