Homer Simpson, Cleavon Little and the 'Debt Ceiling'

by Frank Hill, Telemachus

You are going to hear a lot about the so-called ‘Debt Ceiling’ between now and April so you might as well try to understand it before some politician tries to trick you into thinking it is something it is not, or worse than that, ‘not all that important’.

The first thought that came to our collective consciousness was the indelible image of the opening credits to the inimitable ‘Simpsons’ show where Homer is mishandling a spent nuclear rod with some tong clamps and throws it in the air and it goes down the back of his shirt.

Hidden meaning:

‘You don’t want to mess with it if you do not know what you are doing!’

Many House Republicans have been urging that the debt ceiling be used to ‘force’ Congress to vote on some of the tough spending decisions that have got to be made to lower federal spending and these ridiculously high budget deficits and insane national debt.

Why they don't just put on a vote-a-rama every day for the next 365 days and vote on the viability of every single federal program on the floor of the House is beyond us. They could do that without ever tying it to the debt ceiling or the singing of the Star-Spangled Banner before the Super Bowl for that matter.

This somewhat artificially-manufactured 'crisis' argument mirrors the one expressed in such a serpentine manner by former WH Chief of Staff, Rahm Emanuel: ‘Never let a good crisis go to waste!’

Except that using the debt ceiling as a ‘crisis’ is almost self-defeating in its circular logic. ‘Let's hold a gun to our collective head in Congress (in the form of not raising the debt ceiling) and then we will stop doing all the spending…that is causing the debt to go up in the first place!’

That reminds us of a scene from 'Blazing Saddles' with the great Cleavon Little where he, as the new African-American sheriff in an all-white western town, threatens to take his own life in his own hands. Think of Congress as 'Sheriff Bart' pulling out the 'debt-ceiling gun' on themselves.

(please excuse the non-PC nature of this clip but it does capture the essence of Congress using the debt ceiling vote to reduce spending and Mel Brooks and Cleavon Little were making a sardonic comedic point about the townspeople in a Mark Twainish sorta way)

(Love the nice lady when she says: 'Isn't anyone going to help that poor man?' Just like the American voter who keeps sending the same Congressman back to represent them year-after-year-after-year.)

So what is the ‘debt ceiling’ anyway?

The debt ceiling was established by the Second Liberty Bond Act of 1917. World War I-era legislation. Close to 100 years ago. That in and of itself should be enough evidence to convince you it is archaic, out-of-date and not really applicable to current modern practices and economic realities.

It is a very simple concept birthed under very simple circumstances. Previously, whenever Congress wanted, or needed, to raise money through the debt markets, they had to pass legislation to raise the debt limit for each individual issuance of bonds. With the passage of the Liberty Bond Act, Congress could set a higher limit for debt issuances and pass multiple spending bills that would not necessitate multiple increases in the ‘debt ceiling’.

What would happen if Congress repealed the ‘debt ceiling’? We do not know and no one else does either. Maybe we should try it; it would make each and every spending vote subject to raising the debt ceiling and NO Congressman or Senator wants to be on record for increasing the national debt over 2000 times per session of Congress. NONE of them, not even Barney Frank.

It might remove one ‘free’ vote per year for conservative Members to vote ‘against this monstrous debt ceiling bill!’ and then trumpet their bravery and 'conservatism' (sic) for the folks back home. All the while they are slashing taxes and increasing defense spending and special projects for their home district that is ‘not pork, but constituent service!’ These decisions all contribute to higher debt, not lower.

There is a question that we are doing some homework on about how Congress would be forced by previous law to deal with debt coming due or obligations in the form of contracts financed with debt. If true, and unless changed, this provision would basically mean every debt obligation would line up in order on the calendar and be paid until the money runs out. Which would be like in a few weeks. And then every program from defense to Social Security would be cut by over 30%, minimum.

But let’s assume that the debt ceiling stays as is. What would happen in April if Congress does not come to some compromise on spending reductions they want to attach to the debt ceiling being raised?

Immediately, like within nanoseconds, the entire federal budget process would shift to a ‘cash-based’ system. Meaning, any cash that comes in the door in the morning would get spent on only the top priorities in the afternoon.

We already know that interest on the already extant national debt of $9 trillion held by the public and foreign sovereigns will be paid. First. It has to or else we declare bankruptcy and the US greenback dollar will become as radioactive as the spent nuclear rod in Homer Simpson's shirt.

(Remember, the so-called SS debt of $5 trillion is entirely fictitious and has no economic value or reality according to the CBO. It will never be ‘paid back’ in the traditional sense of the words; it will be ‘paid’ by higher taxes on our children and/or lower SS benefits to us in our dotage)

Next, what do you think gets paid? Defense costs or Social Security? We think SS gets the nod here, to be paid in full because of the clout and fear of the AARP. They are more ‘scary’ to any Member of Congress than the terrorists overseas. Why? Because the AARP can get seniors to vote against incumbents to the tune of 44 million voters per election, that is why.

