Why Do We Have A Debt Ceiling Anyway?

Following the Tea Party-forced government shutdown and near default, it’s worth considering doing away with the debt ceiling. It serves absolutely no purpose other than providing recalcitrant congressional representatives the opportunity to hold our government hostage in order to “negotiate” their pet issues.

Since the debt ceiling is a measure of money already spent by Congress, it has no real impact on congressional budgeting and government spending.

If we really want to limit government spending, what we need is a spending ceiling based on a percentage of the Gross Domestic Product (GDP) and an absolute deadline for the House, the Senate and the White House to agree on a federal budget. Such a law would force Congress to negotiate the federal budget without threat of our government defaulting on its debts.

It would also be far more sensible than the Teapublican-sponsored balanced budget amendment that could lead to greater dysfunction than we’re already experiencing.

A spending ceiling would allow the budget to increase along with the GDP, and presumably the population, while maintaining fiscal discipline. Moreover, Congress and the White House could be given the flexibility to temporarily override the ceiling in special or extreme circumstances, such as the Great Depression or the Great Recession, as long as there was a commitment to offset the overrides within five years. This would allow the federal government to stimulate the economy for a year or two, or to increase spending in wartime. But, in most years, the political debate would be confined to how the money should be spent. Not the amount of money to be spent.

Such a system might allow citizens to more clearly track their representatives’ priorities. It might also make it difficult for representatives to speak in broad generalities about the budget and force them to address specific programs. And, if properly implemented, it might be easier to tell if a representative favored corporate welfare over human needs; or whether or not a representative was voting in support of special interests versus the interests of his, or her, constituents.

In other words, Congress would be forced to do something unprecedented…create a budget and live with its consequences.