Don’t Just Lift the Debt Ceiling. Get Rid of It.

[madokie]

To get concessions out of Obama, Republicans have to make a bigger offer.

The alarming congressional standoff over the statutory debt ceiling goes well beyond standard gridlock for one simple reason: The consequences of failing to raise it, though unknown, are extremely alarming. Without the authority to borrow more money to plug the gap between required spending and permitted taxes, the executive branch will be forced to do something odd and legally controversial— arbitrarily decide to pay some bills and not others, sell bonds for above their face value as a loophole, mint large-denomination platinum coins as a funnier loophole. Any of these scenarios seems likely to throw financial markets into chaos, and for Republicans, that’s become leverage too sweet to give up. For the White House, it’s a weapon that needs to be defused. President Obama feels, sensibly, that if using the debt ceiling as a means of extracting policy concessions becomes normalized, the cycle will never end. Giving in to GOP demands would postpone a debt ceiling crisis rather than eliminate it and permanently cripple the powers of the presidency.

But there is one way in which Obama could make some concessions to Republicans without engendering endless rounds of debt ceiling brinkmanship, and that’s if Republicans get over their ignorant aversion to authorizing government borrowing and offer a deal that eliminates the debt ceiling once and forever.

Democrats wouldn’t like the idea of giving something up in exchange for debt elimination. They’ll say that avoiding default isn’t a partisan or ideological priority of theirs, and so they shouldn’t have to submit to the other side’s partisan or ideological priorities to get it done. But even though polling shows the public overwhelmingly blaming Republicans for this mess, the one thing the GOP has going for it is dislike of the idea that Obama refuses to negotiate. If the Republicans shifted the terms of the debate from raising the debt ceiling to permanently eliminating it, then concerns about future extortion will be moot, and the White House will have little choice but to engage.

Even better, Republicans would be accomplishing something useful for the country. The debt ceiling is the legislative equivalent of an infected appendix—an aspect of the political system that no longer has any constructive role to play in the governance of the nation but can nonetheless cause trouble.

http://www.slate.com/articles/business/moneybox/2013/10/repeal_the_debt_ceiling_full_elimination_of_the_debt_ceiling_is_the_only.html

[gopiscrap]

1. I agree

[RC]

2. Denmark is the only other Democracy that has a debt ceiling.

Only One Democratic Country, Besides America, Has a Debt Ceiling
A report released Monday by Moody’s analyst Steven Hess points out that the United States’ debt limit “is an uncommon attribute not shared by most” countries. The U.S. is the only democratic country, besides Denmark, in which Congress has to approve borrowing separately from spending. In most other countries the authority to borrow money is inextricably tied to the authority to spend money.

For example, in Canada the executive branch can borrow as much money approved to spend in the yearly budget. In Sweden, borrowing is also linked to the budget, although the legislature does not decide how much money the Finance Minister can borrow but instead decides how many programs it can fund.

And in the United Kingdom and New Zealand, the Treasury department has the authority to borrow as much as they need to fund congressionally approved spending.

Only Denmark has a system similar to the United States where the legislature has to approve increases to the debt separately from approving the budget. The Danish set the ceiling high enough so that it never slows the process of borrowing money and they can avoid political conflicts like the one currently gripping the U.S.
http://abcnews.go.com/blogs/politics/2011/07/only-one-democratic-country-besides-america-has-a-debt-ceiling/

The article goes on to say that there is a “weakness in the U.S. budgetary framework” because Congress can approve spending without approving the necessary borrowing to fund that spending. And also that the United States acts the opposite of most countries in that it uses the debt limit to shed light on runaway spending rather than using spending bills to address the growing debt.
In other words we use the debt limit as a weapon against the opposition, as a heavy club, instead of a tool to actually control spending. The US citizen and the world be damned.

[Laelth]

3. Interesting historical analysis.

Not sure what I'd be willing to give up in exchange for permanent elimination of the debt ceiling (i.e. a return to the Gephardt rule--the debt ceiling is automatically raised as soon as Congress authorizes spending through the appropriations process).

Mr. Yglesias doesn't make any recommendations, either. I'm not sure Democrats should give up anything to abolish a law that has outlived its usefulness.



-Laelth