The views expressed by contributors are their own and not the view of The Hill

The debt ceiling is the least of our nation’s fiscal concerns

As the debt ceiling limit fast approaches, a bipartisan group of House members has proposed a plan to address the issue. House Republicans have also proposed a plan, to increase the debt limit by $1.5 trillion. Though all the proposed ideas have merit, the real problem is that such discussions are even needed in the first place, given that the solvency of our nation is at risk.

The business of government has now become more about avoiding catastrophe than constructive policy making. As one of the richest countries in the world by a variety of economic and social measures, we are poor in managing our nation’s wealth and infrastructure.

The largest fiscal risk that our nation faces comes from the national debt.

There is now nearly $32 trillion of national debt, with around 80 percent of it held by the public, including countries like China, a near-peer with whom we have a somewhat acrimonious relationship. The problem is that the national debt is continuing to grow, with no feasible path forward to slow its growth, let alone pay it down.

Each year’s budget deficit is added to the tab. Higher interest rates are further exacerbating the situation, with the Congressional Budget Office projecting such costs to be $640 billion in 2023 — not that much less than the Department of Defense’s $816 billion budget for fiscal 2023.

Moving the debt ceiling higher merely “kicks the can down the road” until the newly established debt ceiling is approached. Whether it takes a few months or even a few years, the new debt ceiling will never be enough.

What this fiscal nightmare fuels is legislative disfunction, pitting the two parties against each other, with the American people effectively held hostage in the process.

Is there a better way?

First, let’s get rid of the debt ceiling completely. The energy used to debate and raise it periodically is ill spent. Threats to not increase the debt ceiling have yet to be productive. 

Some would argue that without any fiscal restraint, spending would soar out of control. The fact is, spending is already out of control, even with the debt ceiling in place. Ending such negotiations would free up energy to get more pressing issues addressed.

Second, entitlement programs represent more than one-half of the annual federal budget. If one of the parties suggests changes to any of these programs, such as Social Security, their words are weaponized against them. Given that the primary objective of nearly every politician is to retain their power, asking for entitlement programs to be brought into the debt reduction discussion is akin to political suicide. Yet without putting such programs in play for discussion, the hope of balancing the federal budget is slim.   

Making significant cuts to entitlement programs, however —any federal programs, for that matter — are risky, because they represent over 20 percent of the U.S. economy. Any such cuts must be balanced against growth in the private sector, or the risk of a recession increases. This demands bipartisan cooperation, since a long-term plan that would cross over many administrations would be needed to make constructive change.

Perhaps lessons learned about cake cutting can be applied to allocating government resources. When a cake must be cut into two pieces, one person does the cutting (in this case, the party in the majority) and the other (the minority party) gets to pick. This reduces some of the power of the majority, forcing collaboration and compromise.

The nation’s fiscal condition is worse than horrible. Any company that ran its affairs like the federal government would not stay in business very long. Any individual who spent well beyond their means would be forced into bankruptcy.

The United States is on a pathway to bankruptcy, the 800-pound elephant in the room. Even though it continues to pay its obligations, this is only because other nations and the public are willing to lend the United States the necessary funds. Given the trajectory of the national debt, these investments grow more suspect with each passing year.  

If the same approaches to government and spending continue, the same results will occur. Some call it insanity to believe anything else.

We must do better. The fiscal cliff is not that far away. And the risk of it occurring is growing with each passing debt ceiling debate.

Whether you are Republican, Democrat, Independent or other, permitting our elected officials to threaten the fiscal stability of our nation is unacceptable. Eliminating the debt ceiling would force our leaders to take responsibility for their decisions. Without such accountability, the insanity of our nation’s fiscal condition will persist, to the detriment of everyone.       

Sheldon H. Jacobson, Ph.D., is a professor of computer science at the University of Illinois at Urbana-Champaign. He applies his expertise in data-driven risk-based decision-making to evaluate and inform public policy.  

Tags Bankruptcy debt ceiling economy entitlements Interest rates national debt Sheldon H. Jacobson

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Regular the hill posts

See all Hill.TV See all Video

main area bottom custom html

MAIN Area bottom

Main area bottom

Top Stories

See All

Most Popular

Load more