Needless D.C. Drama

Cycle of Dysfunction

Polls measuring approval for congress have been running in the mid-teens in the last few years.  Only about one out of every six people think congress is doing a good job, which is a pretty pitiful statistic. Based on readily available information, one must wonder if those who believe congress is performing well actually have televisions, or read newspapers.  Case in point, as I write, congress is continuing its tradition of failing to pass a budget to fund the federal government, having shut down the government over the weekend, only to pass a continuing resolution (CR), to reopen on Monday.

 

On this past Friday, a failure to pass yet another CR, caused the U.S. government to shutdown for the fourth time since 1995.  Both Republicans and Democrats, as is always the case, pointed fingers of blame to the other side.  We can debate the specific reason for this shutdown (Democrats wanted a deal to protect DACA recipients from deportation), and whether that is a good reason, but that is not where I wish to focus.  Shutting down the government is a very unique American event that need never occur.  Many countries of lesser stature have weathered civil wars, coups, and all manner of chaos, without shuttering the government, and failing to pay employees.  Rather than dwell on the specifics of the partisan bickering, which are endless, maybe we should look for simpler solutions.

 

There are two similar, but unrelated, issues that often get confused:  government shutdowns due to the inability of congress to pass a budget; and breaching of the statutory debt limit.  The failure of congress to pass a budget for a new fiscal year (which runs from Oct. 1 to Sept. 30 of the following year) means that the government cannot legally spend money.  By law, it must be “appropriated” first.  When this happens, congress will usually pass a CR, in order to keep the government running.  If not, there is a shutdown of government operations considered “discretionary”, while “mandatory spending” continues (which primarily consists of transfer payments such as Social Security).   The debt ceiling issue refers to an absolute dollar limit on the amount that the federal government can borrow.  Periodically, when the debt limit is about to be breached, it either has to be raised, or serious problems may ensue (e.g. U.S. debt default and global financial turmoil).  Fortunately, in most cases, the ceiling is raised on a bipartisan basis, with no issues.  However, it doesn’t always go smoothly.  With projections that the debt ceiling will be reached again in March, and partisan polarization on full display with the budget impasse, we could be in for more fireworks in coming months.

 

The Debt Ceiling is Arbitrary

Since 1962, congress has voted to raise the debt ceiling 74 times, for an average of 1.32 times per year (see History of the U.S. Debt Ceiling ) This factoid should lead to an obvious question:  why do we have a debt ceiling at all?  If it is simply going to be raised once or twice a year, then what is the point?  Conventional reasoning that it provides a check on government debt is belied by the both the ease with which it is raised (under normal circumstances), and our debt levels relative to other countries.

 

Only seven countries in the world have debt limits. Out of those, the only developed countries are the U.S. and Denmark (see Countries with Debt Limits ).  Denmark has never been anywhere close to breaching its limit.  Therefore, the U.S., like our budget shutdowns, is alone among developed countries in having to deal with a ceiling on our debt.

 

There are a couple of elements involved here worth noting.  The first is the fact that the ceiling is a specific dollar amount, that does not automatically increase through time.  This makes the limit completely arbitrary.  Any limitation on government debt should be based on the country’s ability to repay.  Because of both natural real economic growth (driven by growth in productivity and population), and inflation, the economy is constantly growing over time (measured as nominal Gross Domestic Product).  Since government debt will typically grow in line with the economy, a debt ceiling will always eventually be reached.  Therefore, unless there is a specific goal to reduce the debt as a percentage of GDP, the debt ceiling serves no purpose.

 

Furthermore, evidence shows that a debt ceiling does nothing to actually limit debt.  If it had any effect, the U.S. should be running lower debt levels as a percentage of GDP relative to other developed countries. But that is not the case (see List of Countries by Debt ).  Based on International Monetary Fund data, only 9 countries have “net government debt as a percentage of GDP” higher than the U.S., which is currently at 87.8%.  Among those where the data are available, 85 countries have lower debt.  Once again, to stress the relevance of these data, only 1 developed country in that group (Denmark) has a statutory debt limit.

A Couple of Easy Solutions

Every American, as they witness these recurring episodes of drama surrounding U.S. Federal Government finances, should be appalled.  Partisan bickering is often completely divorced from any ideological principles. That is, allegiance to party lacks a philosophical underpinning.  Other times, a small minority in one party dictates the course of events against what the majority of legislators (or Americans) would support.  In actuality, none of this is new.  Democracy has always been a messy business, and politics has always been dirty, but today’s political arena seems to have decayed beyond anything we have seen in modern times.

