What should we do about the debt ceiling -- and why should you care?

OMG! The DEBT CEILING FIGHT is back.

Many of you may be asking yourself: what the hell is the debt ceiling? In brief, it's the limit on how much the government is allowed to borrow to pay for what it already owes on bills Congress has already agreed on and enacted — not for legislation that's currently being debated. If it's not raised, the government can't pay its bills (just as if you or I didn't pay our credit card bill). That would result in a default, which would mean chaos. Your variable-rate mortgage, for example, would go through the roof. The full faith and credit of the United States would be undermined.

The current debt ceiling has to be raised to pay for debt racked up by Republicans as well as Democrats, including trillions under the former guy. Senate Democrats raised the ceiling for Trump, so why won't Mitch McConnell and his Senate Republicans do it now for Biden?

Answer: because the debt ceiling is a political football used by both parties to gain leverage. (Democrats won some concessions when they agreed to raise it last time.) And McConnell wants as much leverage as possible for the pending fights over Biden's $3.5 trillion plan, the filibuster and voting rights, and so on.

But it's a dangerous football, akin to the one the President carries around with the nuclear codes. It could blow the place up.

Senate Democrats need to get 10 Republicans to vote for raising the ceiling (because of the filibuster). What's their plan? Tack a debt-ceiling measure (lifting it through the end of 2022) onto a bill to keep the government funded through December, which will also contain some goodies Republican senators want, such as urgently needed disaster relief for their states.

So what happens if Republican senators still won't budge? Will the government default on its debts? Will we have another government shutdown as we've had before when the government ran out of money?

No one knows, and that's part of the problem. It's spooking the market and causing tumult in the economy. And making Washington nervous.

My guess is that everything will be worked out. McConnell and his Republican colleagues don't want to bring the economy to its knees.

But the longer-term problem of the debt ceiling will remain. May I make a humble suggestion? Abolish the debt ceiling once and for all. Put a measure to abolish it in the Democrat's upcoming reconciliation bill.

When the debt ceiling was first adopted in 1917, it might have been a useful way to prevent a president from spending however much he wanted. But since 1974, Congress has had a formal budget process designed to control spending and the taxes needed to finance it.

There's no reason for Congress to authorize borrowing for spending that Congress has already approved, especially when a failure to lift the debt ceiling would be so horrific.

Having a debt ceiling doesn't discipline government, anyway. Remember: The national debt is obligations government has already made to those who lent it money. Discipline has to do with setting spending limits and legislating tax increases, not penalizing the lenders.

Which is why most modern democracies don't have debt ceilings. Britain, France, Germany, Canada, Australia – they do just fine without explicit borrowing limits.

Even more basically, the nation's debt is a meaningless figure without reference to the size of the overall economy and the pace of economic growth.

After World War II, America's debt was larger than our entire annual Gross Domestic Product, but we grew so much so fast in the 1950s and 1960s that the debt kept shrinking in proportion.

Today's debt is also higher than our GDP, but that's a problem only because the debt is growing faster than the economy is growing – so it's on the way to becoming larger and larger in proportion. But if we begin to spend more on public investments that will grow the economy (e.g., education and infrastructure in Biden's bills), the debt will start to decline in proportion to it.

This is what we ought to be focusing on. Fighting over whether to raise the debt ceiling is a dangerous distraction. Abolish it!