By Nick Massey
March 7, 2023

Debt ceiling silliness debate: here we go again

What is the debt ceiling and what does it mean for the U.S.?

Over the last 15 years, I have written four different columns on the subject of the debt ceiling. Other than the numbers, nothing much has changed. Here we go again. This would all be quite humorous if it were not so serious.

I’m sure you have heard the periodic silly debate over the debt ceiling is back again, and we’re about to hit our debt ceiling limit. I say silly because the debt ceiling has become just another way for either side of Congress to impose economic terrorism on the other side and all of us as well. It has very little to do with getting anything done but has everything to do with one side holding the other hostage in an effort to get spending concessions or something else they want.

The current debt ceiling is $31.381 trillion. It was $16.3 trillion just 10 years ago and $6.4 trillion 20 years ago. That’s a rise of almost 500 percent in 20 years. Treasury Secretary Janet Yellen warns that we are about to hit the current debt ceiling, at which time she’ll have to start picking and choosing which U.S. bills to pay unless the ceiling is raised by Congress.

In my opinion, there is no question that we need to reduce government spending, balance the budget, and reduce government debt. If you have been reading my columns, you know I have been ranting about this for years. However, the debt ceiling is a separate subject and should not be confused with how we balance the budget and reduce government debt going forward. The debt ceiling involves money already spent or obligations made. Like them or not, existing debts and obligations need to be paid.

As an example, if you had $100,000 worth of obligations this year and your income was only $80,000, you are going to need to find $20,000 somewhere. You will either need to find additional income to make up the shortfall, borrow the money, or default on some of the obligations. If your personal debt ceiling is $100,000, you can’t borrow anymore, and you can’t bring in additional income, you will default.

Most people never believed that our leaders would actually start shutting down the government to prove a point or hold the public hostage for political ideology. At least, that is the hope.

Let’s step back for a moment and consider what the debt ceiling is. The national debt total is simply the cumulative amount of spending that exceeds the amount taken in. The ceiling is an arbitrary number agreed upon by Congress as a benchmark the Treasury cannot exceed. According to the Constitution, Congress must authorize borrowing. The debt limit was instituted in the early 20th century, so the Treasury did not need to ask for permission each time it needed to issue bonds to pay bills. You might find it interesting to note that most countries don’t have a debt ceiling. Be that as it may, it is our law, and we have to deal with it.

A statutorily imposed debt ceiling has been in effect since 1917 when the U.S. Congress passed the Second Liberty Bond Act. Before 1917, there was no debt ceiling in force, but there were parliamentary procedural limitations on the level of possible debt that could be held by the government.

U.S. government indebtedness has been the norm in our financial history, as well as in most Western European and North American countries, for the past 200 years. The U.S. has been in debt every year except for 1835. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791).

Every president since Herbert Hoover has added to the national debt expressed in absolute dollars. The debt ceiling has been raised over 75 times since 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush, and four times under Barack Obama. It has been raised several times since then but in smaller increments as both sides of Congress failed to agree and would postpone facing the major decision.

Yes, it is absolutely important that we deal with our accumulating national debt. However, the debt ceiling is not the problem. The problem is the annual budget deficits. It is important to remember that the amount of debt we have increases only if we spend more than we take in. Of course, that has been going on for a long time with annual budget deficits. In the last four years, we had several annual deficits of over $1 trillion, with $4.2 trillion in 2020. Some estimate that this year will “only” be about $1 trillion. But that is like saying we are going over the cliff less rapidly. The amount of debt is still going up.

Where the debate should be concentrated is on balancing the budget. Unless we start spending less than we take in, the debt will increase, and we will continually bump up against any ceiling established. Some believe that freezing the debt ceiling will force Congress’ hand. But the current debt is from money already spent or promised. Are we really willing to tell the world that we won’t honor our obligations?

The current Congress is likely to be one of the most contentious ever, with both sides playing “chicken” with the debt ceiling to get what they want. The consequences of that, both intended and unintended, could be catastrophic. Those who suggest that it doesn’t matter are playing with fire and are going to get us all burned.

The truth is, there is nothing significant about the debt ceiling number. What is important is finding meaningful ways to reduce annual budget deficits and at least keep the debt from getting worse. There are serious dangers in this debt limit brinkmanship. It’s time for Congress to stop monkeying around, stop the political games, stop holding our citizens hostage over ideology, and get something done. Thanks for reading.

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About Nick Massey

Nick Massey is a retired financial advisor and CFP, and former President of Massey Financial Services. He can be reached at