In an online congressional study group titled “Why the Debt Ceiling Matters,” Rep. John Yarmuth (D-Ky) and Prof. Michael Dorf, law, voiced concerns about the newly passed extension of the debt ceiling and its future impact on the U.S. economy.
The conversation was moderated by former Rep. Steve Israel, who is now the director of the University’s Institute of Politics and Global Affairs, Prof. Douglas Kriner, government, and former Hempstead, New York, council member Erin King Sweeney, associate executive director of the Institute of Politics and Global Affairs at Cornell.
By facilitating the conversation between the representative and professor, the event aimed to teach students about the concept of the debt ceiling through the perspective of current political practitioners.
The debt ceiling is the limit on the amount of money that the federal government can borrow to fulfill its financial obligations. The event was held following the House’s approval on a bill to raise the U.S. debt ceiling on Oct 12. As a result of the agreement between congressional Democrats and Republican leader Mitch McConnell (R-Ky), the legislation would extend the debt ceiling to $480 million until December –– raising the current national debt from $28.4 trillion to $28.8 trillion. President Joe Biden signed the bill on Oct 14.
Treasury Secretary Janet Yellen has warned that a failure to increase the debt limit would have severe consequences, such as causing the government to default on legal obligations, therefore, making the approval of the bill essential.
Yarmuth’s kicked off the discussion, introducing current issues surrounding the debt ceiling, and explained that the debt ceiling and any actions surrounding it are only relevant to the spending that has already occurred — arguing that raising the debt ceiling is unnecessary.
“All that [debt ceiling extension] does is kick the ball down the road once again,” Yarmuth said, “and so whenever we get to that number we’re in the same situation. That’s why Professor Dorf’s statement is so right: It would be wonderful to do away with the debt ceiling. But that’s a tough political vote.”
During the study group, Dorf also introduced his findings on the “trilemma” Biden is confronted with –– “the power of Congress to spend money, tax and borrow.” Dorf explained that the president doesn’t have the power to cut spending, especially if Congress hasn’t authorized him to do so. The president also cannot just impose taxes or borrow on his own authority. In this case, the president’s least unconstitutional option would actually be to violate the debt ceiling statute, according to Dorf.
The first half of the session featured an alternate discussion between Yarmuth and Dorf, answering questions from the moderator. There were also some interactions between the representatives during the session, as Yarmuth explained why he chose to quit the next election answering a question from Israel.
The discussion was followed by a Q&A session with students. In answering students’ questions, Yarmuth and Dorf explained the relationship between the debt ceiling and inflation, and their prediction of what would happen when the consideration of the debt ceiling is delayed in December.
“The debt ceiling does not control the level of debt. The relationship of the debt ceiling to inflation is more or less the following,” Dorf said. “If Congress fails to raise the debt ceiling, and then doesn’t pay people, or defaults, that’s going to raise the cost of borrowing in the future, which means interest rates are going to go up.”