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It’s time to abolish the debt ceiling



Published: Wed, December 26, 2012 @ 12:00 a.m.

By Philip G. JOYCE and ROY T. MEYERS

Baltimore Sun

The announcement that House Speaker John Boehner once offered to take the debt ceiling off the table in the current “fiscal cliff” negotiations was, in one sense, a welcome development. If the Senate were to agree, we would temporarily be spared the sort of embarrassing brinkmanship that accompanied the last increase, in August 2011. But a year from now, we will likely be back in the same place, where the debt ceiling is being held hostage by people who have no qualms about using the good credit of the United States as a negotiating ploy. We would suggest that, rather than just waiting a year to have this fight, the best approach is simply to abolish the debt ceiling. It is an anachronism that causes more harm than good.

Ironically, the debt ceiling concept was created during World War I to smooth the process of borrowing. But the debt ceiling has evolved during the recent years of partisan polarization into a barrier to sensible financial management. Now that the current debt limit of $16.396 trillion is about to be met, the Treasury will use costly “extraordinary measures” to pay its bills. The Government Accountability Office has documented that the 2011 delay in raising the debt ceiling increased borrowing costs in that year by $1.3 billion.

Height of irresponsibility

Under current law, after those means are exhausted, and without a specific congressional authorization to incur more debt, the government would default on some of its obligations. That would have devastating consequences for our economy; no longer would Treasury securities be viewed as the safest in the world. Choosing to default would be the height of irresponsibility and far from the ideals of fiscal conservatism.

The federal budget has been in deficit for 45 of the past 50 years. Some of these deficits have been worthwhile, as means to stimulate the economy during recessions and to finance investments. But deficits also result from demanding more government benefits and services than we are willing to pay for with taxes. The debt ceiling is a useless tool for controlling those demands, because its “limit” comes into effect far too late. Worse is the fact that the debt ceiling enables hypocrisy — for many legislators who oppose raising it previously approved spending in excess of revenues they were willing to raise.

If Republicans (and Democrats) truly want to cut the debt, there’s a better way of doing it than again threatening to put the nation’s credit at risk. The debt ceiling is not central to this task. It is, instead, a distraction from any reasonable debate on taxes and spending.

In other work with colleagues, we have proposed that the first step of a more sensible process would be — to borrow a phrase — to “repeal and replace” the debt ceiling. The replacement would first ask Congress and the president to set reasonable targets for debt reduction over a multiyear period so that the debt would reach a sustainable level.

Then our elected officials would have to do the hard work of budgeting: deciding what specific spending is unaffordable and what taxes must be borne by the American people. For those conservatives who believe spending is “out of control,” they would be more likely to rein it in by conducting strategic reviews of what the government does. They could use performance data to identify government programs that don’t work, and refuse to vote for bills that fund low-priority programs.

Liberals should join them in adopting this smarter approach. If they believe that programs work well enough to justify higher taxes, then strategic reviews and performance data may help them make their case.

With this more sensible process, together conservatives and liberals could engage on the real issues, rather than yet again playing games with the nation’s finances.

Philip G. Joyce is professor of public policy at the University of Maryland, College Park. Roy T. Meyers is professor of political science at the University of Maryland, Baltimore County. They wrote this for the Baltimore Sun. Distributed by McClatchy-Tribune Information Services.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Comments

1Ianacek(908 comments)posted 1 year, 8 months ago

Isn't this just a resumption of the "kick the can down the road" approach that allowed the debt to rise so high . If elected officials believe they will be well out of office before anything bad happens , of course they will defer hard decisions .

Representatives are fighting to avoid a bond marketselloff & much higher interest rates within the next few years . This would affect everyone .

Whether representatives vote for an inflationary debt policy will , I think , come down to the age profile of Congress . Few people under 50 can clearly recall the hardship visited on many in the inflationary 70's .

I don't know how anyone was able to label a mere $1.3 billion as arising from the 2012 budget debate , when the total size of the debt is over 16,000 billion .

Mr Joyce sounds like a socialist . He wants Congress to begin new programs & then conservatives can "use performance data to identify government programs that don’t work, and refuse to vote for bills that fund low-priority programs" worked . How often has that ever happened ? Once a program has begun , its like pulling teeth to end it because you've established vested interests . Much easier not to start bad programs, & Congress actually does that already by ensuring most bills introduced are weeded out before they reach a final vote .

Maybe something should be done to discourage the introduction of these "feel good" bills as they waste so much time .

Rather than forget debt ceilings , they should become much more of a central feature in annual budget debates.

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276Ytown(1239 comments)posted 1 year, 8 months ago

No debt ceiling increase! Until we eliminate the wasteful spending, there's no need to borrow more money. Here's a good start of where we might look to trim the budget.

http://www.coburn.senate.gov/public//...

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3redvert(2064 comments)posted 1 year, 8 months ago

Where do some of these idiots come up with this crap? How has the "no debt ceiling" philosophy worked for the millions that are up to their eyebrows in credit card debt.

You can't spend money you don't have, It is not rocket science!

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