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Jared Bernstein

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Increasing the Debt Ceiling Should Be Paired With... Nothing!

Posted: 09/12/2013 3:45 pm

In a little over a month, according to the U.S. Treasury, in order to pay bills they have already incurred, Congress needs to raise the government's borrowing authority by increasing the debt ceiling.

Since 1960, Congress has raised the limit 78 times, under both Republican and Democrat presidents (49 times under R's, 29 under D's). Many of these increases have been stand-alone bills; sometimes they've incorporated other provisions. But while politicians on both sides of the aisle have grandstanded on the issue, it is only in the last few years that some have threatened default by the U.S. government unless they got their way. That is unprecedented and deeply irresponsible.

Nor is it the case, as Speaker John Boehner alleged today, that "for decades, the White House and Congress have used the debt limit to find bipartisan solutions on the deficit and debt."

First off, the logic of his argument is mind-boggling. If that's what past Congresses have done, then clearly they've failed or we wouldn't be in this mess.

Second, his list of examples to make his case starts in 1985 and he references five debt limit bills wherein there have been notable reforms to reduce the debt. Yet, there's been 34 bills raising the debt limit since then.

Third, his list includes both Gramm-Rudman-Hollings budget reforms (1985 and 87), yet their abject failure to achieve their goals of balancing the budget within five years, coupled with the fact that they induced the Reagan and Bush 41 administrations to adopt increasingly rosy economic scenarios as way of evading those targets, should serve as an object lesson about why debt limit increases should be clean.

Fourth, his list includes the 1990 budget summit agreement, which contained substantial tax increases which most House Republicans voted against. Today's Republicans have consistently taken revenue increases off the table so it is difficult to see how the Speaker would view this as a way forward.

Here's the bottom line. The time to decide whether you're going to pay the bills you rack up is when you're looking at the menu, not after you've finished the meal. You want to know what's actually well-established in American fiscal policy? It's a budget process where both sides lay out their visions in terms of future receipts and outlays, hammer out a compromise in conference, and pass a budget.

That's the way all this is supposed to go down, but it hasn't since 2010, which is why we're yet again on the precipice of a government shutdown and debt ceiling crisis. There's nothing normal or healthy about it.

This post originally appeared at Jared Bernstein's On The Economy blog.

 

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