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Eliminate the Debt Ceiling

The periodic chaos and exceptional measures associated with the US federal debt ceiling are costly, unnecessary, and could well end in catastrophe. The US Constitution, arithmetic, economics, and common sense all support legislation to abolish the cap once and for all.

NEW YORK – On January 19, 2023, the stock of outstanding US federal debt reached $31.4 trillion, technically bumping up against the statutory “debt ceiling.” The Treasury is now resorting to “extraordinary measures” to buy more time for Congress to raise or suspend the debt limit before interest or principal payments come due. A failure to do so will trigger a sovereign default.

If you doubt that this could ever happen, think again, because it already has. In 1790, the Treasury, under Alexander Hamilton, took over the debts of the states and deferred interest payments until 1801. In November 1814, when the War of 1812 had destroyed both the Treasury and the White House, the government did not have enough gold and silver to pay the interest due on its debt. And in 1862, the federal government refused to redeem into gold greenbacks that it had created the previous year.

Then, in 1933, Congress, at the request of President Franklin D. Roosevelt, reneged on the government’s obligation to make payments on Liberty bonds in gold at a fixed price. And in April and May of 1979, a technical glitch caused the Treasury to miss the deadline for redeeming $122 million in maturing Treasury bills, with some investors waiting more than a week to be paid.