Q: What is the debt limit?
A: The debt limit is the amount of money the U.S. Treasury is authorized to borrow to meet spending obligations. The Constitution grants Congress the power of the purse strings and under federal law, the legislative branch of the federal government must approve borrowing authority to allow the executive branch to pay the bills. The debt limit provides Congress an opportunity to reevaluate spending and revenue policies to put the country on a sustainable fiscal path. Unfortunately, more often than not Congress simply increases or suspends the debt limit without taking any actions to get spending in check. As Iowa’s senior U.S. Senator, I bring Midwestern common sense to the people’s business and that includes the people’s budget. Working families and retirees can’t spend willy-nilly without keeping close eye on their bank accounts. Small businesses and farming operations would go bankrupt if they didn’t make sure their expenses squared up with income. In other words, Iowans live within their means. The federal government ought to do the same with taxpayer money. That’s why I’ve introduced legislation to adopt a constitutional amendment requiring Congress to balance the budget from one year to the next. No matter what big spenders say, the federal government cannot tax, spend and borrow America’s way to prosperity. That’s not how it works.
Q: Why does the debt limit need to be raised or suspended?
A: The U.S. Treasury is spending more taxpayer dollars than it is collecting. That means the federal government has to borrow money to cover the gap so it can pay its bills. In August 2019, the debt limit was suspended through July 2021. At that time, the debt limit reset and the Treasury Secretary has advised Congress the debt ceiling will be reached sometime in October. In response to the pandemic, the federal government approved deficit spending to help individuals, families, and small businesses to make ends meet in the face of government-imposed shutdowns. The national debt stands at $28 trillion, pushed up by $4 trillion in bipartisan pandemic relief during the final year of the Trump administration. Now as our economy rebounds from the pandemic and we come up against the debt limit, Congress ought to look at the debt lid through the lens of fiscal accountability. The nation’s debt now exceeds the total output of our economy. Instead, President Biden and Democrats are using the pandemic as an excuse to push through their liberal wish-list. It started with their $2 trillion partisan spending spree in March, enacted when the economy was already rebounding and vaccines were becoming widely available. And now, with total control of the White House, Senate and House of Representatives, the Democrats want to ramp up their reckless spending spree even more by ramming through a $4.2 trillion budget in what’s called the reconciliation process. That approach allows Senate Democrats to pass their agenda with a simple majority. That means the Democratic Majority doesn’t need a single Republican vote to put our kids and grandkids on the hook for massive new taxes and massive new spending. With all that new debt, the debt ceiling needs to be raised not just because of previous spending, but to accommodate their reckless tax and spending spree. They plan to pass a multi-trillion dollar bill on their own, and they could use the same mechanism to increase the debt limit to accommodate all that spending. They cannot reasonably expect Republican support unless they abandon their plans to exacerbate the debt problem. They just don’t want to be on the hook for lifting the lid on the debt ceiling. That’s not how leadership works.
Let’s be clear, there’s no question the debt ceiling needs to be raised. The U.S. has never defaulted on our debt. It’s not complicated, but the Senate Majority leadership is twisting itself into knots to avoid accountability. The Democrats have the votes to pass their budget. They have the votes to lift the debt ceiling. Protecting the full faith and credit of the United States is a solemn responsibility. It’s reckless for them to threaten default and put the nation’s fiscal health at risk just because they don’t want to be blamed for giving the green light to increasing the debt even while they plow forward with a multi-trillion dollar spending package. A better idea would be to restore fiscal discipline and put the brakes on all this spending. Former Treasury Secretary Larry Summers, who served in the Clinton and Obama administrations, has warned in no uncertain terms that all this spending is fueling the fires of inflation. Clawing our way out of rising inflation is a very tough row to hoe. Consider what it did to our economy during the Carter administration. Inflation slams lower and middle income Americans the hardest every time they pay for gas and buy groceries. That’s why I’m leading efforts in the U.S. Senate to put the brakes on reckless spending and restore fiscal discipline.