The Best Idea for the Debt Ceiling? Abolish It Forever
The debt ceiling isn't a weapon of legislative restraint. It's a just another cliff -- a Financial Cliff -- that warps Washington into behaving even more foolishly than normal.
There are countless ways to criticize the debt ceiling -- it's a tax on the majority party; a high-stakes yes-or-yes question; a weird, mandatory hostage crisis -- but they all arrive at the same conclusion, which is that it's a really dumb idea.
The case for the debt ceiling might go something like this. Just as cars need brakes, and Ulysses needed a mast, governments need restraints. The U.S. government's ability to borrow debt has no actual limit. We will probably run deficits, large and small, for every year in the life of the republic, just as we have in our two-and-a-half-century history. But we have installed a ceiling for the purpose of forcing lawmakers to reflect on our debt and consider the tradeoffs of borrowing.
In theory, restraint is a nice idea. In practice, here's how it works out.
The minority party votes against the debt limit, stealing the moment to abuse the majority about its policies -- that's why it's a tax on the majority. Then, the party in power votes in unison to raise the limit, because doing otherwise would scare international markets half to death -- that's why it's a high-stakes yes-or-yes question. And then, a few years later, the roles switch, and the abused party because the abuser -- thus re-staging our weird, mandatory hostage crisis once again.
You can think of the debt ceiling as a Financial Cliff. Without a vote, the U.S. automatically defaults on its debt, sending world markets into ... well, actually we don't know. It's never happened. And it never should. But it almost did last year.
In 2011, a peculiarly intransigent Republican Party demanded major concessions in exchange for not destroying the country, which is a clever move, if you can play it. They played it. And the "solution" to the debt ceiling, a Financial Cliff, was to create a Fiscal Cliff at the end of 2012, which we are now debating replacing with an Entitlement Cliff, or perhaps some other Cliff, to force Congress to make more undesirable decisions, at a later date.
If you're thinking this sounds awfully silly, even for Congress, you're right.
The best solution would be to abolish the debt ceiling forever. The second best idea comes from Tim Geithner, who proposed a cure for this madness in his opening fiscal cliff offer. First, he said, give the president the power to raise the debt ceiling. Second, give a two-thirds majority in Congress the power to override the president's decision.
"This almost completely prevents a debt ceiling crisis ever again, while keeping the ceremonial aspect that people like," Joe Weisenthal writes. "There would still be votes, but they'll mainly serve as a way to let politicians play politics, without putting anything at risk."
Exactly right. Lawmakers love talking restraints and responsibilities and prudence. But the debt ceiling doesn't make Congress look like a mast-bound Ulysses. It makes them look like fools. The debt ceiling is bad Washington theater. Let's make a law that treats it as nothing more.