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Speaker of the House Kevin McCarthy, R-Calif., talks to reporters just after the Republican majority in the House narrowly passed a sweeping debt ceiling package as they try to push President Joe Biden into negotiations on federal spending, at the Capitol in Washington, Wednesday, April 26, 2023. (AP Photo/J. Scott Applewhite)
When decision-makers get locked into a path, they almost intuitively build up regimes, institutions, and rules that reinforce their decision, no matter how suboptimal that path may be. It makes it very difficult, and expensive in the short term, to leave that path.
We just witnessed a true-life example of Nobel Laureate Economist Kenneth Arrow’s Path Dependence or Increasing Returns theory.
My well-intentioned Republican colleagues in the House of Representatives passed an increase to the limits on the federal government’s credit with the hopes that they can reduce our national debt. To repeat: Republicans just raised the debt ceiling to bring down our national debt.
At the current baseline of spending-revenue ratio, the Congressional Budget Office forecasts that our national debt will grow to more than $52 trillion by 2033. That’s an unfathomable and unsustainable amount of debt.
And, that doesn’t include the acceleration of spending that the Biden administration has requested. If you throw in the $800 billion increase in spending that Biden has requested, the national debt will be almost $58 trillion in ten years.
Lately, I have been accused of not adhering to maxims that I have long uttered, in particular, that we must bend the spending trajectory of the federal government down. Some of my friends have argued that the Republican plan bent the spending trajectory down.
Let’s look at the reality. In the first eight months of the plan, the national debt will likely increase by $1.5 trillion since we’re spending roughly $100-120 billion more than we bring in each month. That will raise our debt from $31.4 trillion to at least $33 trillion.
After 10 years, the comparison of the CBO baseline to Republican national debt looks like this: CBO, $52 trillion vs. Republican, $47 trillion. The angle of the slope of the national debt may be slightly reduced, but because deficit spending continues we don’t bend the spending curve down.
That kind of debt load is the kind that will bury, and perhaps finish the nation.
Some of the details in the Republican plan were suggestions that I either offered or support: rescinding the unconstitutional student loan forgiveness/restructuring plan, Rep. Scott Perry’s (R-Pa.) elimination of hundreds of billions of dollars’ worth of Green New Deal subsidies, and cash giveaways.
But, those two proposals didn’t bend down the trajectory sufficiently to alter our crash course with fiscal reality.
What if we actually found a way to adjust our spending to our level of revenue? In other words, what if, just for a year even, we didn’t spend any more than we brought in? We lived within our means.
We might not bring down our national debt, which currently sits at $31.4 trillion, but we wouldn’t be growing it either. Wouldn’t that be a huge victory over the plans of both parties which continue to increase our debt load!
I proposed that we include the Republican savings proposals in the bill just passed in the House. But we could have and should have also returned “discretionary spending” to the pre-COVID spending levels of 2019. Does anyone think our federal government was too small in 2019?
With our current revenue levels, we could pay for 2019 discretionary spending and current levels of Social Security and Medicare without appreciably adding to our national debt. I suggested that we try that for a year to see what happens.
Firstly, we wouldn’t have to increase our debt limit again soon because our growth of national debt would be abated.
Secondly, inflationary pressure would largely be dissipated because flooding our economy with nonproductive, worthless dollars, which has driven our inflation, would end.
Thirdly, it would form the basis for restoring our economy by removing the federal incentives for millions of otherwise able workers to stay at home and out of the workforce.
And another benefit would be that we could assess during that year how to resolve our overwhelming national debt.
This proposal was laughed out of the room.
I was told it could never get enough Republican votes to pass out of the House and would be dead on arrival in the Senate.
Putting such a plan on the floor of the House for a vote would have been interesting. The Board of Truth, the voting board, has a way of revealing whether a plan such as this would have been viable.
Besides, the Republican bill passed out from the House, the one that allows an increase in the national debt by $1.5 trillion in less than a year, is said to be dead on arrival in the Senate as well. In fact, we were told that it is merely the price for starting negotiations with the Senate and White House.
If that is true, wouldn’t it have been better to start with a package that would require the federal government to live within its means?
Republican congressman Andy Biggs represents Arizona’s Fifth Congressional District and serves on the House Judiciary and Oversight & Accountability Committees.
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April 30, 2023 at 03:00AM
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House GOP’s debt ceiling bill still leads us to a hard crash - The Hill
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