So out of every dollar, we will have paid about 12 cents for interest on the national debt; 28 cents on SS; 23 cents on defense and why not throw in the 21.4 cents on Medicare we know will never be cut for the reasons stated above? And Medicaid…there’s another 10.5 cents right there.

On the night of the debt ceiling not being raised, 95 pennies out of every single dollar sent to the US federal government by your tax payments will be consumed by these 5 programs which, for all intents and purposes, are the ‘mandatory’ parts of the federal budget.

That leaves 5 pennies out of every tax dollar sent to Washington for all the other programs you might like and love: education; environmental protection; transportation and highway improvements; agriculture and food safety protection.

So, if you really want to ‘cut down the size of government’, allowing the debt ceiling to stay the same as it is today is one big way to do it. Assuming, of course, these same brave souls who vote not to raise the debt ceiling also stop voting for increases in any program, or decreases in any taxes, of importance to them and you.

And to top it off with a cherry, SS/Medicare/Medicaid will have to start getting Marine-style haircuts just so the inherent demographic growth in each program does not throw them over the debt ceiling in 2-3 years from now.

Cause if they don’t, worldwide economic chaos will ensue as the dollar crashes; US bond instruments are dumped like hot potatoes and the Chinese yuan gets a chance to prove its mettle as the new world reserve currency.

Other than that, it is a grand idea.

(Editor's Note: Frank Hill's resumé includes working as chief of staff for Senator Elizabeth Dole and Congressman Alex McMillan, serving on the House Budget Committee and serving on the Commission on Entitlement and Tax Reform. He takes on politics from a fiercely independent perspective at the blog Telemachus).


  1. For what it's worth, I agree with you; although I think our deficit spending is ridiculous, trying to limit the debt ceiling is not an effective solution, and is like holding a gun to our own heads.

    For example, as I've suggested before (on my blog and elsewhere), my proposed solution to Social Security (transition to private accounts, realization of implied debt at government level) would result in a massive increase of government debt, on paper (the debt is unchanged, the accounting would just be more explicit). Although I favor limiting Medicare/Medicade/Obamacare substantially also, I would like to see their rates tied to private insurance payout rates, instead of arbitrarily set, and the implied future debts realized earlier on the federal balance sheet; both of these would also likely increase the on-paper US debt.

    What we really need, as people discuss periodically and are starting to once again, is a stable international exchange currency, kinda like a blogged about. That way when the US currency value starts to go hyperbolic (the inevitable precursor to recycling which eventually happens with all fiat currencies), the systemic risk has a chance to be limited, instead of causing large international currency disruptions and just passing the torch to the next government which is just as incapable of grasping the "balance" part of a balance sheet.

    Of course, ideally the next government would have much stronger provisions in the foundational documents to guard against the fallibility of human leadership, and their inability to resist massive theft through currency degradation, but that's a bit down the road. In the meantime, let's stop pretending we can fix our current debt, start coming up with methods to make politicians more accountable for long-term spending, and start thinking about how to make sure the transition to our next fiat currency is as painless for Americans as possible.

  2. I am gonna read your proposed solution and get back to you.

    Heck....several years ago, the 'transition costs' to a privatized system under W. were considered 'astronomical'. Care to guess what they were way back then, in 2004 or so?

    $1 trillion. That sounds like mini-peanuts nowdays. We spend $1 trillion on bailouts of everyone from Wall Street to Detroit to the PTA before lunch....and then do it again! and again! and again!

    Will get back to you when I am done reading.

    Playing with the debt ceiling might 'sound like a good idea'....but it probably is not.

    Just vote on every single federal program every single day when Congress is in the 'Committee of the Whole' structure which would allow far more flexibility than voting on an omnibus comprehensive behemoth of a spending bill...or not.

  3. I like the direction of these ideas but you might want to flesh them out some concerning the enormity of the transition costs it will now take to get this done, particularly since we did not take the much-needed steps to privatize at least part of SS 30, 20, 15, or even 10 years ago when it woulda made a big difference

    we are right in the maw of the entitlement hurricane right now with all these Boomers starting to retire and the cost of maintaining current benefits to seniors AND converting to even a partially privatized system is simply stupendous.

    I would recommend you read a great book from a true SS expert, Chuck Blahous, who worked in the Bush 43 WH for 8 years on this issue.. His book is called 'Social Security: The Unfinished Work'

    i think you'll find some information there that will help you flesh out the end to some very good thoughts you have started here....

    It is either that or just raise everyone's FICA taxes by 25% or cut everyone's SS benefits going forward by 30%..or both at the same time. It is about that simple, believe it or not.


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