Wednesday, August 10, 2011

the purpose of the debt ceiling

A lot of people have complained that politicians have been using the debt ceiling to debate long term budget issues when instead, we should just have a "clean" bill that simply raises the ceiling. But this view demonstrates a fundamental lack of understanding of what the debt ceiling is. The ceiling is a self-imposed rule that Congress put on itself. If it wanted, with a simple majority vote it can get rid of it. But it doesn't. Why? Because the purpose of the rule is to force Congress to debate long term priorities before taking on more debt. This is a useful debate because it helps control long term debt, which should give lenders more faith in the US government not less. It is reasonable to question the outcome of the debate, but totally nonsensical to question the debate itself.
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