Bruce Bartlett, rapidly earning the status some have already granted him as a “national treasure”, has a solid op-ed in the Washington Post on the debt ceiling. In the op-ed he punctures five widely-held misconceptions about the debt ceiling:
- The debt limit is an effective way to control spending and deficits.
- Opposition to raising the debt limit is a partisan issue, i.e. a Republican malady.
- Financial markets won’t care much if interest payments are just a few days late — a “technical default.â€
- It’s worth risking default on the debt to prevent a tax increase, given the weak economy.
- Obama must accept GOP budget demands because he needs Republican support to raise the debt limit.
The above are all wrong and in some cases enormously wrong.
I haven’t written a great deal about the debt ceiling here. I think it’s purely a political contrivance regardless of which party is doing the contriving. Not only do I think that the debt ceiling should be raise, I think it should be abolished. When the debate over the debt ceiling occurred once a generation it was bad enough but now that we’re having the same dreary debate over it every couple of years it’s a monumental waste of time—a way to get some camera time and avoid dealing with the underlying problem: excessive spending by Congress.
I think that so far Republicans have played their hand pretty well: they’ve managed to put reducing the deficit on the front burner. It will be interesting to see how they reconcile their public positions on various issues. I don’t see any way that we can reduce the deficit, fight wars all across the Middle East and South Asia, maintain Medicare spending, and maintain the current total level of taxation.
There is no national consensus on actually reducing federal spending so the discussion in Washington largely centers around slowing its rate of growth. I don’t think that’s enough to prevent the train wreck I think is on the horizon but apparently our elected leaders do.
BTW, here’s something that most of us have never considered (from Felix Salmon):
[Cross-posted at OTB]
This underplays what really is consensus on debt.
sam, the problem is that the debt ceiling is a legal limit placed on the amount of debt that can be issued at one time and the amount guaranteed by the U.S. government. The Fourteenth Amendment is argued to guarantee public debt approved by law. The Fourteenth Amendment may protect pre-existing debt, it does not necessarily protect new debt issued without authorization “by law.”
Obama could declare the restraints on his future ability to borrow unconstitutional, issue a new rounds of notes, but the buyers of U.S. debt have a vote as well and they may not like the outstanding risks absent a court ruling, which would be years in coming.
I don’t disagree with Bartlett on most of his points (probably need more clarification on three), but the fifth point is just nonsense.
I’m pretty much as much in the strong executive camp as about anybody, but I have never questioned Congress’ power of the purse. I’ve probably invoked this power with somewhat of a smirk at times, because I know that it’s not a very effective tool at times, but it is what it is. To argue as Bartlett does that Congress never had the authority to limit borrowing strikes me as quite insane.
It’s too bad they actually don’t care about the deficit. Any real conservative would jump at the chance to reduce the deficit with a tiny proportion being additional revenue. If that tiny amount of revenue is raised solely through elimination of tax expenditures it should be a no brainer. Crying about the deficit is a ruse to try to starve the government of revenue.