If Not Now, When?
The debt ceiling is coming! The debt ceiling is coming! Alarmist? Quixotic? Fear-mongering or Real?
There are two perspectives in-play: the fiscal and the psychological.
Fiscally – on a purely logical level – yes, it is that simple. The U.S. could service existing debt, defund Obamacare, and let a government shut-down occur while real cuts take place.
Psychologically, it’s not that simple. First, T-Bill holders will freak, borrowing costs will grow and the debt will becomes much more expensive to service. Second, our members of Congress are sheep. They won’t de-fund Obamacare or push for a shutdown. Therefore, we would not be able to handle our obligations and could see another mini or full default.
The answer has to be a debt ceiling deal with teeth. It cannot be like the Reagan era $2 in cuts for each $1 in taxes (where the tax increase occurred but the spending cuts never did). It must be cuts first, then debt ceiling increases. Liberals (on both sides of the aisle) don’t get what they want until Conservatives see the cuts we need.
I’d like to see a permanent re-write of how the debt ceiling works. It should force every raise of the debt ceiling to be preceded by spending cuts equal to 200% of the requested raise. The cuts in spending would be calculated based on the previous year’s spending. If the cuts don’t happen, the debt ceiling stays put.
It can’t just keep going up. We will have to draw a line in the sand somewhere. So the question becomes, if not now, when?