This commentary is by Tom Evslin of Stowe, an entrepreneur, author and former Douglas administration official. It is republished from the Fractals of Change blog.
Treasury Secretary Janet Yellen announced that the US will run out of borrowing authority (again) on January 19 and needs to have the debt limit lifted by Congress before summer when the Treasury will run out of short-term tricks to keep paying Uncle Sam’s bills. Moderates in both parties are afraid that the Republican right, fresh from its victories in the Speakership fight, will block a debt-limit increase.
The Wall Street Journal, which is firmly part of the establishment middle on this issue, explains for the hundredth time “Raising the debt limit doesn’t incur new government spending, but instead authorizes the Treasury to borrow to pay for expenses Congress separately approves.” That’s a good argument but the facts are wrong.
A small part of the reason that the government is running out of debt authority faster than anticipated is that we haven’t collected student loan payments in years. This forbearance was not appropriated by Congress. It was first declared by Trump during what was an emergency, then extended by Trump and Biden as the emergency waned and unemployment practically disappeared. Biden has declared permanent forgiveness for huge amounts of college debt without any authorization from Congress nor appropriation to cover what it costs the Treasury to go without these repayments. The forgiveness is tied up in lawsuits but the forbearance on collection – regardless of ability to pay – goes on and on. If the debt ceiling is raised, the raise will allow money to be borrowed in our name to cover these UNAPPROPRIATED costs.
So here’s the good government compromise:
- Raise the debt ceiling to over what Congress has appropriated;
- Be specific that money can’t be spent which hasn’t been appropriated; that prohibition includes the boondoggle of forgiving the debt-incurred by relatively affluent people to attend over-priced colleges. (BTW, there already are many duly legislated programs to forgive college debt for those in certain professions and with low income).
Compared to the total deficit, unfunding unappropriated expenditures will only go a small way towards an affordable budget. Congress has duly appropriated exorbitant amounts. Nevertheless, using the debt limit to rein in unappropriated expenditures can be an important first step to restoring both congressional authority and responsibility.