“We simply cannot continue spending money that we don’t have. I have heard from a great number of Iowans who have said ‘enough is enough’ when it comes to increasing our debt, therefore I cannot support this shortsighted deal that hands Washington a credit card without a limit and sidesteps the tough decisions that the American people elected Congress to make. ... This trajectory of continuously writing blank checks for limitless government spending is completely unacceptable.”
Source of claim
U.S. Sen. Joni Ernst, R-Iowa, in a YouTube video published the same day the Senate passed two-year budget deal that increased federal spending by $80 billion and extended the debt ceiling through 2017.
President Barack Obama signed the budget bill into law Nov. 2. The debt limit, also called the debt ceiling, set by Congress, is the total amount of money the federal government is authorized to borrow to meet its financial obligations, according to the U.S. Department of the Treasury.
Before we explain the debt ceiling, it may be helpful to describe how Congress landed in this position in the first place.
Like in many years, Congress passed a budget in which its expenditures exceeded its revenues — causing a deficit. The federal debt is the sum of all past deficits. Every year that the government runs a deficit, the money it borrows is added to the federal debt.
To finance this debt, the U.S. Treasury sells bonds and other securities. When a person buys a bond, he or she is lending money to the government and will be paid back, with interest, later, according to the National Priorities Project, a non-profit, non-partisan federal budget research organization.
The debt ceiling is the limit set by Congress of how much the treasury can borrow. Congress adopted the ceiling in 1917 as a way to control spending and taxes, then primarily determined by the president, according to a report detailing the history of the debt limit compiled by the Congressional Research Service. Initially, that limit was set at $12 billion, though raising it 78 times has brought it to the level we’re at today — $18.1 trillion. This year, like several years in the past, the federal government was on pace to borrow more than the debt ceiling would allow, which would cause the U.S. to default on its financial obligations, resulting in negative consequences for the nation’s economy.
Raising the debt ceiling doesn’t authorize new spending but allows the federal government to cover its existing financial obligations.
“The debt ceiling is for spending already approved and appropriated by Congress or required by law like Medicare, Social Security and interest on the debt,” said Cary Covington, an associate professor of political science at the University of Iowa. “It is not for possible future expenditures, and it is most definitely not unlimited — hence the term ‘limit.’”
However, it could be argued that while the debt ceiling doesn’t authorize new spending, the fact that its been raised 78 times creates the impression of a safety net that in effect allows Congress to spend more knowing it will be covered, even if indirectly.
Ernst’s statements are inaccurate. A blank check by its very nature allows the bearer to write and spend any amount, thereby enabling future spending. The debt limit does not authorize new spending like Ernst’s statement suggests. Instead, it allows the government to finance existing legal obligations, such as Social Security, Medicare benefits, military salaries and tax payments, according to the Treasury. While the debt ceiling doesn’t specifically allow more spending, it doesn’t prohibit it. Congress and the president must approve any new federal spending commitments, a decision outside the realm of the debt ceiling. These spending obligations have already been approved by Congress and not raising the debt ceiling won’t reverse spending or reign in new debt. Comparing the raising of the debt ceiling to a credit card with no limit is flawed for similar reasons.
What critics of raising the debt ceiling really take issue with is the increased spending but this is separate from raising the debt ceiling. Not raising the ceiling won’t cancel any debt. Congress could force budget cuts as a way to cut down government spending, but the debt will remain the same.
We give Ernst an F.
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This Fact Checker was researched and written by Jessie Hellmann.