It’s déjà vu all over again, and again and again, do we need a debt ceiling?

Below is my column as submitted from the December, 2013 Sturbridge Times Magazine, Page 22. It's something odd from moi, showing love to a politician I never voted for.

Neither a borrower nor a lender be;
For loan oft loses both itself and friend

The words of Polonius to his son, Laertes, resonated with me almost before I ever heard them.  Raised by a mother who embodied thrift, debt was to be avoided and feared. 

Polonius might not be the most apt guide.  He also said, “brevity is the soul of wit” but was quite the windbag.  Mom, however, I cannot gainsay.  She would quote the Danish courtier always and my experience with loans and mortgages only reinforced caution. *

Sadly, as evidenced by the latest fiscal contretemps, not too many congressmen and presidents had similar maternal experiences.  To characterize our government’s addiction in borrowing to finance its largesse as spending like a drunken sailor is to slander the relative natural frugality of the men who go down to the sea in ships three sheets to the wind.

Was it ever thus?  The United States has almost always had a national debt, and managed it with more or less hands on congressional oversight.  In 1917 we entered a world war and who knew what that would necessitate?  So in the Second Liberty Bond Act of 1917 discretion was granted to the government to spend as it would.  That bill, however, set a limit.  Federal shopping could not exceed a set amount.  The debt ceiling was born.

Since then, through thick and thin and with admirable discipline, our nation has never exceeded the debt ceiling.  The admirable discipline does not mean reining in spending, but making sure the legislative ceremony of raising the limit has been observed steadfastly.  Still, our financial house did not seem horribly out of order.

Raising the debt ceiling is sort of like when the credit card company sends out a letter telling you they have raised your credit limit.  It comes with one of those “you’ve been so good about paying us, you deserve it” notes.  What it really means is “you’ve been so good about paying us, now, we’d like to see you pay us more.”  I do hope no one in this country is under the impression that the issuer is doing this because they want to help anyone but themselves.

The question is begged, however, if they always raise it, why even bother with a debt ceiling?  The word “ceiling” implies there is a point at which you stop. 

So is the bickering over the debt ceiling just much ado about nothing, as it defies gravity no matter what?  Is it time to just abandon it?  Obviously, this is a case for the Long Hill Institute for Economic Policy.  After a miniscule amount of deliberation, an opinion was rendered.  They referenced the story of an ill run railroad.  The trains never left or arrived on time.  Though mostly tardy, occasionally a train would leave ahead of when it was supposed to.  Complaints abounded and as it was a monopoly, users had no alternative.

Finally, the president of the line deigned to speak with the riders.   He was condescending when one angry questioner asked him why the railroad even bothered to publish a timetable when no train ever arrived or departed on time?  The president replied that that was proof of its tremendous value.  “Why,” he thundered, “How would you, my riders, ever know the train was late if we did not publish a schedule?”

The Long Hill Institute uses this parable to make the point that having to observe the ritual tethers us to reality.  

The late Senator Dirksen said in the sixties that billions of dollars added up to real money.  We are in trillions zone.  Some might say there is no problem.  In Dirksen’s time we collected much less in taxes then we do now, so it’s covered.  People who take that argument have a point, but is this a function of inflation?  After all, taxes collected are in money that is worth less.  Inflation is a whole other question that keeps economists’ minds from suffering idleness.

At what point is it too much?  Better we should have to at least look at the question periodically rather than sweep it under the rug, or maybe a national debt of 100 septillion dollars is the sign of a healthy economy?  That would certainly be the logic of those who view not raising the debt as fiscally irresponsible.

*Hamlet was not the only Shakespeare she referenced.  Oft the words of Lear, “Sharper than a serpent’s tongue an ungrateful child” were directed at me.