Raising the Debt Limit

August 17, 1953

It is fortunate that Congress did not immediately grant the President’s request to increase the legal national-debt limit from its present level of $275,000,000,000 to $290,000,000,000. Immediate acquiescence by Congress, as Senator Byrd put it, would have been “an invitation to extravagance.” A suspended decision, on the other hand, will give both time and occasion to reexamine the whole problem of government spending.

The Administration’s argument for raising the ceiling was that the national debt was already more than $272,000,000,000, and that expenditures between now and Jan. 1 are expected to exceed receipts by $7,300,000,000. In reply, Senator Byrd pointed out that the Treasury already had a $9,000,000,000 cash balance in the general fund, “which should be ample to cover this five-month deficit, and if not, there will remain $3,000,000,000 in addition which may be borrowed under the existing debt limit.”

In addition, Senator Byrd said: “The President has the authority, if he chooses to use it, to place every agency of the government on an expenditure ration and limit the expenditures in such manner as he deems best. . . . We all know there are thousands of ways to reduce government spending that can be accomplished by Executive order without impairing benefits as measured by real value.”

The basic solution of the debt problem, in short, is not to keep raising the debt limit but to balance the budget by bringing expenditures down to a reasonable level of taxation. Spending in the fiscal year 1954 seems likely to equal or approach spending in the year that ended June 30. That itself was higher than in any full Truman year. Yet Mr. Eisenhower fought hard to get Congress to authorize very dubious 1954 expenditures, such as the tremendous sum of $6,652,000,000 for foreign aid.

One of the arguments of Secretary Humphrey in favor of raising the debt limit was the need of keeping a huge cash balance: “You can’t run this government with this level of expenditures on less than about a $6,000,000,000 cash amount because you are spending at the rate of about $6,000,000,000 a month.” This argument may boomerang. It may remind the country that we are now spending in a single month almost as much as Franklin Roosevelt in his first term spent in a full year.

It is of course self-contradictory for Congress to approve tax cuts and expenditure increases that make additional debt inevitable, and then refuse to approve the additional debt. The question has even been raised whether a legal debt limit serves any valid purpose at all. Yet it does. It acts as an alarm clock, a pressure gauge, a “dangerous curve ahead” sign. It is merely a foolish and perilous misuse of these devices to turn off the alarm and go back to sleep, to substitute another pressure gauge when the first one reaches the red mark, or to move the sign beyond the curve instead of in front of it. This is in effect what Congress has been doing over the years. From 1941 to 1945 it raised the debt limit five times. It is worse than pointless for Congress to set a debt limit unless it really means it.

Though it may now be too late for Congress to refuse to raise the debt limit at its next session (or even at a special one), it would be folly to grant that increase without insisting on some quid pro quo in return. This might take the form of passage of the Coudert resolution (already approved by the House Government Operations Committee) which would prohibit the Administration from spending more than it took in during any year except in wartime or of grave emergencies declared by Congress. Congress might even, in return, submit a constitutional amendment to give the President power to veto individual items in appropriation bills. Better, it might deny itself the power to appropriate more than he had recommended. Any one of these moves would help to substitute competition in economy between Congress and the President for the present competition in extravagance.