Published August 11, 2011
After a contentious debt-ceiling debate persuaded Standard & Poor's to downgrade the U.S. credit risk, one Democratic lawmaker is proposing a way to avoid debilitating political brinksmanship in the future: get rid of the debt ceiling.
Denouncing the Republican "obsession" with deficits, Rep. Jerrold Nadler, D-N.Y., is introducing
legislation that he says would eliminate confrontations like the one that led to the U.S. being on the verge of default on Aug. 2.
"The debt ceiling is truly arbitrary and has nothing to do with the deficit," Nadler said in a statement released Wednesday. "The debt ceiling does not prevent the United States from incurring new debts. That occurs when Congress decides to authorize more spending than revenues. The debt ceiling prevents the president from borrowing money to pay those debts when they come due.
"While this has never been a problem in the past, the dangerous game of chicken Republican radicals played with the full faith and credit of the United States demonstrates that we can no longer risk allowing this artifact of World War I to threaten our nation's creditworthiness."
Nadler is not alone in his view of the debt ceiling's lost utility. Some Republicans say the relic no longer serves a purpose if it doesn't act as a deterrent to increasing debt.
"It is nothing but grandstanding for members of both parties to vote routinely for legislation that they know will create deficits and then profess shock and horror that the debt limit must be increased as a consequence," Bruce Barlett, an economic policy adviser to Presidents Ronald Reagan and George H.W. Bush, recently wrote in a column in The New York Times.
Last month, credit ratings agency Moody's also suggested losing the debt limit, which was originally designed to the let Treasury incur debts without seeking congressional authority.
"We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in a report.
The debt ceiling has been fairly meaningless up until the latest confrontation because whenever it needed to be raised, it was. One Republican aide said he's not sure what wholesale repeal would accomplish.
Other House Republicans credit the debt ceiling with being the only thing that has kept the U.S. from blowing the debt hole to smithereens. They add that the debt ceiling was the single most helpful tool in focusing America's attention on the nation's deep indebtedness.
It is the "mechanism that has forced the Congress to confront the fact it has a debt problem," said Brian Straessle, communications director for the Republican Study Committee.
GOPers note that the Budget Control Act they passed in the House created cuts, caps and a balanced budget amendment that would prevent the U.S. from incurring so much debt that it needs a limit. They say a holistic approach using all three prongs would keep Washington from sliding back into its massive spending habits.
"If we are truly going to put the country's fiscal house in order, it will not be enough to temporarily reduce what Washington spends. We must permanently reform the process by which working Americans' hard-earned tax dollars are spent," Rep. Paul Ryan, R-Wis., said after Speaker John Boehner named three representatives to a super committee designed to come up with spending cuts.
But Nadler said eliminating the debt ceiling will "prevent years of unemployment and the attrition of America's great middle class."
"Let us abolish the debt ceiling, which has become a serious threat to our economic future and a pawn for Republicans intent on holding the economy hostage to impose their own extreme agenda," he said.