Debt, Not the Debt Limit, Is the Real Fiscal Crisis

A spending blowout and higher interest rates make spending cuts not only necessary but urgent.

Washington is now consumed by the question of whether to raise the ceiling on the national debt. That ceiling currently stands at $31.38 trillion, barely above the $31.34 trillion of outstanding debt subject to the ceiling, according to the latest Daily Treasury Statement.

The so-called responsible faction in the impending debt debate says that the ceiling should be raised without any risk that the nation default on its debt. The nation’s creditworthiness, they argue, shouldn’t be held hostage by conditions of fiscal discipline. The White House falls into this faction, insisting on a higher ceiling without any strings attached.

A group of about 20 House Republicans—many of whom originally opposed Kevin McCarthy’s speakership—announced their opposition to raising the ceiling without spending cuts. On Bloomberg TV on Wednesday, Rep. Andy Ogles of Tennessee said he was “unwilling to give Biden a blank check.” Yet his emerging faction is being called irresponsible and worse.

But who’s really irresponsible? This small group of Republicans wants to reintroduce fiscal discipline on the Biden administration and congressional Democrats, who have been borrowing and spending like drunken sailors for two years. Since President Biden’s inauguration alone, the national debt has soared by nearly $3.7 trillion.

Was this spending responsible after $4.4 trillion that was borrowed and spent between February 2020 and January 2021 as part of a necessary response to the pandemic and the ensuing economic shutdown? Many economists warned that Mr. Biden’s first spending initiative, the $1.9 trillion American Rescue Plan, was unnecessary and would unleash inflation—and it clearly has.

It’s hardly irresponsible to suggest that we return to fiscal sanity. Any increase in the debt ceiling should be matched by an equal reduction in this slew of post-pandemic domestic spending.

Yet the irresponsible nature of the Biden administration’s domestic spending isn’t the primary reason it should be reversed. The determinative reason is that federal interest expense is rapidly rising to unaffordable levels, given the $8 trillion increase in debt since February 2020 and the high interest rates that the Federal Reserve has had to impose to rein in inflation.

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