Cokie Roberts Answers Your Questions About The Debt Ceiling
MARY LOUISE KELLY, HOST:
President Trump recently said there are good reasons to get rid of the debt ceiling, the debt ceiling being the cap on government borrowing and the subject of heated debate whenever Congress considers whether to raise it. Barack Obama voted against raising the limit back when he was a senator, something he later regretted when he got to the White House.
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BARACK OBAMA: That was just a - a example of a new senator, you know, making what is a political vote as opposed to doing what was important for the country.
KELLY: Many of you have questions about why the United States imposes this limit on the government's ability to borrow. And our co-host Rachel Martin put those questions to commentator Cokie Roberts in our regular segment Ask Cokie.
RACHEL MARTIN, HOST:
Let's just get right to our first question. It is about the fundamentals of this whole exercise of raising the debt ceiling, and it comes through Twitter from Sarah Eggers, and she asks the following. (Reading) Why did we invent the debt ceiling? What was its intended purpose?
COKIE ROBERTS, BYLINE: Well, it's a good question, since hardly any other country has a debt ceiling. But the Constitution gives Congress the sole power to authorize borrowing against the credit of the United States. And throughout the - basically the first century plus, individual projects were each financed separately. So Congress had to pass borrowing authority to build the Panama Canal, for instance, or to fight the Spanish-American War. So the debt limit was introduced in World War I as a way to give the Treasury and the brand-new Federal Reserve more flexibility in issuing war bonds. Two thirds of that war was paid for by borrowing.
MARTIN: So as a country, we've just been borrowing and borrowing ever since, it seems like, which leads to our next question. This one was sent by Jenn Berry, who asks, (reading) why is Congress able to authorize raising the debt ceiling instead of staying under budget like we're supposed to?
ROBERTS: Well, that gets to the common confusion between the deficit and the debt. The annual budget allocates funds for all the government programs, and if more money is going out for things like defense or education or whatever than coming in through taxes or tariffs, then you have a federal deficit, an annual deficit. And for fiscal year 2018, which starts next month, that number's expected to be $440 billion. The debt is the cumulative amount of all the money the country owes. And right now, that's close to $20 trillion. And anyone who has a U.S. savings bond owns some of that debt.
MARTIN: But what about the question of staying under budget?
ROBERTS: Well, that's been an ongoing debate for many, many years. A lot of Americans want a constitutional amendment mandating a balanced budget, and most states do have to abide by that. But the federal government has obligations that are different from the states, like defense, and the argument is that flexibility is necessary. And again, keep in mind the deficit is different from the debt. When you compare it to a family budget, remember, most families do have debt in some form, a mortgage or a car loan. And once you've taken on that debt, you're expected to make payments on it. And that's what the federal government has to do.
MARTIN: So this gets to some of the practicality of paying the debt, and we've got a question that speaks to that. Let's listen.
W. MICHAEL HINCHCLIF: Hi. My name is W. Michael Hinchclif, and I am living in Reno, Nev. My question regarding the debt ceiling is this - has anyone in government considered making it a percentage of GDP or some other economic measurement instead of just a flat number?
ROBERTS: Well, there have been efforts to make it automatic so you don't have this fraught debate all the time. There's this so-called Gephardt Rule, named after Dick Gephardt who was a leader in Congress, and it says when the budget is passed the debt ceiling is deemed to have been raised. But the problem is that Congress has regularly failed to approve a budget.
But look, it's also, Rachel, a political problem. Many members of Congress like to use the debt limit as an opportunity to rail against federal spending. Others like to use it as leverage, which is what the Democrats are doing right now. That's why they insisted on a short-term fix so they can use this must-pass legislation to attach something they want. And that's why Republicans are so upset with Trump for siding with the Democrats on this deal. They don't want it to be something where the Democrats have the ability...
MARTIN: A bargaining chip.
ROBERTS: A bargaining chip, exactly.
MARTIN: Commentator Cokie Roberts. You can ask Cokie your questions about how politics and government work by emailing us at firstname.lastname@example.org or by tweeting us with the hashtag #AskCokie.
Thanks so much, Cokie.
ROBERTS: Thank you, Rachel. Always good to talk to you.
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