Debt Ceilings, Futile and Useless

Previous posts have stated that this Substack series is devoted to two topics. These two topics are closely related and listed below. After about ten posts on the fiscal matter, the focus shifted in mid-August to the second topic, Congress. However, this post is about Debt Ceilings, a fiscal matter, and one very much on everyone’s minds these days. It also happens to fit very well into the Congress’s-activities topic.

• The unsustainable federal fiscal policies, and

• Congress’s shunning solving our big problems

Among all the powers of Congress, and therefore its responsibilities, are the following per the constitution, all the powers needed to do a good job of managing our fiscal affairs.

• To Lay and collect Taxes, Imposts, and Excises, to pay debts…

• To borrow money on the credit of the United States

• To Make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers

We citizens and taxpayers expect Congress to perform these tasks well. However, as the chart at the first of this article shows, our federal debt has escalated in the last 20 years to the point of being about 100% of GDP, a measure entering the danger zone. Under present laws, it is projected to continue rising sharply. The interest alone on the debt is now more than the cost of Defense or Medicare. The graph below shows huge unbroken deficit spending over the past 24 years, each adding more to the debt. This shows us that despite all its powers, Congress is doing an increasingly poor job of managing our money.

Responsible fiscal management must include a cushion (reserves) for unexpected and expensive occurrences including recessions, pandemics, and military requirements. The two graphs clearly show the negative fiscal impacts of the 2008 financial crisis and the pandemic. A responsible fiscal policy would show some years with deficits and some with surpluses, averaging over the years at near zero. Debt levels should be close to 50% of GDP or less rather than our present level of about 100%. Our government is not doing the fiscal planning and execution that most families do.

Now, back to the topic of this Substack post. It is most upsetting to see our government in this sad condition – using the Debt Ceiling tool that it created – to try to manage fiscal affairs, obviously a tool that is not working. As Albert Einstein said, “Insanity is doing the same thing over and over again and expecting a different result.”

The Debt Ceiling was first used in 1917 during WWI. It has been tweaked over the decades somewhat, but it still is a ceiling that must be “increased or suspended” to prevent the government from defaulting on its obligations – including paying interest and retiring maturing bonds. Defaulting surely would damage America’s enviable financial stature and raise interest rates. Indicative of its temporary nature, from 1940 – 2025, the Debt Ceiling was increased 93 times and suspended 6 times, averaging 1.15 times per year. All 6 suspensions were since 2013, a fact that likely indicates an acceptance in Congress of the uselessness and/or an inability to arrive at a new level for a Debt Ceiling. Reference: Brookings Institution, What is the federal debt ceiling?, July 7, 2025; Sage Belz, Sophia Campbell, Lorae Stojanovic, and David Wessel

Now, we find ourselves in yet another Debt Ceiling fight – complete with a partial government shutdown – between the two parties, one party wanting also to increase the ceiling by $5 trillion and the other wanting to add yet more spending to the Debt Ceiling bill. The Debt Ceiling is a reactive rather than a proactive tool! Whatever results from this non-productive battle will do nothing to improve our country’s long-term fiscal health.

If the government believes that the Problem is that “The debt ceiling must be raised frequently so that it can borrow monies as needed to pay for uncontrolled deficit spending”, then is it is understandable why America has a dangerous, and rapidly growing, debt-to-GDP level.

Why isn’t it working? The Debt Ceiling is a short-term tool being applied to a long-term problem. Among other issues, the federal government has many very expensive programs on autopilot, programs considered non-discretionary and automatically indexed to include rising costs each year. These include our retirement and medical programs. So instead of making responsible, fair, gradual, broad, and effective fiscal legislation in both federal income and outflow of money, Congress just panics and either increases or suspends the debt ceiling yet once more. Remember, “When one finds himself in a hole, stop digging.”

The starting point in solving a seemingly intractable problem is for the problem to be well defined. This avoids the danger of launching prematurely into an attack on the symptoms of the problem rather than the problem itself. See below for a statement of the Problem from the June 1, 2025, Substack Post. Careful attention might improve this statement, but you get the concept.

Problem Statement

The federal debt has grown dramatically since the Great Recession of 2008, reached harmful levels, requires a comprehensive and sustainable array of solutions, but still is not receiving serious attention from our government.

After agreeing on a written Problem Statement, the next step is to concur on the Objective(s). This brief but firm statement will guide the crafting of legislation and a congressional amendment(s) to implement prudent fiscal management designed to last indefinitely.

In addition to expertise in the halls of Congress, there are several think tanks and foundations that have already done excellent work on this problem. The responsible path forward requires all aspects of federal income and spending to be considered and modified as needed by legislation to put our country on the path back to fiscal sanity, steadily and fairly over the years and decades ahead. The essence of the program also must be enshrined in a constitutional amendment(s) triggering automatic and immediate corrections to ensure the permanency of fiscal responsibility.

The tools of responsible fiscal management include not only the legislation and congressional amendment(s) above, but a return to consistent Regular Order, Appropriations Processes, timely Budgeting, and other bipartisan procedures in Congress.

The title of this Substack series of posts is Congress is Vital. One only has to read the long list of powers of Congress in the constitution to know that the title is correct. When Congress does a poor job, we all feel the effects. That is particularly true in fiscal matters. The Debt Ceiling is doing more harm than good and needs to be replaced with a sound long-term and sustainable (i.e. permanent) program enacted into legislation – and it needs to be done as soon as it can be done properly.

So, let’s begin implementing the fiscally responsible tools and say adios to futile Debt Ceilings.