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Is Raising the Debt Ceiling Economically Sustainable?

| Tuesday August 2nd, 2011 | 8 Comments

Yesterday, an agreement was made between the President and Congress to raise the debt ceiling. It is expected to pass both Houses and get the President’s signature.  The question remains, is it really sustainable to raise the debt ceiling? If we hold true to the definition of sustainability as to “meet the needs of the present without compromising the ability of future generations to meet their own needs,” raising the debt ceiling is not sustainable.  Sustainability is not just about the social and environmental aspects, but is tightly intertwined with fiscal and economic viability as well.

It’s interesting to note which party historically voted for and against raising the debt ceiling.  This year it is the Republicans who seem hesitant and the Democrats calling for the raise.  But in years past, these roles were reversed.  When the debt ceiling was raised in prior administrations, it was the Democrats who were holding out, and the Republicans pushing for a higher debt limit.

Regardless of which party is in power, I’d be against raising the debt limit anyhow. Raising the debt limit puts an unnecessary burden on future generations.

Debt is borrowed money.  It is borrowed in order pay or consume something in the present, and (ideally) repay the debt later. Raising the debt ceiling allows for “more” consumption now, and having to pay “more” for it later. The key word is later, implying putting the burden on future generations.  Raising the debt ceiling allows for more borrowed money.

Some folks may suggest that raising the debt ceiling is of dire necessity so we can continue to pay existing obligations.  Even historically, the debt ceiling has been passed every year throughout the past century.  But we can end this cycle of higher and higher debt. Let’s consider the role of time. Today’s existing obligation is yesterday’s future obligation. Every year for the past century, the repayment of debt has burdened the next generation.

Another way to think about it is using more natural resources today, without replenishing natural resources for tomorrow.

The generation of yesterday spent money they did not have, and pushed obligations to their future generation (us).  Debt, especially at the magnitude of government borrowing (trillions), burdens future generations, like past generations have burdened us with their debt.

We can make life less burdensome for the next generation by not raising the debt ceiling.  Yes, it will be tough to do so without cuts to many programs in this generation.  But living within our fiscal means by not spending beyond what we have and not taking on further debt, is a giant step towards economic sustainability.

Image Credit: Slash by TheTruthAbout on flickr.com.


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  • http://www.jimblogger.com JimBlogger

    So let me get this straight here. They raised the debt ceiling by (at least) $2.1Trillion and slashed federal spending by $2.4Trillion. It took them all that bickering to come up with THAT?! LOL. We’re doomed.

  • Elizabeth Krueger

    Jonathan,
    We’ve been over this in the past. The GOP was willing to force default rather than even fix tax loopholes that are clearly unjust, and linked future budgets to the debt ceiling.
    The income inequality in this country is increasingly unsustainable, and corporations are experiencing booming profits, although job creation is almost non-existent and cuts in government spending are increasing the numbers of jobless. The GOP position on taxes refused to address those inequities. During an economic recession is not the time to make draconian cuts in spending.
    Taking the slash and burn approach of holding the debt limit now, is a bad idea.

  • Jonathan Mariano

    Hi Elizabeth,

    I think it would be apt to distinguish the GOP from the position against raising the debt ceiling. As can be seen in the past, the GOP position of not raising the debt ceiling was also the Democrats position. The topic of income inequality is not related directly to this discussion, so I shall table that and stick to the topic at hand.

    Technically, we are not in a recession, but we can only define that in hindsight. Regardless, during a recession, it is a time for saving, not spending. It’s counterintuitive, but logical. Think of it in terms of fisheries. Let’s say a fishery is being depleated. Is it time to fish more, or time to to save and replenish the fish? Savings and low to no debt is the solution to a sustainable long term economy.

    J++

  • Elizabeth Krueger

    Re: Jonathan’s comment:
    Your points are unconvincing.
    You’re arguing points that are not germane to the discussion. Yes, party out of power typically resists raising debt ceiling when asked. Technical definition of recession also not germane. GOP pushed US to bring of default to score political points, never done in the past to this extent, so I stand by my characterization, unless you argue that Tea Party element is not GOP.
    The economy is not a fishery.
    I do not agree with your prescription for saving when people need work and food on the table.

  • Tom

    Jonathan is right. When you don’t have the money, nor the income, you must stop spending in order to stay afloat. Asking your kids to pay off your own lifestyle which you can’t afford is unsustainable… especially when the kids go and do likewise as America has done.

    • Paul SanGiorgio

      This is an excellent point. If you can’t afford to buy a house, car, education, or medical procedure in cash, you should never take any type on debt to pay for it as you’re only mortgaging your children’s future! Won’t someone think of the children?

  • Jonathan Mariano

    @Elizabeth: If party politics is not germane, I challenge you to not mention the GOP or the Tea Party in your arguments. My point of bringing up the partisan nature is that your arguements always bring up the GOP. Have a look at your past two comments, explicitly blaming the GOP. I’d rather have a discussion on the debt ceiling, debt, and economics etc., than discussing the political actions of a political party or associations of a political party.

    If the technical definition of the recession is not germane, then your argument “During an economic recession is not the time to make draconian cuts in spending, which is what…” is also invalid as it cites the economic recession for rational of not making draconian cuts in spending.

    Of course the economy is not a fishery:). I merely used the fishery as a way to convey the concept of savings, especially for the future.

  • graham

    @ Elizabeth,

    The GOP was not going to force default, they were going to force the federal govt. to make drastic choices to cut spending. Besides, countries don’t default, we do…countries just print more money and ruin the value of their currency. We’d just become the next Weimar Republic pushing around barrels of money for a loaf of bread; which of course would be OK with you so long as we were all mutually miserable.

    Aas far as pushing this issue hard to prove political point…never before in the history of the US have we had such a burden. Yes, they should’ve stopped the last administrations spending, but it is this administration and the last congress that has spent more than all of the previous administrations in the History of the US, combined.

    We have $112 Trillion in unfunded liabilities, when do we say enough is enough?

    I do think that one could argue that the Tea Party is not GOP, 96 “Republicans” voted agains the bill!