While the debt limit has been removed from most people’s focus, it’s one of the best tools to ensure a limited government that doesn’t burden Americans and sap our economic vitality.
Few people knew that $5 trillion of new debt from the coronavirus pandemic era would be able to sneak in between July 2019 and July 2021 when the debt limit was suspended. We knew that the American people were potentially exposed to an unabridged increase in their debt.
The absence of the debt limit for two years has allowed a huge expansion of the federal government, likely adding significantly to current inflationary pressures. Another reckless and rapid abuse of the debt limitation could have serious consequences.
Lurking in the shadows of President Joe Biden’s so-called “Build Back Better” bill debate is the fast approaching debt limit. We are actually already there. The Treasury Department is again quietly employing “extraordinary measures” to finance federal deficits.
Biden’s signing of a $1.2 billion spending bill into law means that Congress will likely vote again to limit the debt before the end the year. Treasury thinks extraordinary measuresAfter Dec. 15, they will likely be exhausted
Plans to dramatically expand the scope and size of the federal government can’t be implemented without a significant increase in the debt limit. It’s vital that we remember the power of the debt limit to prevent these abuses and to defend the rights of all Americans to the fruits of our labors.
If implemented realistically, Build Back Better would call for perhaps $4.6 trillion in new spending and tax credits over a decade—much of which would be wealth redistribution from hardworking Americans to politically connected corporations and individuals.
Biden’s plan would “build back” for a few, and with someone else’s money—specifically, your money. Inflationary trends will be exacerbated by taking this much money from the economy and distributing it in an arbitrary, inefficient way.
All federal government spending is unavoidable at the expense the American people. That’s why our Constitution narrowly defines federal taxing power and why we have the debt limitOther fiscal controls and rules.
Make no mistake, all government spending is a form of wealth redistribution—first, from all Americans to the government, and then, through the projects and favoritism of the government, to a handful of people and entities.
No matter what politicians or bureaucrats do afterward with the money, all government funding is first obtained by destructively taking it out of the economy.
Both Biden and the Left have tried to keep debt limit out of the spotlight. The left routinely paints the debt limit as an arcane obstacle to their plans—as though it’s merely some vestige of a bygone era.
You might have even read about absurd ideas like minting a coin. trillion-dollar coinTo avoid the debt limit we will double down on currency devaluation.
These distractions, however, intentionally obscure the true purpose and intent of the debt limit. It’s a promise to the American people that the government will not endlessly take more of what they earn and produce.
The debt limit isn’t an external limitation, such as the credit limit a bank puts on your credit card. The debt limit is one of many tools that the American people have in order to protect themselves from an abusively large federal Government.
Federal deficits are usually financed by borrowing capital from the private sector. This results in a reduction in investment in economic growth and opportunity, which then creates burdens for all Americans.
Biden may point to the list of benefits in the Build Back Better bill. However, it also destroys broader economic opportunities.
There’s another way to finance federal debt; namely, printing money. Although it sounds absurd, it is actually feasible. 55%This is how the federal government has financed new federal debt since the pandemic.
Pumping new money into the economy, the Federal Reserve has purchased roughly $3 trillion of new federal debt just to try to keep up with the federal government’s pandemic bar tab—which has, so far, added $5.5 trillion to the debt since before the pandemic. That’s roughly $43,000 per household.
We are currently in uncharted territory. The Fed has increased its money supply by increasing its asset assets by more than $7.6 trillionIn just 13 Years. It’s unclear how much of the recent inflationary trend comes from this large increase in the money supply or the rampant federal deficit spending it finances.
That’s exactly what the debt limit and other fiscally responsible rules can prevent. Without these limits, the federal governments could easily hold a blank checkIt can be personalized with your name.
That’s the very definition of an unlimited government.
This powerful and expanding government is more than a threat to our economic prosperity. It is an attack upon the fundamental freedoms that are the foundations of our society.
As the end of the year fast approaches, don’t ignore the next push to simply wave off the debt limit. Though the debt limit may seem like congressional fine print, it’s the fine print Biden and the central planners don’t want you to read.
It is important to remember that the debt limit can be used as an indispensable tool to ensure a government that respects rights and is properly limited.
You have an opinion on this article? Please email to share your thoughts. [email protected] and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Be sure to include the article’s URL, headline, and your name.
