Is The Debt Ceiling The Only Remaining Institution Capable Of Shrinking The Federal Government?

Even before the pandemic episode, spending on debt service threatened to rival the entire federal defense budget.

Unchecked federal debt presents an even greater threat now as interest rates rise to wherever it is they’re going. And yet, the debt limit is about to be raised again, with purported “showdowns” looming between Republicans and Democrats.

The debt ceiling was raised less than a year ago with Mitch McConnell’s aid, amid Biden’s promises aplenty about how these fungible dollars weren’t enabling anything new, because, nah, this is all about honoring past commitments and not allowing default.

What opposition, given that it is expected to take the reins in the House, would a new GOP really mount? Despite having a front-row seat to Build Back Better during 2021 and 2022, Republicans sang along with massive spendy (and “regulate-y”) bipartisan “infrastructure” and “innovation” legislative packages that are ballooning social and economic spending anew.

The Congressional Budget Office was projecting annual deficits topping $1 trillion before the close of the decade even before these antics.

The debate that should be underway is one over the appropriate dimensions of the Federal State. Biden, though, is out joking about how “surprised” he is “to see there are so many socialists in the Republican Party,” making fun of the legislators lining up for funding back home for the progressive spending and regulatory programs they criticize until the checks start being written.

Debt crisis didn’t happen overnight. A federal government with $31.4 trillion on the credit card owes those gargantuan red-ink proportions to 19th and 20th Century progressivism and New Deal success at reorienting the relationship of the individual and society to one of submission to a custodial and bossy federal government. Congress’s habit of turning the day-to-day operations over to unelected rulemaking bodies frees up time to create yet new programs and spend more.

Yes, the surface-level controversy or showdown is rather fake; there is no “standoff.” By attaching to budget reconciliations, Democrats can sometimes raise the debt ceiling without the GOP’s “permission” (while blaming Republicans for delay regardless). While timing is not likely to present that option this go-round, we can still anticipate that the GOP majority will relent on raising spending limits (which, especially in the post-Covid reset world, mean deep new regulation also). As likely GOP speaker Kevin McCarthy recently put it, “We’ll provide you [Biden and Democrats] more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right?”

The lack of deep collective GOP passion to drastically cut government is striking in contrast to the expansionist zeal of the left, not to mention the desire of those like Treasury Secretary Janet Yellen to remove the debt limit altogether. The risible things the GOP points to as actionable—like the student loan forgiveness theft or the IRS funding boost—are puny by comparison.

The debt ceiling is fine right where it is, just as it was in prior iterations of the brinksmanship. The true alternative? End the Agencies and Programs, and Cut the Spending.

Default drama notwithstanding, there is far greater risk to the continued existence of the United States as a limited constitutional republic if trillions in “transformational” (the left’s word) and hyper-regulatory (my word) economic “investment” and social spending continue unabated.

As the joke goes, if taxes are still being withheld from your paycheck, it means the government isn’t shut down, and it also means the Treasury still has a monthly “income” of taxes and fees that it can prioritize toward debt service and programs, while deciding on how to get by with drastically less spending otherwise.

Households are having to do the latter; so too should Washington prioritize. For future obligations, we can avoid repeats of the “what we already owe” and “prior commitments” traps by not making those promises. Debt servitude of future generations is to be decreased, not increased. The GOP should be arguing that, just on the face of it, we’re not helped by borrowing more today, and are making ourselves worse off from the liquidity/default standpoint tomorrow.

Even more abstractly, someone must start calling out the dangers of the displacement and replacement of private economic and societal life by an already enormous government spending what it doesn’t have. The GOP failure to do so in 2021 and 2022 and to instead go along with “bipartisan” abominations is actually more worrying than Biden’s outrages.

