Congress has to authorize the treasury to borrow more money. Everyone knows this. It would be virtually impossible to balance the budget before the deadline hits, and the results would be painful if not catastrophic. The results of hitting the deadline, after a period of wiggle room through accounting maneuvers, without letting the treasury borrow would also be horrible.
The debate about balancing the budget should be largely separated from allowing the treasury to borrow. I get that the debt ceiling creates some urgency and forces congress to draw some attention to it, but right now borrowing really isn't high on the list of problems. The US government can borrow at historically low rates. There is no danger right now of running out of people to borrow money from. There is also little danger of interest payments being unsustainable. Since treasury bonds are fixed terms, there is no risk of somebody "calling up" the debt early.
The way to deal with the debt seems obvious to me. Spend now to accelerate economic growth, then let time, inflation and economic growth slowly shrink the debt relative to the size of the budget. What seems like a lot of money now will seems much more reasonable in a few decades. In 1950 debt was 257 billion and 94% of GPD, in 1980 it was 907 billion but only 33% of GDP. The US didn't pay down the 1950 debt, in fact they borrowed a lot more, but that borrowing was vastly outpaced by economic growth.
The wealthy generally borrow money to invest. They leverage their assets and multiply their returns. Although there is some risk associated with this, it is not financial suicide; done properly it is in fact very wise. If you wait to save up the cash you miss the investment opportunity. The US government has the ability to borrow at amazingly low rates and invest that money directly into the US economy, multiplying the return. They could invest in the infrastructure that would give the economy the foundation to grow in the coming decades: an upgraded electrical grid, high speed internet, mass transit, high speed rail, energy production, a world class education system etc.
It’s not a favour to the budget or to future generations to fail to maintain existing infrastructure just to balance a budget. An infrastructure debt, either badly maintained or never built, is just as much a debt and a problem that is passed on to future decades as a pile of owed treasury bonds is. In fact, I would argue that it's much worse.
The debate about balancing the budget should be largely separated from allowing the treasury to borrow. I get that the debt ceiling creates some urgency and forces congress to draw some attention to it, but right now borrowing really isn't high on the list of problems. The US government can borrow at historically low rates. There is no danger right now of running out of people to borrow money from. There is also little danger of interest payments being unsustainable. Since treasury bonds are fixed terms, there is no risk of somebody "calling up" the debt early.
The way to deal with the debt seems obvious to me. Spend now to accelerate economic growth, then let time, inflation and economic growth slowly shrink the debt relative to the size of the budget. What seems like a lot of money now will seems much more reasonable in a few decades. In 1950 debt was 257 billion and 94% of GPD, in 1980 it was 907 billion but only 33% of GDP. The US didn't pay down the 1950 debt, in fact they borrowed a lot more, but that borrowing was vastly outpaced by economic growth.
The wealthy generally borrow money to invest. They leverage their assets and multiply their returns. Although there is some risk associated with this, it is not financial suicide; done properly it is in fact very wise. If you wait to save up the cash you miss the investment opportunity. The US government has the ability to borrow at amazingly low rates and invest that money directly into the US economy, multiplying the return. They could invest in the infrastructure that would give the economy the foundation to grow in the coming decades: an upgraded electrical grid, high speed internet, mass transit, high speed rail, energy production, a world class education system etc.
It’s not a favour to the budget or to future generations to fail to maintain existing infrastructure just to balance a budget. An infrastructure debt, either badly maintained or never built, is just as much a debt and a problem that is passed on to future decades as a pile of owed treasury bonds is. In fact, I would argue that it's much worse.