Democrats celebrated the country’s credit increase in 2021 – but they may soon come to regret it.
The Democrats managed to raise the government’s borrowing cap last year without the GOP. But the limit will soon be met, and Congress must once again decide whether to tighten up the purse strings a bit or approve a higher line of credit to keep the party rolling – but not this Congress. As it turns out, the massive $2.5 trillion hike really was enough to get the country through 2022, and so it will be readdressed after the newly elected, quite possibly Republican-led Congress is on the job. Now that debt ceiling increase the left cheered in 2021 looks more like a ticking time bomb for 2023.
Debt Ceiling Hike Too Much, Too Soon?
The Senate passed a debt limit increase on Tuesday, December 14, 2021, without a single GOP vote. Hours later, the House sent it on to President Biden’s desk – with the support of a lone Republican, Rep. Adam Kinzinger (R-IL). Lawmakers stayed in the Swamp four days beyond the scheduled end of the legislative year to bestow upon the nation, as Liberty Nation reported at the time, “another $7,500 of debt to every man, woman, and child in the United States – or, more significantly, about $14,000 for everyone who filed a tax return in 2020.”
When that article was published less than a year ago, the interest on the national debt was nearly $420 billion a year – almost twice what it was in 2016. As of August 2022, servicing that interest takes an annual payment of $677.6 billion, according to the US Treasury
(Photo by Tom Stoddart/Getty Images)
Much ink has been spilled over which side will prevail in November, and as LN Editor-in-Chief Leesa K. Donner wrote earlier this month, “Republicans are poised for historic midterms.” The last time the GOP polled as high as it does now on who can do a better job of handling the important problems, it picked up 55 House seats.
And so the Democrats may well have shot themselves in the proverbial foot. Sure, they haven’t had to deal with a debt-ceiling battle since December. But as difficult as it was even then, they held most of the leverage. It seems they may have jumped the gun a bit – gone too high, too soon. If the Dems manage to keep majorities in both chambers – even if only by the slimmest of margins in the Senate – any negotiations on the borrowing cap would likely follow the same trajectory as the 2021 effort. When the issue next comes up, however, Congress is set to look quite a bit different.
The Clock’s Ticking
The US Treasury is expected to reach the mandated $31.4 trillion borrowing limit soon, and if Republicans win control of the House, they are planning to use this as leverage to cut back on some of President Joe Biden’s biggest spending initiatives, including the green and social programs pushed throughout his term so far. “It’s critical that we’re prepared to use the leverage we have,” Representative Scott Perry (R-PA), leader of the House Freedom Caucus, said. Senator Bill Cassidy, a more moderate Republican from Louisiana, said leveraging the borrowing limit allows the GOP to “take the credit card away” from the president.
The idea behind a debt ceiling is to give Congress the ability to rein in spending, requiring approval of the legislature for federal borrowing to ensure the national debt never spirals out of control. Naturally, it failed miserably. The national debt managed to explode from $3.2 trillion in 1990 to a whopping $31.1 trillion today. It does, however, queue up an inevitable clash from time to time, in which one side uses it to squeeze the other for concessions. Sometimes it works; sometimes it doesn’t. For example, in 2011, one such effort led to a budget cut. In 2013, however, it failed to defund the Affordable Care Act.
On the docket seems to be welfare reform, various tax cuts, as well as the end to so-called green and social infrastructure spending. And of course, the GOP can always demand “bipartisan” support for other legislative measures – like shoring up the border, for example – in return for increasing or suspending the limit in the future. If a Republican majority stands firm and united and the Democrats break first, the debt ceiling can be a powerful legislative tool in the hands of a GOP majority. If not, it still promises to be a massive headache for the left.
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