As government spending continues to outpace government revenue by more than a trillion dollars a year, the federal debt ceiling, legal limit to US borrowing, is nearing its max. It stands at $14 trillion, and we're on pace to blow through the ceiling in the first half of 2011. That means giving government the right to have more debt could be the first major vote of anti-debt Tea Party representatives.
RNC Chair Michael Steele and key GOP electeds have planted their feet and refused to support a higher debt ceiling. What happens if Congress does not vote to raise the roof and allow the Treasury to legally borrow more money? To get a better idea, I chatted with former Reagan adviser and Fiscal Times columnist Bruce Bartlett. Here is an edited transcript:
The idea of a debt ceiling is weird. Why can't the Treasury borrow and spend as it needs to fulfill its obligations to investors and the law?
It's an incredibly stupid system. I think no other country has a debt ceiling. These countries understand correctly that the deficit, ie the incremental increase in debt, is a consequence of decisions about taxing and spending.
There's no need to have a debt ceiling and there's no evidence that the debt limit has limited spending. It serves no purpose except to give people free votes to look as if they're being fiscally responsible ["Hey look, I voted against raising the debt limit!"] while they act fiscally irresponsible ["Also, I'm voting to cut taxes by $4 trillion."].