\n
Comment on this story<\/title><path d=\"M14 14V2H2v9.47h8.18L12.43 13ZM3 10.52V3h10v9.23l-2.5-1.66Z\"\/><\/svg><\/button><\/p>\n<p>Comment<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"teaser-content grid-center\">\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">The recurring farce of lifting the US government debt ceiling began again this week. As total debt surpasses $31.4 trillion \u2014 the current statutory limit \u2014 the Treasury is undertaking\u00a0a series of bookkeeping maneuvers to disguise new borrowing and keep the government operating. At some point, these methods will be exhausted. If Congress doesn\u2019t vote to increase the limit, new borrowing could be halted and outright debt default is possible.<\/p>\n<\/div>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">The farce demands that this dire result gets headed off at the last moment, but it might be unwise to take this for granted. A system that envisages the mere possibility of a self-inflicted default proves that, when it comes to fiscal incompetence, the US Congress leaves no path unexplored. When this pantomime was last played through almost to the end, in 2011, default was indeed avoided \u2014 but financial markets were destabilized, the country\u2019s credit rating was cut, and taxpayers faced nearly $20 billion in additional borrowing costs.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">It should hardly need saying that this malpractice ought to stop.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">Defenders of the current rules say that debt-ceiling negotiations provide at least a semblance of fiscal discipline. One analysis found that every major deficit-reduction deal between 1985 and 2011 resulted from such fights. Yet if the debt limit was ever an effective tool, it no longer is: Debt has increased\u00a0to roughly 95% of gross domestic product (not counting intragovernment obligations), up from 78% in 2019. That figure is on track to keep rising. Pressure on Congress to restrain government borrowing might very well be needed, but the nuclear option of a threatened default is partly self-defeating. People assume it won\u2019t happen, which serves to neutralize the deterrent effect \u2014 until one day, by accident, it does.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">Avoiding such a needless disaster should be a priority. Once the debt ceiling is reached, and the creative accounting is all exhausted, payments that service government debt should be required to continue. The rules could specify automatic cuts in other spending and increases in taxes sufficient to avoid new borrowing. That might well involve shutting down much of the government and interrupting vital programs \u2014 an adequately\u00a0dramatic outcome to exert some discipline, should that be necessary, but not so grave that it would be seen as all but impossible. In other words, a more effective deterrent.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">To be sure, some more thoroughgoing reforms to fiscal policy would be preferable. Congress could, for instance, replace the limit on the nominal value of debt with one defined by the ratio of debt to national income (a far better measure of fiscal sustainability). It might change the hard limit to a threshold that triggers gradual, not sudden, remedial measures. It could revive and strengthen \u201cPAYGO\u201d provisions that match revenue to increased spending. It should certainly avoid blockbuster \u201comnibus\u201d spending bills and restore the largely abandoned process of actually analyzing budget proposals before enacting them.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">Even if such ideas continue to go nowhere, Democrats and Republicans can surely agree on two things. First, public debt cannot safely be allowed to keep rising at the projected rate. Second, purporting to solve this problem by threatening to default on the country\u2019s obligations is nuts.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">More From Bloomberg Opinion:<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">\u2022 Do Away With a Debt Ceiling That Serves No Purpose: Bill Dudley<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">\u2022 Financial Engineering\u00a0the Debt Ceiling: Matt Levine<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">\u2022 No, Banks Aren\u2019t Stronger Than They Need to Be: Editorial<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">The Editors are members of the Bloomberg Opinion editorial board.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-qa=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css font-copy\">More stories like this are available on <a href=\"https:\/\/www.bloomberg.com\/opinion\">bloomberg.com\/opinion<\/a><\/p>\n<\/div>\n<section class=\"dn-ns hide-for-print\" data-testid=\"mostRead\" subscriptions-section=\"content\"\/><\/div>\n\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMilAFodHRwczovL3d3dy53YXNoaW5ndG9ucG9zdC5jb20vYnVzaW5lc3MvdGhlLWRlYnQtY2VpbGluZy1ub25zZW5zZS1oYXMtZ29uZS1vbi1sb25nLWVub3VnaC8yMDIzLzAxLzIwLzQzNjJkZDAyLTk4YzUtMTFlZC1hMTczLTYxZTA1NWVjMjRlZl9zdG9yeS5odG1s0gEA?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Comment on this story Comment The recurring farce of lifting the US government debt ceiling began again this week. As total debt surpasses $31.4 trillion \u2014 the current statutory limit \u2014 the Treasury is undertaking\u00a0a series of bookkeeping maneuvers to disguise new borrowing and keep the government operating. At some point, these methods will be …<\/p>\n","protected":false},"author":1,"featured_media":44913,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/44912"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=44912"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/44912\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/44913"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=44912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=44912"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=44912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}