Each year the board of directors of the Indiana Bankers Association approves an annual financial budget during its January board meeting. Staff knows that the goal is to operate within this budget, but if something goes wrong, we inform the board. The deviance may require that we take some action in order to return the bottom line to the expected level. I suspect that this is a fairly common occurrence for nearly every business entity in existence. If we want to tackle a project that would require us to borrow money, that circumstance would be factored into the budget, and authority from the board would be approved at that time. If the project occurs during the middle of the budget year and had not been contemplated when the budget was approved, authority would be sought from the board at the time that the project is approved. Again, I suspect that nearly all businesses operate similarly.
The federal government operates much differently. First, Congress sometimes goes for years without actually approving a budget. Instead it operates by approving a series of Continuing Resolutions (CRs) that often permit using the most recent budget going forward. Even when Congress does pass a budget, as it did this year, there is another mechanism that comes into play. That mechanism requires Congress to approve an increase in the national debt limit. Admittedly the debt of the United States is far too high, in my opinion. Regardless, it makes little sense that a body that approved a deficit budget must later vote to increase the debt limit at some point in the future when the U.S. treasurer determines that we are about to run out of cash and borrowing authority to meet the approved budget. It seems obvious to me that if we do not want to increase the debt, we should pass a balanced budget! Or we could actually chip away at our humongous debt by passing a budget that shows a surplus — a novel approach.
The federal government and Congress waste much time and create needless rancor by playing this game of raising the national debt to pay for things already approved by Congress. In the past few months, the debt limit has been raised several times, most recently last week. There is always partisan finger-pointing and debate surrounding this issue. Fortunately, last week Congress approved taking the debt limit off the table for a year. Politically, it will be interesting to watch the posturing in this fall’s election relative to the continuing deficit budgets and debt limit. It will be the first election in many years in which the budget and the debt limit will not occupy daily front page news, and I believe that is a good thing. Candidates can debate other issues of importance in depth, and we the voters may be able to better determine which candidates more fully represent our own beliefs.
Of course, this does nothing for the longer-term issue of how the federal government should operate relative to the debt ceiling and budgeting process. Maybe a candidate will make this procedural issue a campaign issue, although I realize that, except for political junkies like me, it would put most people to sleep. Even so, Congress will someday have to deal with the continuing budget deficits which are creating this mountain of debt that is now estimated at $54,000 for every man, woman and child in the United States.
S. Joe DeHaven, 02/19/14