That is, as massive displacement programs like “investments” and social engineering projects become part of the air we breathe, they cease over time to be regarded as part of the regulatory leviathan. The “socialism” that is Medicare lost that moniker, as one will be able to observe when the GOP rushes to defend it in the upcoming debt limit “fight” and theatrics. Eventually — without a change— the socialism of “Reset,” Build Back Better and the new bipartisan “public-private partnerships” (PPPs) is destined to be played down, just as the GOP has made peace with Obamacare.

Yes, some on the right, including yours truly, will carry on with urgent calls for “resetting” the Administrative State and its regulatory abuses instead of people’s day-to-day lives. But spending is calling the shots now in a significant way, whatever agencies do. It’s weird to say so, but the overarching reality is that hyper-debt spending means “regulation” cannot be cut merely by cutting regulation, in an important respect.

That is, as Washington manipulates, controls and displaces what would have otherwise been undisturbed private economic and social decisions and endeavors with its spending, its hiring (yes, Washington is the nation’s largest employer), its procurement (it’s also the largest purchaser of goods and services on earth) and its contracting, these become “budget” or “transfer” programs in Office of Management and Budget parlance. Anesthetized future generations forget they’re being regulated, that they are people things get done to.

This sleight of hand has a certain parallel with antitrust regulation. Alongside the recent surge in economic investment, federal manufacturing “hubs” and PPPs, antitrust remains one of the most deeply invasive forms of regulation imaginable, yet its effects do not show up in the Federal Register to be eyeballed; nor are its interventions ever assessed in the annual OMB Report to Congress on regulatory costs. The new Reset “investments” preordain displacement costs of socialism that will remain forever unfathomed, and are arguably more significant than creation of the Federal Trade Commission was.

This lust for control is why Reset and Build Back Better are so important to the progressive left, and why contemplation of cuts so intolerable. For evidence just look at the Equity campaigns and the “guaranteed” or Universal Basic Income programs from that political quarter. These are the engines of the moment.

Biden has made Equity the centerpiece of his self-proclaimed “Whole-of-Government” regulatory transformations. Meanwhile the UBI is being test run by localities across the country (most recently a “guaranteed” income program in Arlington, VA) and is the end-goal of the federal progressives. With everyone hooked — and many elements of UBI were given test-runs during the early months of Covid— there no turning back, no prospect for cutting government without massive upheaval. While Biden isn’t yet on board with Yellen’s abolition of the debt limit altogether, his successors will be.

“I will not yield,” Biden said, regarding the coming debt limit fight. “I will not cut Social Security. I will not cut Medicare.” That’s theater, since neither will Republicans relent on these programs. And there are not yet signs that the GOP is likely to devise sweeping, transformative plans to slash the federal government to, say, a third of its current size, that match the left’s wholesale reframing of the Nation’s character. That is the platform actually needed, even were there to be imposed a modicum of deficit and debt control in the coming months. At most we might see a a redo of program-category sequestrations like those implemented for a time between Obama and Republicans, to be jettisoned in some future Congress.

Worse than having no plan to rationalize even everyday spending and regulation to get the credit card under control is the country’s vulnerability to a new external shock. As Covid showed for the third time in the 21^st Century (the others were the 2008 financial meltdown and 9/11), spending restraint goes even further out the window when a crisis or economic shock erupts. The spending spigots open and cement for new custodial and economic regulation gets pointed into place. Failure to take significant steps to downsize government as such, not merely limiting a little debt, puts us in an increasingly precarious situation.

As part of a larger “Abuse-of-Crisis Prevention Act,” America’s future must be walled off from the profligate past and present. Since Social Security, Medicare and all of the expensive “reset” stuff that has come since actually are “socialism,” our proper response is to stop enrolling newborns into them. Presto, a non-socialist, free future arrives in a few generations. Now that would be Building Back Better, and eliminating the prospect of future debt crises and defaults at the same time.

For more see:

“The Debt Ceiling Marks Republicans’ Turn To Not Let Crisis Go To Waste,” Forbes

“Debt Ceiling, Meet Domestic Forever Wars,” Forbes

“Congress Is Causing Rising Regulatory Burdens. That Needs Fixing