As Washington nears yet another debt ceiling crisis, it’s worth pondering why the U.S. has a debt limit in the first place. It’s a good question. While I am not wholly settled in my opinion on the matter, I think some commentators have been too quick to dismiss the debt limit as anachronistic (or worse).
Let’s start where I think there is widespread agreement (at least off of Capitol Hill): Congress should not appropriate funds without providing for the necessary revenue. So far so good. At this point, some argue that the problem with the debt ceiling is that it requires two votes to spend money — one to appropriate the funds, and a second to authorize the debt. That’s true in the cast of deficit spending, but it’s also true for non-deficit spending. After all, authorizing taxes requires legislative action. If Congress were committed to a balanced budget, appropriating funds would still require two votes, one to spend the money and a second to provide for the necessary funds through some raising revenue device. Getting rid of the debt limit would, in effect, privilege deficit spending. While deficit spending is sometimes justifiable, it should not be structurally easier than the alternatives.
None of this means stand-offs over debt ceiling increases are a good idea. They’re not. Congress should provide for the necessary funds before appropriating funds and debt limit increases should be adopted in conjunction with budget resolutions. But just because the existing budget process is dysfunctional does not mean the debt ceiling is the problem.
[NOTE: Eliminated a sentence fragment.]