Should we kill the debt ceiling?

[Beau]

Should we kill the debt ceiling?
177You recommend this56%You don't recommend this44%Shared 271 timesThere's no reason to impose a limit that can be lifted willy-nilly while potentially sending the US into default.
By Kim Peterson on Mon, Jul 25, 2011 4:31 PM
The United States and Denmark are the only two democratic countries that have a debt ceiling, writes James Surowiecki in The New Yorker. No one else finds it all that necessary. Why do we?

Surowiecki makes a very good case for abolishing the debt ceiling. It was adopted in 1917 to stop U.S. presidents from borrowing and spending money without congressional oversight. And while some Republicans like to say that President Barack Obama is on a similar spending binge, that simply isn't true: Since 1974, the government's taxing and spending have been spelled out pretty specifically in the budget resolution each Congress passes.

The irony here, Surowiecki writes, is that Obama will be less accountable to Congress if the ceiling isn't raised. That's because he alone will decide which bills get paid and which don't. Congress has no authority here.

There's another reason to smash the debt ceiling. Congress can lift it at any time willy-nilly. In fact, it has done so more than 70 times in the past 50 years (and seven times during the administration of George W. Bush). The only thing keeping it from being lifted this time is the political gamesmanship that Washington, D.C., can't get enough of.

The debt ceiling essentially exists so that the party that isn't in the White House can posture politically against the party that is, writes Felix Salmon at Reuters. Obama even voted against raising it in the past.

But it's all fun and games until the U.S. defaults -- or runs into higher interest rates or financial turmoil. "For the U.S. to default now, when investors are happily lending it money at exceedingly reasonable rates, would be akin to shooting yourself in the head for failing to follow your diet," Surowiecki writes.

Supporters of a debt ceiling say it brings some fiscal discipline to the government, ensuring some responsibility when politicians can't be responsible themselves. But there's a safety net -- which Congress has sought 70-plus times, making the whole spectacle of self-control and self-regulation laughable.

The government should abolish the debt ceiling. If Congress can't manage debt in its annual budgeting process, it should put in place some controls that actually have teeth without playing dangerous games with our credit rating.


THIS WAS ON THE MSN HOMEPAGE



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