Don't let the phrase "nation's debt ceiling" cause your eyes to gloss over. Why? The phrase has everything to do with government spending and that, of course, has everything to do with your pocketbook. A debt ceiling focuses attention of the nation's deficit and resulting debt increase, which recently surpassed $17T.
That said, in a Wall Street Journal article, the Nobel Laureate and Professor Economics at the University of Chicago, Gary S. Becker, and the former Chairman of the President's Council of Economic Advisors (2006-2009) and Professor at Stanford's Graduate School of Business, Edward P. Lazear, think the concept of a "debt ceiling" is a bad idea.
Whoa! That's one heckuva contrarian opinion.
Why do Becker and Lazear think the concept is a bad idea?
They argue that focusing upon the deficit and debt increase only draws attention away from the causes: too much government spending. In addition, a debt ceiling provides a false sense of security because the ceiling is supposed to provide a "cap" to spending, keeping it under control.
FALSE! Congress has raised the debt ceiling 90+ times during the past 70 years and, believe it or not, 15 times since 1993. Talk about an addiction to spending that hoses taxpayers!
Focusing upon the deficit and debt ceiling increase distracts attention away from the nation's debt which is the real villain when it comes to the nation's economy.
Becker and Lazear propose that the debt-ceiling rule be replaced with spending controls that would limit spending growth limited to historic ratios relative to gross national product (GNP). The impact would be to focus the nation's attention upon government spending as it is related to economic productivity rather than government income (taxes) and outlays (spending).
To translate: Using historic ratios relative to GNP, spending could increase or decrease depending upon current economic conditions.
A good idea, The Motley Monk would opine. That said, it would be "Dead on Arrival" on Capitol Hill because neither the majority of Democrats nor Republicans would embrace the idea. It's a fiscal straightjacket that would have the impact of a Balanced Budget Amendment without a Balanced Budget Amendment that would make it impossible for members of Congress to overspend.
Now, that's one winner of an idea!
Let the discussion begin...
To read Becker and Lazear's article, click on the following link:
"How 'Debt Ceilings' Increase Debt."