“The Congress shall have Power…To borrow Money on the credit of the United States.”
-- U.S. Constitution, Article I, Section 8
Last week, Treasury Secretary Tim Geithner delivered President Obama’s wish list for fiscal cliff negotiations to Congress. Among other things, his proposal would make permanent the President’s ability to increase the debt limit on his own, with Congress having the ability to vote to disapprove the increase. This would essentially accomplish the idea that Secretary Geithner expressed in November, that the U.S. should eliminate the debt ceiling entirely.
History of the Debt Limit
Congress has always had control over the issuance of federal debt. Even before the debt limit was established in 1939, Congress authorized each debt issuance, often for a specific purpose. For example, P.L. 57-183, passed in 1902, authorized debt issuance for construction of the Panama Canal. Since 1939, Congress has controlled borrowing by raising the debt limit when necessary.
Why the Debt Limit Is Necessary
The debt limit is the method Congress has chosen to exercise its constitutional authority to borrow money. Congress has always controlled the issuance of debt – the general debt limit is simply a more efficient way of borrowing than requiring Congress to authorize every new Treasury auction.
By exercising its constitutional authority through a debt limit, Congress allows itself a moment of reflection to consider the policies that have led to the current debt and consider reforms that will decrease future debt trajectory. From 1940 until passage of the Budget Control Act, debt limit increases averaged one every nine months. Many of the past debt limit increases have been for short durations. Frequent debt limit increases provide a good opportunity to cut spending and restrain the growth of our debt.
Congress Should Guard Its Constitutional Authority
The Obama debt limit proposal is “an unlimited, unchecked authority to borrow from the Chinese.” -- Senator Orrin Hatch, December 1, 2012
President Obama has proposed that Congress delegate its constitutional authority to borrow money to the executive branch. Doing so would remove the last action-forcing mechanism to address our nation’s runaway debt. The best mechanism for addressing fiscal problems – a budget resolution – has not been passed by Senate Democrats since 2009. Also, neither congressional Democrats nor President Obama have proposed any meaningful entitlement reforms that would bring future debt down, even though President Obama has been legally required to submit a Medicare plan for every year of his presidency.
Congress should not throw away the last option for forcing solutions to the pressing fiscal situation our country faces.