Trump and the Fake Debt Limit

President-elect Trump was right last week when he raised a red flag over the debt limit. The outgoing government is leaving a tailor-made debt crisis for Mr. Trump that complicates his work to implement his mandate, cut taxes quickly and rebuild U.S. strength.

- David Malpass

Lawmakers during the Biden administration spent wildly, so they are responsible for inflation and should have to vote for the debt increase. That's the way it used to work. Before World War I, each deficit spending bill had to be accompanied by a vote on more debt. Voting for both at the same time provided a check to protect the public from government profligacy.

The current debt limit is fake. It was invented in 1917 for the explicit purpose of getting politicians to approve more wartime spending by separating the spending vote from the debt vote. It pretends to limit debt, but only after the money has already been approved by Congress and spent.

Last week's minicrisis provides an opportunity to enact a strong new debt-limit law that protects the public from big government and encourages private-sector growth. The new Republican administration and Congress will have roughly six months until funds run out under the existing debt limit.

They should use the time to negotiate, publicize and pass a debt-limit law that repeals the fake one and forces spending restraint without threatening default.

The current law doesn't work and is actively harmful in three ways. First, it promotes the fiction that there's a debt limit protecting the public. As history shows, there isn't. The current debt limit's only concrete enforcement mechanism is a dangerous game of chicken over whether to default on Treasury debt, a step that would be monumentally damaging.