Donald Trump last week shocked Congress by demanding that the debt limit either be abolished or at least suspended during his presidency — a stance typically championed by Democrats. While the plan, thankfully, has been shelved for now, there might be a way for conservatives to turn this political lemon into lemonade. What if Congress eliminated the debt limit in the much-anticipated budget reconciliation bill but did so in a way that tackled the debt itself rather than the ceiling?
Want to restore relevance to state legislatures and self-government while addressing the debt crisis? Consider putting the states in charge of managing the debt. The idea might not be as far-fetched as it sounds.
As part of the upcoming reconciliation bill, Congress could implement a rule requiring that the debt limit cannot be raised unless two-thirds of state legislatures approve.
We are no longer a self-governing people. Politics today reveals a troubling reality for both the right and the left: Our government no longer operates of, by, for, or in response to the people. The cause lies in the dismantling of the federalist system created by the Constitution. Instead of states representing the people in federal government, the entire arrangement has been turned upside down.
The states have become a joke, a bunch of shleppers doing the bidding of the federal government and groveling for its attention and money. Our founders envisioned the need for localism when America was a relatively homogenous group of just 3 million people. How much more so now with 340 million very diverse individuals and communities?
From a liberal and conservative perspective, restoring the balance of power the founders intended requires flipping the tables. Few solutions achieve this better than devolving debt authority to the states, an idea first proposed by the Goldwater Institute and recently promoted by Rep. Eric Burlison (R-Mo.) on my podcast.
Putting the states in the driver’s seat
Empowering the states through this transformational reform will strengthen self-governance. It will make state and local elections more relevant, align state governments with the priorities of their people, and hold the federal government more accountable.
States and local governments have lost influence because they collect only $3.5 trillion in revenue combined, while the federal government collects $5 trillion in one central pot. The federal government then returns about $1.1 trillion to the states, burdened with conditions and distortions that leave state officials unable to control their own destinies.
The federal government collects most of its revenue from the wealthy, leaving half the country indifferent to reining in federal overreach. Meanwhile, the truly wealthy accept their burden, content to pay what amounts to a bribe for maintaining their status. At this point, we might as well hand our money to the King of England. These funds bear no connection to self-governance or the character of our communities and epitomize the “taxation without representation” that sparked the war for independence.
In recent years, much of this revenue hasn’t even come from taxes but from money printing to service the interest on the debt through treasury auctions. This practice has burdened Americans with an even worse tax — long-term, intractable inflation. What if we shifted control of the printing presses to the states, placing them firmly in the driver’s seat?
Empowering grassroots conservatives
As part of the upcoming reconciliation bill, Congress could implement a self-imposed rule requiring that the debt limit cannot be raised unless two-thirds of state legislatures approve. Even a 26-state threshold would demand agreement from several Republican-controlled chambers for every Democratic-controlled chamber to raise the limit. This approach wouldn’t delegate Congress’ appropriations authority to the states but would instead impose a self-restraint, limiting federal spending without state approval to raise the cap.
Currently, Democrats fully control both legislative chambers in only 18 states. Even a simple majority-rule requirement would still need approval from eight GOP-controlled states or chambers to lift the debt ceiling. Shifting this power to state legislatures would bring the debate over the federal government’s scope to a local level, empowering conservative grassroots movements to wield a veto over excessive spending. It would also make state legislators key players in Congress’ most critical decisions, in effect serving as a backdoor repeal of the 17th Amendment.
Over time, this plan would compel states to take control of their own futures and permanently reduce the size of the federal government. Once states take the lead on managing the debt, the conservative vision of states fully overseeing health care, transportation, education, and agriculture could become a reality.
Civil society established the states, and the states established the federal government. Many of today’s public policy problems arise from flipping this governance on its head. Granting states authority over the debt limit could address not only the federal spending crisis but also fix the broader dysfunction of the federal government in a single, systemic move. Now, we need elected officials with the courage to champion this or other bold ideas to promote localism. It’s not too late to include this reform in next year’s most important bill.
National debt, Debt ceiling, Federal budget, Congress, State legislatures, Federalism, Budget deficit, Reconciliation bill, Republicans, Democrats, Grassroots, Opinion & analysis