One of the key pieces of the package President Obama put forward yesterday to deal with the so-called “fiscal cliff” is a permanent end to the debt ceiling. It would make increases in the ceiling effectively automatic, subject to a veto by two-thirds of Congress.
This proposal did not just prompt howls of protestations from conservatives — it also produced a remarkable failure amongst politicians and journalists alike to understand the basics of government financing and the Constitution’s separation of powers.
In the Washington Post yesterday, Lori Montgomery called the idea “an effective end to congressional control over the size of the national debt.” Rep. Louie Gohmert (R-TX) railed against it as “a blank check.” Timothy Carney, a journalist for The Washington Examiner, lamented the legislature ceding power to the executive, effectively “castrating” Congress.
But the worst example of the theme arrived this afternoon, when Fox News host Megyn Kelly asked Sen. John Cornyn (R-TX) about the White House’s debt ceiling proposal:
MEGYN KELLY: What do you make of [the President's] request to cut the Congress out of the process when it comes to raising the debt limit? He wants a blank check now to just raise it when he needs to. Your thoughts on that?
SEN. JOHN CORNYN: Well it’s outrageous. It’s like saying we’ve maxed out our credit card, so I’m gonna get a new credit card with no limit so I can keep spending. There needs to be some accountability here. So far were spending 42 cents out of every dollar in Washington in borrowed money. And that’s money that our kids and grandkids are gonna have to pay back. It’s profoundly irresponsible. So that’s a crazy idea, and I’m amazed that Secretary Geithner had the, uh, courage to float that yesterday.
Congress has been vested with the power to tax and spend, under Article I Section 8 of the Constitution. Congress passes budgets, which decide how much revenue the government takes in and how much spending goes out. When the Treasury Department issues new debt, it’s merely carrying out the mechanical necessities of Congress’ decisions — because carrying out the law as passed by the legislative branch is the constitutionally mandated job of the executive branch.
But since the early 20th Century, Congress has also kept in place a separate law — the debt ceiling — that places a statutory limit on how much debt the Treasury may issue. That limit has been periodically raised. It is entirely separate from the decisions to tax and spend, which set the country’s debt obligations. As the Government Accountability Office put it: “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.”
The President does not have discretionary control over how much the country borrows. Obama’s new proposal gives him no such control. It would merely make hikes in the ceiling automatic, in accordance with the debt necessitated by budgets Congress has already passed.
Rather than a blank check, Congress has been handing the President a check for a certain amount, ordering him to cash it, then threatening to punk him by draining the account before he can reach the bank. To paraphrase a previous point made by the Center for American Progress’ Seth Hanlon, Obama’s proposal simply makes sure Congress doesn’t force him to cash checks destined to bounce.