Tuesday, July 12, 2011
Why The Debt Ceiling Is Stupid
First things first: the debt ceiling is stupid.
It seems very obvious that the concept of a debt ceiling is outdated and approximately as useful as a driver's license for a microwave. The ceiling was first established on bonds only via the Second Liberty Bond Act, and was then modified to apply to all debt. Since then, the ceiling has been raised approximately eighty-five thousand times (not intended to be a factual statement) with effectively no controversy whatsoever. This is because of spending is already authorized, un-authorizing it via refusing to raise the debt ceiling is pretty stupid. Furthermore, to not raise the debt ceiling would cause the United States to default on its debt, and anyone above the age of about eight understands that this is probably a bad thing. Observers who say that it would basically destroy the U.S. and global economies are not actually exaggerating.
If all of this is true, then the ceiling serves exactly no purpose aside from to manufacture controversy. That, of course, is exactly what has happened: for the past several months, Republicans in Congress have proceeded to pitch a massive fit over raising the ceiling, a thing that most of them have done multiple times over the last decade anyway. Several weeks ago, Eric Cantor walked out of talks on the debt ceiling (The Atlantic), employing the age-old "take ball and go home" strategy. Three days ago, John Boehner rejected a massive deficit reduction deal because it had tax hikes in it. (Huffington Post) Now, ordinarily "negotiations" and "deals" involve some level of concessions by both sides. However, perfectly in character, Eric Cantor declared (as detailed by TPM) that agreeing to raise the ceiling in the first place was a major concession. This is as if your teenage son argued that he was making "a major concession" by agreeing to be grounded.
So we are left with the inevitable conclusion that the existence of the debt ceiling provides no tangible good, and is only useful as a political football that is also a bomb. The correct choice, then, is not to strike a deal to allow for it to be raised, but instead to repeal it. If Republican Congresspersons want to deal with what is, in their opinion, "out-of-control spending," then they should fight that spending when it is proposed, not try to find ridiculous retroactive technical workarounds to fight spending.
That said, another problem exists: the President does not seem to see it this way, and seems perfectly happy to attempt to strike a "grand bargain" in order to raise the ceiling and slash the deficit with a combined tax increase and spending reduction plan. This, however, is futile, since the Republicans are not so much "negotiating" as engaging in a shakedown. Now, Lawrence O'Donnell (noted by this post on Daily Kos) seems to think what President Obama is doing is fairly shrewd: that the idea is not to really force a bargain, but make the Republicans look unreasonable and reckless.
This might work, but it places a great deal of faith in the GOP to back down and allow the ceiling to be increased in the end. The Republicans' entire strategy over the last several years seems predicated on as many bad things happening as possible, so that they can then blame the President for them. Furthermore, the President, and his allies in Congress, has done a poor job making the case that Republicans would be at fault in the case of a default - just as they have done a poor job making the case that Republican austerity fever and ridiculous trickle-down economic theory are responsible in part for the continued unemployment problems facing the country, and the general economic sluggishness that remains. Given that research indicates that voting in Presidential elections is very related to the state of the economy on election day, Republicans may find that without major concessions, they might have their best chance at taking back the Presidency if they allow a crash by not raising the ceiling.
Wait. Go back and read that again. What did I just say? I just said that we have a political hostage situation. Retaking the Presidency is more important than silly, transient things like people's jobs, livelihoods and economic security. Nothing matters aside from that, even if it means we're using bottlecaps for currency, or scavenging fuel like Mel Gibson in Mad Max.
So let's sidestep the whole thing forever. If we get rid of the debt ceiling entirely, it can't hurt us like this again. Manufactured controversies are bad, as a general rule. Why let one go on longer than it needs to?