The debt ceiling is the borrowing limit for the United States government. Once reached, the United States would be unable to spend more. Like a credit card, there is a spending cap. Unlike a credit card, the government can raise its own “credit limit” — with congressional approval.
The ceiling in the American economic house has gone from a standard 8' to a cathedral in a rather short time. Progressives and some liberal Republicans argue that raising that ceiling is routine. They say that refusing to do so is irresponsible.
Conservatives argue that continuing to spend money until America is broke would be irresponsible. In the long run, the house of cards that is the global financial system will collapse if spending is not reined in. No individual, business or government can spend more money than it collects without eventually having their line of credit cut off. Delaying painful choices makes the inevitable reckoning worse.If we keep on "kicking the can down the road" by routinely raising the debt ceiling, we will indeed be facing a real crisis. I'm looking for politicians who will step up and demonstrate leadership by explaining to the American people why we need to do something and to offer some plans to deal with the root causes of the problem. In a recent USA Today column, Glenn H. Reynolds says,
As economist Herbert Stein once observed, something that can't go on forever, won't... [Reynolds says] Here's my budget proposal: An across-the-board cut of 5% in every government department's budget line. (You can't convince me -- and you'll certainly have a hard time convincing voters -- that there's not 5% waste to be found in any government program.) Then a five-year freeze at that level. Likewise, a one-year moratorium on new regulations, followed by strict limits on new regulatory action: Perhaps a rule that all new business regulations won't have the force of law until approved by Congress.I like the regulation moratorium. A lot. And I think we could probably go to a 10% across the board cut without any ill effects. But whatever across the board cut we make would at least put us on the road to fiscal sanity.
What do you think?