 

While calls for bipartisanship may seem futile, with a small amount of cooperation, events such as government shutdowns, and debt ceiling fights, could become a thing of the past.  We already have a mechanism for continuing government functions in absence of a budget being passed: the CR.  Continuing resolutions could be a logical framework for preventing government shutdowns.  Amending previous budget legislation to provide for an automatic CR in the event of a failure of congress to pass a budget could make government shutdowns a thing of the past.  Government would continue to run with appropriations based on the previous year’s budget.  This should not be too controversial.  Apparently, it has been proposed before, but for some reason, lacked support (see Legislation for Automatic CR )

 

Concerning the debt ceiling, there has already been some movement in the direction I would propose.  In September of last year, President Trump met with Chuck Schumer and Nancy Pelosi, Democratic leaders of the Senate and House respectively.  In that meeting, there was a “gentleman’s agreement” (according to anonymous sources) to discuss a repeal of the debt ceiling (see Trump, Schumer agree to pursue plan to repeal the debt ceiling ).  As far as I know, this is the first time such a proposal has been made at the leadership level.  However, Republicans in congress have balked at the notion of repeal, with the usual arguments about removing budget discipline.  As I have already noted, there is no evidence that a debt ceiling has any positive effect on the nation’s debt level.

 

Addicted to Brinkmanship

Politicians almost universally express distaste for shutdowns, and yet, they continue to happen.  The reason why is pretty straightforward.  Many politicians see these events as opportunities to force policies that otherwise may fall by the wayside.  More importantly, as disgusted as the voting public is by such incidents, legislators do not seem to be hurt at the polls (see Why Can’t We Avoid Government Shutdowns? ).

 

Despite the fact that almost everyone believes this is a horrible way for our nation’s legislators to conduct business, it persists. It persists in a large part due to the extreme partisan polarization in the country.  There are many reasons for this.  In the broadest sense, the statement that there are “Two Americas” is generally correct.  Certainly, there is a broad spectrum of cultural predilections (defined by socioeconomic circumstances, racial and religious views) represented around the country. But regardless, rural areas tend to lean strongly Republican, and urban areas toward Democrats, creating a sharp political divide down the middle.  Strengthening this divide is the modern media structure, which allows individuals to choose news sources that cater to their world-view; reinforcing those views.  Social media, particularly Facebook, works in tandem with classic media in the same way by promoting news stories similar to ones the user normally reads.  The end effect is that views opposed to predetermined beliefs have virtually no chance of being heard, much less considered.

 

While the media solidifies existing beliefs, cementing natural divisions, gerrymandering helps hardcode that divide into the U.S. House of Representatives.  Gerrymandering is the act of the party in power drawing congressional districts in a way that favors their own party.  Since congressional districts are usually drawn by state legislatures, states that lean toward a particular party tend to magnify their ideological slant in the U.S. Congress.  Both parties through the years have utilized the strategy. But, for the first time, earlier this month in North Carolina, we have seen a federal court strike down an election map as unconstitutional (see Has the Tide Turned Against Partisan Gerrymandering? ).  We should all hope, for the sake of moving toward a fairer, and more transparent political system, that this trend holds.

 

Given the above-mentioned conditions, it’s easy to see why a significant number of congressional districts are slam dunks for a particular party.  Since the most heavily partisan voters are more likely to vote in party primaries, and the most fervent party supporters are more likely to skew strongly to the right (Republican) or left (Democrat), a larger portion of legislators than is representative of the population hold extreme views.  For such legislators, taking uncompromising positions is a point of pride, as well as, a necessity to get reelected.  Shutting down the government, even if it doesn’t accomplish the stated goal, allows a politician to congeal support from the hardline partisan voters who are most likely to show up at the polls.

 

Conclusion

Gallop polls show that Independent voters are almost as large as registered Republicans and Democrats combined (see Party Affiliation ).   Despite today’s more pronounced delineation among voters along party lines, most of the moderates in both parties are open to pragmatic compromise.  If you add moderate Republicans and Democrats to Independents, you easily have over half of the voting populace.  This group is what I would call the “Real Silent Majority”.  I believe this is the group that is most disturbed by continuing legislative dysfunction, as those on the extreme left and right aggressively promote an agenda outside the mainstream.

 

The existence of a debt ceiling, and the necessity to pass an annual budget do nothing for our country besides offering opportunities for brinkmanship.  Rather than allowing certain politicians to exploit these tense situations, our leaders should simply remove the temptation by enacting some simple legislative changes.  Such changes are long overdue.  If those changes fail to come about, those of us in the “Real Silent Majority”, the political middle, should all contact our representatives.

 

 

 

 

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