As one of their last official acts in 2009, members of Congress are debating whether to let the federal government go more deeply into debt. The issue is the country's debt ceiling, or the statutory limit on the amount Washington can borrow. The exercise may be familiar, given that Congress has raised the debt ceiling three times in the past two years. But the context is different. The deficit in the fiscal year that ended Oct. 31 was $1.4 trillion, or almost 10% of the country's gross domestic product -- the highest level since World War II. And the national debt, which didn't reach $6 trillion until 2002, now stands at $12 trillion. Interest payments on that debt consumed nearly $200 billion of the federal budget in fiscal 2009.
In other words, lawmakers have more reason than ever to be concerned about deficit spending. Yet those who would vote against increasing the debt limit are just posturing; holding firm on the current limit would simply force the administration to buy time with accounting gimmicks until Congress relents and raises the ceiling. The alternatives are to shut down some government operations or default on obligations, which aren't real options. And with unemployment painfully high and the economy struggling, it's not practical for Washington to slash spending or raise taxes enough to curb its borrowing.
In the face of these ugly realities, however, there is one thing lawmakers can and should do. As they vote to raise the debt limit, they can try to reassure voters -- and, perhaps more important, the investors whose purchases of Treasury bills keep the government afloat -- that they won't let the deficits continue in perpetuity. That's more of a challenge than merely bringing the budget back into balance after a recession-induced spending binge. The long-term problem is caused by burgeoning retirement and healthcare costs associated with the aging U.S. population. And Congress doesn't have much stomach for reining in Social Security or Medicare. Just look at the controversy over the proposal in the Democrats' healthcare reform bills to eliminate some of the extra subsidies paid to the optional Medicare Advantage program.
Deficit-conscious lawmakers have proposed several ways to force Congress to address the looming fiscal problems, such as establishing a commission to recommend ways to bring the budget back into balance. We'd rather see Congress follow the recommendation of the nonpartisan Peterson-Pew Commission on Budget Reform and pledge to stabilize the federal debt at no more than 60% of GDP by 2018. Congress has time to figure out how best to curb its deficit-spending habit. Repairing the country's credibility as a borrower, however, can't wait.