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Why do we even have a debt ceiling? Blame Woodrow Wilson.


With all of this debt ceiling political dueling going on today in Washington, curiosity got the better of me and I decided to investigate how we got ourselves wrapped up in this mess in the first place. Would it really surprise you to know that Woodrow Wilson is behind it?

A number of Democrats today -- including former President Bill Clinton -- are calling on President Obama to invoke the 14th Amendment and issue an executive order to increase the debt ceiling. This got me wondering -- if that's possible, why do we even have a debt ceiling if Congress and the president can just ignore it whenever they want?

To answer this question, you have to look at how the debt ceiling came to be. We haven't always had such a measure to "control spending," and in fact it became the law of the land in 1917. At the time, Wilson was about to usher the United States into World War I and his administration was looking to issue Liberty Bonds. To reassure Americans that the federal government would be "responsible" with their money while at war, Wilson's administration used the idea of a debt ceiling as cover. It seems average Americans didn't trust the government and, lo and behold, they were right.

As a result, the debt ceiling -- passed into law via the Second Liberty Bond Act of 1917 -- was an exercise in bad faith and continues to plague us to this day. At the beginning, federal lawmakers may have kept to the word to spend responsibly, but as this chart shows, responsible lawmaking didn't last long after the debt ceiling was installed and legislators realized out how easily they could ignore it:

In addition, knowing the full story behind the debt ceiling concept makes Democrats' claims about how the law "forces" them to make cuts to "essential" public programs even more bogus.  There would be no "cuts" if they had spent reasonably and responsibly to begin with.

It's also worth wondering if the debt ceiling hasn't had the reverse effect on government accountability than Wilson's administration promised it would.  It seems relying on this "ceiling" has only allowed federal lawmakers to promise more spending, reassuring Americans that the statutory limit would not allow them to borrow or spend too much -- and just look at where that mentality has gotten us.  As George Will has noted, "This is a purely recurring symbolic vote to make people feel good by voting against it."

It only goes to show that truly no good comes from anything Woodrow Wilson ever touched.

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