Moody’s is suggesting that the United States should eliminate the whole debt ceiling because that ceiling causes periodic uncertainty. The rating company says that having this debt ceiling and having to debate about it causes uncertainty among bond holders. The belief is that eliminating the debt limit will make things better.
Let us ignore the idea that Moody’s has any concern for the US because it really only cares that bond holders are not met with uncertainty and it couldn’t care less if America is in a dire financial situation so long as bond holders are taken care of.
So let us look instead at the real reason there is uncertainty. There is a problem not because there is a debt limit but because Congress continues to exceed that debt limit. We have a ceiling in place which is supposed to act as a barrier to control spending and bring some sense of fiscal sanity to our government. It has not worked because the debt limit is continually ignored as Congress after Congress votes to raise the limit.
The entire problem is that we are spending above our means to pay for things politicians promised in exchange for votes but that we have no way of affording. We do not have an income problem, we have a spending problem. You know we have a spending problem when they balk at ideas that will restrict spending:
“Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility,” said the statement “Increasing the Federal debt limit, which is needed to avoid a Federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions.” Daily Caller
If these things are not necessary and government can be responsible without them then why are we in the mess we are currently in? What got us here? But I digress…
If Congress actually observed the debt limit and used it to restrain spending then we would be in a lot better shape. Congress is just unable to control the urge to spend our money.
And the debt limit, while largely ignored, is an impediment that slows down the process and keeps Congress from spending while the issue is debated. Moody’s would have us believe that unencumbered spending on the part of Congress would make things better.
Here is what will make things better. Force Congress to have a balanced budget. Force them to live within their means and force them to cut programs and all the unnecessary spending that goes along with those programs.
One thing is certain, removing any shackles from Congress will not help us in the least.
It might, as Moody’s suggests, remove the periodic uncertainty of bondholders but it will only create permanent uncertainty among the people who actually pay the bills.
Never surrender, never submit.