Common Fallacies in the 2023 Debt-Ceiling Debates

Published in the Mises Institute’s Quarterly Journal of Austrian Economics.

Abstract: This article investigates the veracity of three claims made by current and former government officials in the context of the 2023 debt-ceiling debates: it would be unconstitutional to enforce the debt ceiling; the U.S. government has never defaulted; and there are no measures that could be taken to avoid a government default except raising the debt limit. None of these claims is true.

As Congress and the Biden administration carried out the combative negotiations that led to the passage of the Fiscal Responsibility Act of 2023 (H.R. 3746), the news media was replete with stories and opinion pieces about the debt-ceiling debates. Many of these repeated claims made by administration officials and surrogates were designed to promote a political narrative. Such claims included the following: it is unconstitutional for the United States to default on its debt (Blinder 2023); the U.S. has never defaulted on its debt (Biden 2023); there are no additional measures that can be taken to prevent default (Janet Yellen, quoted in Condon and Hordern 2023); and finally, the sole solution to averting a debt crisis is to raise the debt ceiling (Powell 2023). This article will analyze these claims and explain why they are exaggerations, if not demonstrably untrue.

Read the full paper here.