US debt ceiling: Democrats and Republicans agree deal in principle | Hacker News Reader

US debt ceiling: Democrats and Republicans agree deal in principle

bbc.com

36 pointspg_123462 comments

I recently learnt that Denmark and the US are the only two countries with a fixed debt limit. Several other countries have relative to GDP debt limits. The purpose is the same; to ensure that executive branch can borrow money without having to ask the legislative branch each time. The US debt limit has existed since 1939 in its current form, but it was only recently (like since the 1980s) that it has become a hot potato. Denmark's has existed since 1993, and only been raised once, though far higher than the actual debt.

Other countries don't have these restrictions (fixed or relative), where it's usually because those countries' constitutions allow the executive branch to simply borrow money whenever it sees fit.

I think the debt limit is a good idea as it forces some consensus about spendings. Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation.

It's worse in countries that don't have separation between executive and legislative branch (most EU countries). For example in my country (Poland) you have a party winning an election and then they control both legislative, executive (parliament chooses the prime minister) and mostly judicial branch (not only attorney general is one of the ministers but because terms for supreme/constitutional courts are short they get to put their guys in as well. If they win two times in a row the majority of justice will be theirs.

Once that's done there are 0 check and balances on them. They just spend on social programs and laws benefiting their electorate and screw anyone else. It's a terrible system where winner takes all and is beyond check and balances.

Say what you want about US system but at least it's not free for all the way parliament democracy is. The debt limit is one of those checks - wanna spend money? - talk to the other side about it.

What do you think happens when someone refuses to raise the debt ceiling?

And who in power in the US both approved the current year spending budget, and is currently threatening to not raise the debt ceiling?

The issue with thr US version of the dept ceiling is that the money was already spent. The discussions to raise it should be before they spend more.

> I think the debt limit is a good idea as it forces some consensus about spendings

Except it doesn't, as seen in the US doing this dance on the brink every other year.

What you actually are thinking of is a spending limit where either constitutionally or by statute you can't pass a budget that isn't balanced to some level.

Being able to pass a budget with more spending than revenues and then saying "wait, we have to agree to borrow too" makes no sense

> judicial branch (not only attorney general is one of the ministers

The attorney general is not strictly considered a part of the judiciary in terms of separations of powers.

The role of prosecutor is pretty firmly an executive one based on the model where the legislature makes the laws, the executive enforces them and the judicial checks they're being enforced as written

The problem with poland is not as much the system as the fact that they fucked it up by appointing judges illegally. Any system is a free for all if you just break the rules, and parliamentary systems tend to be on average less of a free for all than presidential ones

> wanna spend money? - talk to the other side about it

That's the point, you already need to talk to the other side in order to spend the money, it's called passing a budget bill. A debt limit just allows you to decouple the debt discussion from the budget discussion, meaning that when it comes up it's either "raise it, we'll see about spending next budget" or "well, guess we're defaulting now"

Essentially a debt ceiling means:

* legislature determines the government's income by setting tax rates

* legislature determines the government's spending by passing the budget law

* legislature determines the maximum amount of government debt by law

Obviously if the budget law requires spending that exceeds the tax income, the difference has to be raised by the government by issuing debt.

Now the legislature can pass these different laws such that the executive has no choice but to break one of these 3 laws, as it is arithmetically impossible to follow all of them at the same time. I fail to see what the benefit of that would be for anyone.

If the legislature wants the government to spend less, they can simply pass a smaller budget.

> I think the debt limit is a good idea as it forces some consensus about spendings.

This is what the budget does. The same legislature that is full of people saying they won’t raise the debt ceiling already passed a budget that implies spending money beyond the current debt ceiling. It passed, with majorities in both houses, and the President signed it. The negotiations were difficult.

If we had an ounce of brains, we’d hold the debt ceiling negotiation at the same time as the budget negotiation. I’m not sure if there are congressional rules that prevent this, or if Congress just enjoys the idiocy.

The thing is, it's not the same legislature in the sense that the US has had an election since then and a different party has a majority in the House of Representatives than the one which passed the budget with all the spending. The real question which I think the media is ignoring is why they didn't raise the debt ceiling enough to fund that spending for at least a year or two when they still had power. The cynical answer to that is probably that it was an election tactic: they wanted to convince people to vote for them using the threat that the Republicans wouldn't come to a deal on the debt ceiling and would wreck the government.

The first point is somewhat fair regarding whether you can charge the current legislature with hypocrisy. It doesn’t really address the point that they’re gonna pass another budget this year under Republican control—so the debt ceiling is an absurd way to accomplish their goals.

The second point I disagree with. The history shows that debt ceiling increases are quite frequent—almost annual. Most of the time it doesn’t provoke a debt crisis. While pre-handling increases with the budget would be better, it doesn’t seem to normally be done. It’s just sometimes the case that one party blocks the process (I think it’s true it’s mostly Republicans, but individual Democrats have opposed raising the ceiling and that’s completely irresponsible). So you don’t need an assumption that Democrats pre-planned this.

https://sgp.fas.org/crs/misc/R43389.pdf#page10

> Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation.

Spending levels are set by Congress, separate to the debt limit. The executive is not authorized to spend money that's not in the budget; there's no blank check. Abolishing the debt limit would not change this at all.

