Jim Hartman: Our growing $31 trillion debt threat

In February 2011, Indiana’s Republican Gov. Mitch Daniels delivered the keynote address to the annual Conservative Political Action Committee (CPAC) Conference in Washington, D.C.

In his speech, Daniels identified the nation’s bloated budget deficits as presenting a grave threat to America’s future. “Red ink,” our national debt, had become the new “Red Menace.”

In 2011, the U.S. debt totaled $14 trillion, representing 95% of our gross national product (GDP). The debt-to-GDP ratio is important as a measure of whether the U.S. has the ability to cover all of its debt.

House Republicans in 2011 used a looming debt-ceiling limit as leverage to negotiate a limit on non-entitlement spending with President Barack Obama. Annual caps and the threat of automatic cuts caused spending to fall as a share of GDP for several years.

However, Washington ran a staggering $7.2 trillion in budget deficits the past three years. Annual deficits are likely to surpass $2 trillion within a decade even with peace and prosperity — and approach $3 trillion if interest rates continue rising.

In 2023, the U.S. debt now exceeds $31 trillion, representing 125% of our GDP. The massive spending blowout in the past two years has resulted in 40-year high inflation and a weakened economy.

The U.S. reached its $31.4 trillion limit on gross federal spending on Jan. 19, but Treasury officials have resorted to special measures to delay default until June.

Speaker Kevin McCarthy and House Republicans promise they won’t raise the debt limit without spending concessions from President Biden. But Biden insists he won’t negotiate at all over the debt limit.

Republicans will have to pick their spending targets carefully, explain their goals in reasonable terms so they don’t look like they want a default, and present their plans to the public as a united team. If Republicans want to use the debt limit as leverage, they need a strategy for how this showdown ends, not merely how it begins.

Federal spending control is impossible unless Congress is subject to an external force, just as 44 governors now use the ability to impound elements of their legislatures’ spending.

These 44 governors have line-item veto authority to nullify or cancel budget appropriations without vetoing the entire bill.

Presidents of the United States have repeatedly asked Congress to give them line-item veto power.

In his 1984 State of the Union Address, President Ronald Reagan called for the same line-item veto authority he had exercised as governor of California.

President Bill Clinton echoed that request in his 1995 State of the Union Address.

A window of sanity opened when Congress granted this power to the president by the Line Item Veto Act of 1996 to control spending. It was used by Clinton 82 times.

In 1998, the Supreme Court ruled the act unconstitutional in a 6-3 decision.

Though the Supreme Court struck down the Line-Item Veto Act, President George W. Bush in his 2006 State of the Union speech asked Congress to enact legislation that would return the line-item veto power to the president.

An amended version of the line-item veto bill was introduced and passed in the House but failed in the Senate.

Presidents who supported spending-control for the executive include, Trump, Obama, both Bushes, Clinton, Reagan, Ford, Nixon, Eisenhower, Truman, FDR and U.S. Grant.

A free-spending Joe Biden won’t. But the 2024 Republican presidential candidates should support it, and House Republicans could demonstrate their unity and seriousness by passing a line-item veto bill this year.

Notably, Nevada is among only six states not giving their governor a line-item veto.

Legislative efforts to create line-item veto authority for Nevada governors in the 1980’s and 1990’s were unsuccessful.

Gov. Jow Lombardo has very limited authority to reduce expenditures, only when revenues do not reach projected levels forecast by the state’s appointed five-member Economic Forum of fiscal experts.

E-mail Jim Hartman at lawdocman1@aol.com