On Tuesday, Congressman David Schweikert (R-AZ) introduced H.J.Res 99, the National Debt Relief Amendment (NDRA). This constitutional amendment would require approval from a majority of states before Washington increases the federal debt level.
Oh, what a wonderful idea. This is exactly what this country needs, more gridlock when raising the debt ceiling. We can barely raise it now because of all of the political brinkmanship, and this guy wants to add another component to the already sluggish machine.
But beyond delaying the process, we’d just never get the debt ceiling raised ever again. It’s a well known fact that state legislatures tend to be more radical than Congress, regardless of whether the state leans to the left or the right. In Congress, we all know that the ceiling with eventually be raised, because no matter what, the people in charge of the parties on a national scale know that not raising the debt ceiling has the ability to tank our country’s economy. In state legislatures, however, most people just don’t give a shit.
A Gallup poll from last January found that people who identify as either “conservative” or “very conservative” would rather politicians stick to their principles than actually get anything done. They want gridlock. What’s significant about this, though, is that this is how the conservative members of legislatures in states like Nebraska and Alabama think. If a proposal to raise the debt ceiling came up for a vote, it’s clear that it would be shot down in nearly all of the red states.
But beyond the issue of the debt ceiling not being able to be raised and the resulting crash of the world economy (I know…… but there’s more, trust me), is that the very reason that the amendment was proposed is flawed. This is taken directly from Rep. Schweikert’s press release:
Washington has demonstrated an inability to rein in its reliance on debt and continues to mortgage our future with more borrowing, spending, and bailouts.
Conservatives continue to use the phrase “mortgaging our future” (we can probably thank Mr. Frank Luntz for that), regardless of the fact that when the U.S. government borrows money, it is nothing at all like when a family borrows money from a bank. When the government borrows money, it never has to pay it back. As Paul Krugman wrote in his recent article “Nobody Understands Debt”:
The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.
If a family didn’t repay their debt for 70 years, I think they might be in trouble.
What I’m getting at is that the debt shouldn’t be as pressing an issue as politicians are making it. The legitimate economic fear related to debt is called “Crowding Out”. This idea says that when a government borrows too much, it raises interest rates throughout the country, thus decreasing internal private investment. However, that just hasn’t happened. Despite our large debt, interest rates are still at historic lows.
This amendment would even be counterproductive. Everyone knows that, as of now, the United States will not default on its debt, so our interest rates stay low. If this amendment were to pass, it could rid investors of that perception of security. If investors don’t feel comfortable buying U.S. debt, then interest rates will rise.
So congratulations Mr. Schweikert, you win this month’s competition for shitty legislation.