I don't believe its accurate to say that most EU states have no separation between executive and legislative branches.

The split is around 50%-50% with a majority of states actually having a bicameral system where these branches are separated, and this practically includes all major economic states of the EU as well as Poland and the EU itself. [1][2]

In recent legal material, your country (Poland) is a well-known example of an EU state where the governing party has been systematically breaking down this bicameralism and state of law to accomplish exactly what you're describing though.

[1] https://en.wikipedia.org/wiki/National_parliaments_of_the_Eu... [2] https://data.ipu.org/compare?field=country%3A%3Afield_struct...

The OP point was, that no matter how many chambers you have if one party wins majority in all of them and forms also the government (which usually happens), it will decide pretty much all it wants and go forward full steam with the opposition hopelessly running along barking. It's by design. The only chance is with coalitions as there will be more internal friction, but it's a very minor improvement indeed.

Most other countries allow the executive branch to simply borrow money, not whenever it sees fit, but when it is required to execute the budget approved by the legislative branch. That is an important distinction.

I"m Danish and actually wasn't aware that we have a fixed nominal dept limit. Outside of the EUs 60% debt-to-GDP limit.

For people interested in the difference between the US and Denmark with regards to the debt ceiling, take a look at [1].

[1] https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country...

Parliamentary systems often don’t have these restrictions because failing to pass a budget would be considered losing a confidence vote and the government would be dissolved. It’s different with a U.S. style system with a fixed term congress and presidency that can’t be dissolved.

Parliamentary sounds better than this bullshit

Every confidence vote is 100% along party lines and the executive is the parliamentary leadership. Senior cabinet officials run the country and the prime minister holds all the power.

Sounds better than politicians being controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about

That stuff doesnt go away just because you use a parliamentary system. This is really a trait of democratic systems in general.

You need to payoff fewer people in a parliamentary system.

Oh, they still do that. Cabinet officials are controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about.

The debt limit theatre is ridiculous. It's basically an argument about not approving earlier spending after the fact.

If they don't want to hit debt ceilings, stop approving spending that pushes into it in the first place...

They hold each other hostage until the last minute then come up with a deal that allows the right people to line their pockets in the end.

There is a fair chance that far right republicans disagree with the deal, and force McCarthy back to the negotiating table.

It is interesting to look at history in US prior to the Federal Reserve Act.

If the government wanted to spend money on some effort, they needed the citizens to buy bonds.

This seems like a better form of democracy.

After reading some supporting material associated with this topic, I became a fan of MMT. For those interested, I recommend Stephanie Kelton's "The Deficit Myth", and Randall Wray's work. The latter has recently published a really ELI5 for the subject: "Money for Beginners" (NOTE: pay attention to the author - there are quite a few books with similar title)

MMT as an academic concept is fascinating. MMT as a policy tool is useless; if we could predict when runaway inflation will arise we’d have a perfect solution to central banking.

> MMT as an academic concept is fascinating. MMT as a policy tool is useless

What is good about MMT is not original and what is original in MMT is not good.

> What is good about MMT is not original and what is original in MMT is not good.

As you just paraphrased either Dr. Samuel Johnson, or Reverend Martin Sherlock (jury is still out on this one), would you care to elaborate on your characterization, please?

who would've thought!

Indeed. There may be merit in a debt ceiling, and careful consideration in increasing it, but this regularly-scheduled crisis is sheer fnord farce.

There isn't though, at all.

How much debt the US will take on is decided when the Federal budget is authorised. That's when it happens.

The only thing the debt ceiling does is have the US arbitrarily go into default on treasury bills.

There is absolutely no merit to a debt ceiling. If you want to curb spending you do that when you set the budget. You don't do it when the bill comes. Can you imagine trying to get out of your mortgage payment because you said you wouldn't spend more than $500 this month? The bank would laugh at you and foreclose.

One argument for the debt ceiling is budgets, when passed, contain many unknowns. That said, a sensible debt ceiling would be closer to a government shutdown; discretionary spending is halted while non-discretionary payments continue.

What budget’s unknowns does a dept ceiling fixes ? Take this budget line:

Education: 1M$

Here « education » may have unknowns but the ceiling is supposed to apply to the second par : « 1M$ ». I can’t see what may be unclear in this number.

> one argument

Mind sharing others ? I’d would be (sincerely) happy to understand why US needs this while the rest of the world does not.

> What budget’s unknowns does a dept ceiling fixes ?

A trillion dollars plus in student loan pauses and cancellations and starters. Also, for the recently passed IRA we now have “the uncapped tax credits will cost three times what Democrats claimed”.

https://www.wsj.com/articles/inflation-reduction-act-subsidi...

Then pass a new bill to adjust the budget. We shouldn't skip out on our bills. It makes no sense. I'll say it again. There is no merit to having a debt ceiling. Further, it's unconstitutional.

Have they ever not?

Where's the news exactly?

"The news", despite the understandable confusion stemming from its name, isn't about what's new; It's about what's current. "The thing that happened before just happened again" is still news.

Every few years (until they drop the farce altogether and sell the country off for parts to the billionaires), the US will have another manufactured crisis like this. And every time the two parties will come together to strip public goods and social programs.

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