A "balanced budget" is one where the money you take in (taxes, fees, "contributions" etc.) is equal to the money you spend (spending on govt, military, foreign aid, Social Security etc.), so that you don't need to borrow ANY money to make ends meet.
Congress has a debt limit set by law (that is, by Congress) that they may not exceed. The National Debt is not allowed to rise any higher than that limit. But every time they come close to it, they simply vote to raise it. This has been happening, often half a dozen times per year or more, for year after year, in administration after administration, for generations. It makes you wonder why they bother setting the limit, if all they are going to do is change it whenever they want to spend more.
Now we have calls to quit raising the debt limit. In a rich irony, those calls are coming from Democrats, which is like John Dillinger calling to end bank robberies. But regardless of whom it comes from, it's an idea worth looking at.
I don't know how close we are to the present debt ceiling, but we're probably pretty close (we always are). If we decide not to raise the debt ceiling any more, any further borrowing we do, will quickly raise our present debt to the existing limit. And once that happens, we cannot borrow a single dime more to make ends meet. Not even for a month, not even for a week. Any additional spending we do, must be paid for, right then and there, with additional revenue... or else we can't do that additional spending.
In other words, if we decide to stop raising the debt ceiling, that means we must write a completely balanced budget NOW. We can't borrow a single dollar, not even if we mean to pay it back tomorrow.
Even if Congress adopts a more forgiving version of "Don't raise the debt ceiling", turning it into "Our debt at the end of this year, cannot be higher than our debt at the end of last year, but if it goes a little higher in the middle of the year and gets quickly smacked backed down, that's OK".... it still means that we must adopt a balanced budget for every fiscal year... and stick to it.
A balanced Federal budget has never been achieved in living memory. Some people claim it was balanced for a few years in the 1990s after Congress cut the Capital Gains tax rate and CG activity (and tax revenues) soared as a result. But if you look at the National Debt at the end of every fiscal year in the 1990s (and in every other year), you'll see that the Natl Debt has gone up EVERY year, including those years where those people claim the budget was balanced. (For a hint of how this could be, look at funds for Social Security and other Fed trust funds. The govt takes in money as contributions, calls it revenue, puts it in the SS trust fund, then borrows it back out of the trust fund and calls it "revenue" again. Gee, we have twice as much "revenue" as we thought! But that borrowing must still be added into the National Debt, whose paper trail tells the real story).
But suffice to say, that balancing the Federal budget is a VERY difficult thing to do.
Those calling for an end to any further raises of the Debt Limit, are essentially calling for an immediate and permanent Balanced Federal Budget. Though such a thing will be painful, it can ultimately be beneficial for the country.
I've heard one report that the amount of the budget that goes for "discretionary" spending, is less than this year's deficit. If true, this means that we could stop ALL discretionary spending, and still not balance the budget-- we'd still have to violate the present debt ceiling by borrowing more to make ends meet.
What it means, is that if we are serious about not raising the debt ceiling, we're going to have to make some "non-discretionary spending", discretionary instead... and then cut it.
Careful what you wish for.
