Among the aspects of our republic that our founders got right, is the separation of powers of our three branches of government, Executive, Legislative, and Judicial. President George Washington was adamant that we not create a system or position of royalty, or mimic the monarchies of Europe of that day. The Congress, or "people's house" would contain two chambers, hold the power of the exchequer (the budget and spending) and craft the laws of the land. The Judicial branch would oversee disputes, then between states, and have purview over criminal acts by members of either the Executive or Legislative branches. The Executive branch and later the White House would manage foreign affairs, oversee our military and acts of war as Commander in Chief, and execute the laws of the land as written by Congress, as well as oversee the then paltry federal bureaucracy.
Our national debt expanded exponentially during the Civil War and later both World Wars. However, it was not until October 22, 1981, during President Ronald Reagan's first term, and first year in office, that our collective national debt reached the $ 1-trillion mark. Now, almost 42 years later, that aggregate debt is in excess of $31- trillion. Just for the visual, here is what $1-Trillion looks like - $1,000,000,000,000.00.
U.S. Presidential and Executive branch power has grown, much alongside the federal government's reach, with many of the most significant expansions occurring during the four terms of F.D.R., and later the Great Society programs introduced by LBJ. The largest drivers of federal spending today are Social Security and Medicare, it is worth noting that Congressional Republicans are not proposing cuts or reductions in either of those third rail programs in their proposal to again raise our debt ceiling.
All spending bills originate in the U.S. House, once passed there they move on to the U.S. Senate, later conference committees, and if passed as amended by both chambers on to the President's desk. Congress and its combined 535 members have other responsibilities, but spending oversight and management is its first and foremost priority.
Well ahead of the current looming Debt Ceiling cliff, Congressional Republicans have proposed a reasonable package of spending cuts 0f $4.8 trillion. This is largely accomplished by clawing back UNSPENT Covid Emergency Relief Funding, doled out by two administrations, one Republican and one Democrat, and rolling discretionary federal spending (non-social/transfer payment programs) back to 2021 levels and adding some modest work requirements for able-bodied adults to receive continuing welfare assistance. It is again worth noting that during the Clinton/Gingrich budget battles of the mid-90s, which produced those balanced budgets and one year with a revenue surplus, the most significant compromise and budget balancer was a rework of Welfare into what was then referred to as Workfare, and officially Temporary Assistance for Needy Families (TANF).
Democrats held majorities in the U.S. House during Reagan's first term, portions of the George H.W. Bush Administration, the last two years of George W. Bush's second term, and the back half of the Trump years. Strangely though, congressional Democrats also did not roll over and automatically raise the debt limit in those years either. The current proposal would again raise the debt ceiling but also bring Congressional leaders and the White House back to the table in early 2024.
When we hit the current ceiling, federal bonds, and debt will be paid first. Federal government employees, including our military, will be paid later, and many of those in non-essential positions, will be furloughed. This has happened several times previously, U.S. Parks close, bureaucracies grind to a halt, standstill, or significant slowdown...all of which are avoidable.
One of America's greatest strengths, besides its resilient and seemingly ever-growing economy, is our ability to honor our debts, and most obligations and generally follow through on foreign policy commitments. As we have wavered in those latter categories in recent years, doubt is also rising about the former. And as we saw with the quaking vibrations caused by real runs on two U.S. banks across our entire financial services sector, the reality is often only as strong as the trust and belief in that reality. Global doubt about the staying power and guaranteed value of our U.S. dollar may significantly impact our status as holders of the global reserve currency of choice.
Neither budget cuts nor comprise are wrong or inherently evil. To get us across the finish line this time, both are likely and SHOULD BE required. Just as our founders/framers intended.
