It has happened before — 78 times since 1960, 49 times under Republican presidents and 29 times under Democratic presidents — and here we are again. If the congressionally imposed debt limit is not raised, the U.S. government cannot pay bills that congress has already authorized. This would wreck the legitimacy of the U.S. Government as the world’s most credit worthy borrower. Consequently, the congress, recognizing the dire consequences of the U.S. government defaulting on its bills, has always raised the debt limit when it has been reached.
If the debt limit has to be raised to allow government to pay bills already incurred seems to be an irrational way of doing business, it is. Holding the full faith and credit of the U.S. government as hostage is a hazardous way for politicians to use leverage for concessions to cut government spending. If that is the goal, the time to negotiate it is during the budgeting and appropriations process.
Since the debt limit has always been raised when necessary, why should we worry about it this time? Because circumstances are very different. The debt limit was lifted under the Trump Administration without conflict. Democrats supported it with no attempt to embarrass the Trump Administration because these spending bills were due under his watch. In contrast, when Clinton was president, House Speaker Gingrich and his Republicans held off with raising the debt ceiling, resulting in a government shutdown. His attempt to embarrass Clinton failed. Gingrich and his Republicans realized that preventing the government to pay its bills and shutting it down was playing with fire.
There was another battle over this matter during the Obama administration, but Republicans eventually agreed to raise the debt limit, just as the Democrats have always done when the government reached its debt limit under Republican administrations. Cooler heads have eventually prevailed. So now we reach the debt limit again, but with Republicans refusing to allow, without concessions, the government to pay bills already incurred.
So, what’s the difference this time? We now have enough members of the Congress, representing safe seats, that are willing to blow up the system to “cut government spending,” and being willing to cripple two popular and necessary programs that Republicans have been after for a long time — Social Security formed during the FDR administration, and Medicare formed during the LBJ administration.
Differences between Republicans and Democrats have suddenly become front and center with the kerfuffle during Biden’s State of the Union address. But it seems that the media chattering heads and many voters are only suddenly aware that this has been going on for a long time.
When Social Security was first proposed during FDR’s New Deal, it was characterized as “Socialism.” But today, even hard-nosed conservatives who insist that the U.S. is going “Socialistic,” deny that Social Security is “Socialism,” because they had been making payments to the system for their entire working lives.
The same goes for Medicare. Ronald Reagan cut his political teeth in 1961 by lobbying for the American Medical Association against “Socialized Medicine.” LBJ muscled Medicare through the Congress during his administration, and where would we be without it. It would be impossible for most Americans to save enough to cover costs of major surgeries and illnesses that are inevitable during increasing lifespans due to modern medicine.
If, as some conservatives contend, the U.S. is going “Socialistic” — we’re not, we are as far from “Socialism” as any industrialized nation — it has absolutely nothing to do with Medicare. With the exception of the Veterans Administration, actual care and pharmaceuticals are still provided through the private sector. But Medicare is financed through an essential government program that, whatever its real or imagined shortcomings, is popular, and it works. Yes, along with Social Security, Medicare is a major government expenditure, but both programs are absolutely essential for quality of life for all Americans. In addition to benefits for seniors, Social Security serves as an automatic macroeconomic stabilizer. Medicare for seniors allows their struggling children to provide for their own living expenses and retirement.
Past attempts to cripple these programs under the guise of “privatizing them” include those formerly led by former House Speaker, Paul Ryan. President George W. Bush proposed partially privatizing Social Security. It didn’t fly. Others propose raising the age limit for full eligibility.
Some changes to Social Security actually did cut costs, while reducing benefits, of course. For example, computing annual cost of living adjustments using the “chained CPI” instead of the standard CPI reduces cost outlays as it reduces benefits to recipients. Raising the age limit for full eligibility from 65 to 67 is another example of cutting benefits to reduce program costs.
Some attempts have been outrageously blatant. Now denying that he meant what he actually said, Utah’s Senator Lee is on record as castigating entitlements as “wealth distribution under the Nanny State we have created,” and his objective was to “pull it out by the roots and throw it away.” Florida’s Senator Scott has a written proposal to “sunset all federal programs every five years.” In an embarrassing and depressing display of ignorance our own Senator Ron Johnson has characterized Social Security as a “Ponzi Scheme.” In further display of ignorance, he proposes that these programs be made discretionary, having to be renewed every year.
Of course neither Senator Scott’s nor Senator Johnson’s asinine proposals will go anywhere. Republicans are incensed that President Biden is reminding voters of what some Republicans have long been doing in plain sight. The canny Senate Minority Leader, Mitch McConnell, is making clear that he wants nothing to do with tampering with these popular programs. He affirmed that sunsetting Social Security and Medicare was a “Rick Scott plan,” not a Republican plan. As of this writing, Senator Scott is now amending his “Rescue America” plan, insisting that he never supported cutting Social Security or Medicare.
If Republican politicians are furious at Democrats for reminding voters of what they proposed, and feel they were “trapped,” it is a trap of their own making. If they really support these programs, stop castigating them, and cooperate with Democrats to insure future funding.
And don’t use them to resolve the debt ceiling issue.
— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears monthly in the Monroe Times.
