Irish Examiner view: Archaic debt ceiling must be scrapped

Deal provides hope for now but the US debt limit should be replaced by something closer to a normal fiscal strategy

Tue, 30 May, 2023 - 01:55

It was not until 7pm on Sunday that US president Joe Biden and Republican house leader Kevin McCarthy released the full 99-page text of the agreement they had reached to avoid an embarrassing and potentially financially disastrous American debt default.

With the nation facing down a scenario where it was going to be unable to pay obligations to its vast military, its hospitals, its schools, its judiciary and its investors, Biden and McCarthy thrashed out a deal — with both making compromises — and gave us the most significant sign in quite a while that there is room for bipartisanship in American politics.

The country has been deeply divided for some considerable time now and the political widescreen has been filled by demagogues with little real interest in the welfare, stability and well-being of the US, but only in their own narrow, contemptible and sometimes abhorrent self-interests.

Last weekend’s agreement did feature expected brinkmanship between Democrat and Republican party interests, but the fear entrenchment and political expediency could force the US to default on its debt of over $31tn (€29tn), ended up with unexpected cross-party acceptance of broader responsibilities.

In any other modern democracy such an outcome might have been expected, but in the fractured reality of today’s American political landscape, finding any sort of common ground across the political battleground seemed like an impossibly high bar to negotiate.

And, despite agreement being reached, both Biden and McCarthy still have to get their agreed measures passed by Congress and that might seem like an impossibility. Their agreement ‘in principle’ has to be ratified and its passing by both the House of Representatives and the Senate is not a given.

While relieved US citizens can move on from this, they should be concerned by the fact this was the second time the Republican leadership has used the debt ceiling to try and parlay party policy into reality.

But the debt limit — originally established over a century ago and enacted during the First World War so Congress would not have to keep approving debt issuances — is an incongruity in the modern era and needs to be scrapped in favour of something approaching a normal fiscal strategy.

While the weekend deal suggests the existence of a genuine political centre in a Washington political atmosphere riven with division, its perilous passage through Congress and the Senate may provide us with clear evidence that extremists are willing to thrash political norms for their own ends.

The next debt ceiling crisis will come in 2025 and while there are those who want the debt limit scrapped because it risks too much for the US and its economy — not to mention the entire global financial system — there are very many others who want to weaponise it.

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