Debt ceiling round two

boxing gloves

 Could another government shutdown be imminent in early 2014?  Could the Federal government’s control over all the areas of our life be on display once again?  Will we be watching the media demagogue our nation’s finances?  Who will go down in the polls, and what new promises will be made to correct the situation?

 With much dread we will be asking ourselves these questions in the near future. But the question I want you to ask is; does the President or the Congress really shut down the government?

        The answer is no.

 What shuts down the government is its authorization to borrow money expires.  It expires because of the Second Liberty Bond Act of 1917.  Prior to 1917 each bond issue by the United States Treasury had to be separately authorized by Congress.  The process gave Congress full control over the nation’s debt, the process however proved to be inadequate for emergency responses. 

 Financial contributions to Europe during the First World War, lead to the passing of the Liberty Bond Act.  After 1917 the executive branch was allowed to issue bonds and take on other debt without congressional approval, as long as the total debt fell under a statutory debt ceiling.    

In a nutshell here’s how our nation’s finances are designed to work.  The Congress passes a budget, the president signs that budget; any emergency spending necessary can be done without congressional approval as long as it does not exceed the congressionally approved debt ceiling.  The design is rather simple when followed in good faith, and that’s where our government shutdowns take root.

   Today, very little effort is put forth on a complete budget, and an equal amount of effort is used to restrain spending outside the budget.  As a result the government runs out of congressionally approved borrowing on a frequent basis.  Our politicians, past and present, have found it much easier to raise the debt ceiling to cover their inadequacies, (or deliberate manipulations), than to control government spending.   

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s