In the Two Minute Drill, we explain complex issues in politics in 250 words or less (roughly the amount of words it takes the average adult two minutes to read on a monitor). Politics just isn’t always that complicated. Without the fluff and partisan bias, even the most complex of our political differences can be explained succinctly. This week: Explaining the federal debt ceiling.
The House and Senate recently passed a government spending plan without resorting to last-minute brinksmanship. The plan guides government spending into 2015, defusing the chances of another federal shutdown like the one in October. But mere hours after House budget chairman Paul Ryan signed the budget deal, leading to the packages passage in the House and Senate, he raised the specter of another bruising budget fight early next year. “We as a caucus, along with our Senate counterparts, are going to meet and discuss what it is we want to get out of the debt limit,” Ryan said on Fox News Sunday. “We don’t want ‘nothing’ out of the debt limit. We’re going to decide what it is we can accomplish out of this debt limit fight.” Similarly, Senate Minority Leader Mitch McConnell (R-Ky.) was skeptical of a “clean” debt ceiling hike. “Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country,” McConnell said. To understand how reckless these positions are, you have to understand just what the debt limit is and what it means to breach it.
The Explanation (250 or Bust)
The federal government’s total outstanding debt consists of debt held by the public and debt held in government accounts. Debt held by the public increases when the government sells debt to the public to finance budget deficits and acquire the financial resources needed to meet its obligations. Debt held in government accounts increases when the federal government issues debt to certain government accounts, such as Social Security, in exchange for their reported surpluses.
Nearly all of this debt is subject to the statutory “debt limit,” a legal ceiling on how much total debt the government can issue. Unlike any other major industrialized nation, Congress has always restricted federal debt, beginning with The Second Liberty Bond Act of 1917.
Treasury has yet to face a situation in which it was unable to pay its obligations as a result of reaching the debt limit. In the past, the debt limit has always been raised before that point. In the absence of a debt limit increase, the cash balances on hand when Treasury’s borrowing capacity ran out would then dwindle, and the government would no longer meet all of its legal obligations in a timely manner.
In other words, when policymakers raise the debt limit, they are merely enabling the government to pay the bills that Congress has already incurred. Raising the debt limit does not create more spending or larger deficits, and Congress should not hold the debt limit hostage to budgetary and unrelated legislation.
Word Count: 245.
The Five Most Interesting Things We Read This Week
Here are the five most interesting articles (both political and non-political) we’ve read this week:
- Stop wasting your money. Your multivitamins don’t contain any proven health benefits. From a new report from the Annals of Internal Medicine: “The large body of accumulated evidence has important and public health and clinical implications. Evidence is sufficient to advise against routine supplementation, and we should translate null and negative findings into action. The message is simple: Most supplements do not prevent chronic disease or death, their use is not justified, and they should be avoided.”
- “At about 40,000 miles, the route is the longest in Olympic history, winding through the North Pole, beneath the water in Lake Baikal and into space. Fourteen thousand people are taking part, the most ever, and they are traveling, variously, on foot, by plane, by train, by car, by snowmobile, by icebreaker, by jet pack, by zip wire, by sleigh, by horse and by camel.” The New York Times describes the Olympic torch relay.
- How quiet is too quiet? “Everybody seems to be looking for a little peace and quiet these days. But even such a reasonable idea can go too far. The quietest place on earth, an anechoic chamber at Orfield Laboratories in Minnesota, is so quiet that the longest anybody has been able to bear it is 45 minutes.” Companies often use the room, where background noise is measured in negative decibels, to test their products to find out how loud they are. From Smithsonian.com.
- You don’t really know Styrofoam. “The real STYROFOAM™ has never been used to hold food and beverage containers, which are made out of the less insulative and moisture-resistant expanded polystyrene. And the maker of the real STYROFOAM™, Dow Chemical, would really like everybody to stop using the term.” From The Washington Post: You Have Never Actually Used a Styrofoam Cup, Plate or Takeout Box.
- Google recently came out with its annual list of the things we searched for this year. The top “What” question from 2013: “What is twerking?” The top “How to” question of 2013: “How to tie a tie.” Check out the full list, where you can dig into the top searches in different categories including top appetizer (Tomato Mozzarella), top beer (Blue Moon), and top TV show (Breaking Bad). The top meme? Zerg Rush. Type “Zerg Rush” into Google and you’ll get a pleasant surprise.
And in case you missed it, check out The Weekly Column. This past week addressed legislative prayer and the Establishment Clause. Read the Column – Town of Greece: Legislative Prayer and Religious Endorsements.