For the Record: Debt Ceiling

The original debt ceiling crisis of 2011, as captured by cartoonist Jen Sorensen.

Did you all realize that the US debt ceiling actually doesn't exist, and hasn't existed for the past eight years? Though it will return, like a zombie, at the end of the month if Congress doesn't manage to stop it.

I did know, without realizing I did until our friend Dr. Volts asked:

I'm certain the answer is yes. It was created by Act of Congress in 1917, as a reasonable alternative to the previous practice of requiring Congress to approve bond issues one at a time. It doesn't exist at the moment at all--it's been "suspended" at two-year intervals since 2013

— Intimidating Smirk (@Yastreblyansky) July 22, 2021

It's because of the suspension that they've been able to add $6 trillion to the debt since March 2020, not to mention the horror of the Trump tax cuts (where they just rejected parliamentarian's advice). GOP said nothing of course, though they stopped voting for it last spring.

— Intimidating Smirk (@Yastreblyansky) July 23, 2021

I'm wrong on the Trump tax cuts--the Senate avoided breaking reconciliation rules by making the personal cuts expire in 2025, setting up another little fiscal cliff that we can look forward to unless Democrats fix that as well over the next couple of months.

the original trillion-dollar coin idea was simpler and possibly better (though it would have to be $10 or $20 trillion at this point); Treasury would just count the coin as an asset against liabilities and announce that the debt limit hadn't been reached.

— Intimidating Smirk (@Yastreblyansky) July 23, 2021

But I think the coin idea is too gimmicky, and misleading to the public, which will always think it ought to be spent, which is the one thing that absolutely shouldn't be done with it. For raising money, as I've been saying, taxation is the thing, especially when there's $68 trillion out there in the hands of people with so much money that they are literally unable to spend it.

It would raise a constitutional issue (Article 1 section 8, borrowing must be authorized by Congress) none of them would want to touch.

— Intimidating Smirk (@Yastreblyansky) July 22, 2021

You may wonder how I, a notorious non-economist, found out about all this stuff, so I'll tell you something about it, briefly—it goes back to my crazed crusade against Modern Monetary Theory of last spring, when one particularly astute commenter told me I wasn't doing economics at all, but accounting, and I realized it was true. Accounting is actually better than economics, in my view. It's much more in touch with human social reality, and can't get snaggled by high-class metaphysical witticisms like MMT. Anyway, since then, when I get annoyed by something like the debt ceiling, I read about it in the understanding that it's not economics, merely accounting, and that makes it totally comprehensible.

Cross-posted at No More Mister Nice Blog.