Senator Grassley:
You have been in Congress far longer than it should have taken to understand how our government finances its spending and programs it approves.
The Constitution grants Congress the power of the purse strings
That power comes with a mandate under Section 1: Article 8 to coin (create) the nation's currency for "the common welfare". For every dollar the federal government spends above its revenue it creates a dollar of monetary asset in the private sector. This is the "ONLY" way the economy can grow to meet population and economic growth expectations.
the legislative branch of the federal government must approve borrowing authority to allow the executive branch to pay the bills.
I'm quite sure that you are aware of the operations of the Fed and Treasury that make this a falsehood, but I'll assume you believe your own misinformation for the sake of civility.
As a member of Congress, you must be aware that "paying the bills" is not a result of borrowing. You pay those bills with your vote to spend "new" money for the government's requirements and taxation/borrowing are following operations from that spending. We could easily fund our government without Treasury bonds, as they only destroy the liquidity of the new money in return for interest paid. Retiring those bonds simply restores that liquidity at a future date, swapping bonds for reserves.
The debt limit provides Congress an opportunity to reevaluate spending and revenue policies to put the country on a sustainable fiscal path.
The debt limit, like many antiquated regulations from the gold standard era, is totally useless except to provide an opportunity for grandstanding and fear mongering as a political tool. To not increase the limit to provide Treasury bond issues would be a disaster with no purpose other than creating a disaster.
We could work around this by "minting" a coin or simply stop demanding bond issues for money created, but those would only highlight the juvenile attitude behind the otherwise serious act of funding our economy. The extreme consequences, especially in this pandemic, of such nonsense could easily be life and death for the "real" people in this economy, including many of your constituents.
Working families and retirees can’t spend willy-nilly without keeping close eye on their bank accounts. Small businesses and farming operations would go bankrupt if they didn’t make sure their expenses squared up with income. In other words, Iowans live within their means. The federal government ought to do the same with taxpayer money.
You, of all people, should know that the federal government is nothing like a household in its spending. If you want those businesses, farms, and citizens to go bankrupt I cannot imagine a better method than depriving them of the money they need to retire their private debt and pay those expenses without incurring more of that debt.
The balance sheet of the Treasury shows deficit spending as "debt", but that is relative only to its position as the monopoly "ISSUER" of the nation's fiat currency. This debt represents the "ONLY SOURCE" of net monetary assets the private sector has. As anyone remotely familiar with dual entry spreadsheet accounting can attest to, you cannot enter a positive (asset) in one sector without also entering a negative (debt) in another.
The national debt, used to set the aggregate hair of the public on fire, is nothing more than a fairly accurate accounting of our net money supply. Reducing that number can only be done by reducing the money supply (net after private bank debt is accounted for) in the economy.
That’s why I’ve introduced legislation to adopt a constitutional amendment requiring Congress to balance the budget from one year to the next.
Doing so means that the "real" resources and labor the government requires are effectively stolen with payments for those clawed back in taxation, leaving nothing in the private sector as a store of value for the commerce it conducts with its own government. This is where I must deviate from my promise of civility and state that you can't actually be serious about this obvious political stunt. Your own donors can tell you what a terrible idea this is.
You, with your decades of experience in government finance, have to know this stuff and understand how quickly this would destroy America's economy with no real path to correct it with legislation. Just attempting to reduce the deficit to any degree has resulted in serious recessions or depressions every time (7) it was tried, so setting that into stone in our Constitution would be disaster, regardless of how popular it might be with conservative voters who trust your judgement.
A better idea would be to restore fiscal discipline and put the brakes on all this spending. Former Treasury Secretary Larry Summers, who served in the Clinton and Obama administrations, has warned in no uncertain terms that all this spending is fueling the fires of inflation.
Here is the obvious reason for your false representation of the fiscal ability of Congress to fund the public purpose in compliance with its Constitutional mandate. Your party has been consistent in its efforts to avoid the federal government being any source for benefit to its citizen "owners" and its currency. Citing a similarly minded free market worshiping economist doesn't change that.
Where were your concerns for "fiscal discipline" when your party legislated the continual reduction to taxation on the wealthy over decades? The luster has long ago worn off their claim of being "job creators", preferring stock buybacks and shady profeteering to actual investments in the economy. Even if one ascribes to the concept of the national debt being a real debt it is hard to justify this abandonment of the middle class and poor in favor of the donor class with no appreciable returns.
