Poll - should we eliminate the debt ceiling"

[donheff]

I recently read a poll indicating that over 80% of the American public believe we should not raise the debt limit. I am curious about how people here feel on the topic. Most countries have no debt ceiling. They borrow what they need to borrow and default if they can't handle their debt. In the US we have a ceiling which means we can't borrow what we need unless explicitly authorized. Failure to authorize means we default whether we could handle the debt or not. In the opinion of some, this generates false crises that could precipitate a financial catastrophe. In the opinion of others this offers a circuit breaker that encourages action on the deficit. So, do you think we should eliminate the debt ceiling so that going forward we would deal strictly with the budget without the constraints of artificial debt ceiling crises? Leave the existing requirements in place so that we periodically have to authorize our lending? Eliminate the ceiling with some sort of provision (triggers) for mandatory actions to deal with debt (e.g. funding freezes, or whatever when the debt to GDP ration reaches some predetermined point)?

Edit: question 3 has a typo ("as some level..." should be "at some level...)

[REWahoo]

I think we need to eliminate both Congress and the debt ceiling.

[Independent]

I think the debt ceiling forces another set of news stories and another congressional vote about something that looks extremely important to me. I'd much prefer that Congress pass balanced budgets in the first place, then we wouldn't have to worry about raising the debt ceiling.

So I'm thinking that as long as we have our seriously disfunctional government, we should keep this as a way of highlighting how badly we're handling spending and taxing.

[donheff]

I voted to eliminate with triggers. The current situation highlights the tremendous risk the ceiling presents. All it would take is for a true believer in the Senate (Rand Paul?) to filibuster and we could crash into an international crisis.

[rescueme]

Quote:

Originally Posted by donheff I voted to eliminate with triggers.

Me too, regardless of any one (or more) persons affecting the outcome.

Without any "benchmark" to measure against (and taking it outside the political theatre) there is no reason to control spending. That IMHO would be a grave mistake.

[Automatika]

I don't see where not raising the debt ceiling makes us default on our loans. Its not like there isn't income always coming in to pay for things, it just means we would have to choose between making interest payments on the debt or paying for something else. Just like your choice to pay for your mortgage, food or credit card interest.

[rescueme]

Quote:

Originally Posted by Automatika Just like your choice to pay for your mortgage, food or credit card interest.

Normally, I would agree. However, you don't have a printing press that you can issue currency to pay your debts - reducing the value of your remaining currency.

That's what my concern is.

As long as the feds can print the cash to pay the debt, there will be a problem, IMHO.

[Tadpole]

In view of the 14th Amendment, I question the Constitutionality of a "debt" ceiling if it affects the government's ability to pay it's debts. Also, people need to realize that the debt ceiling has been routinely raised and not really meant much more than a "oh yea, we gotta raise it again". A ceiling never has led to new policy in so far as I know. It is useless except to create programming for a rather illiterate cable news media.

I have never seen it used for any purpose other than politics, always the politics of the non-occupants of the Whitehouse who, having milked it, change their position once in power. Ask Obama how executive responsibility (power) changes the character of the argument. You will see that it is a political tool pretending to be a fiscal tool.

[obgyn65]

Leave the provisions as they are. There are more urgent matters to handle right now, especially wars, terrorism and healthcare.

[jimnjana]

Quote:

Originally Posted by Tadpole In view of the 14th Amendment, I question the Constitutionality of a "debt" ceiling if it affects the government's ability to pay it's debts. Also, people need to realize that the debt ceiling has been routinely raised and not really meant much more than a "oh yea, we gotta raise it again". A ceiling never has led to new policy in so far as I know. It is useless except to create programming for a rather illiterate cable news media. I have never seen it used for any purpose other than politics, always the politics of the non-occupants of the Whitehouse who, having milked it, change their position once in power. Ask Obama how executive responsibility (power) changes the character of the argument. You will see that it is a political tool pretending to be a fiscal tool.

If you are going to bring the Constitution into a discussion of the Federal Government Debt, then should probably use the Constitution as a guide for what the Federal Government should be spending money on...

[MichaelB]

Quote:

Originally Posted by REWahoo I think we need to eliminate both Congress and the debt ceiling.

I totally disagree.

Just eliminate congress . That would do it...

[TromboneAl]

Since it has been raised 74 times in the past, it makes it pretty meaningless. That is:

We cannot borrow more than this amount, unless we decide to borrow more than this amount.

OTOH, as Don mentioned, by needing to explicitly raise it, it brings attention to the issue, which is a good thing. Apparently this is the first time that that has worked, because it is the first time I've ever heard of the debt ceiling.

[donheff]

Quote:

Originally Posted by TromboneAl OTOH, as Don mentioned, by needing to explicitly raise it, it brings attention to the issue, which is a good thing. Apparently this is the first time that that has worked, because it is the first time I've ever heard of the debt ceiling.

Yes, but one Senator could filibuster it and create an international financial crisis. The brinksmanship risks are so much more extreme than a Government shutdown that it scares me. We should eliminate it as a feature of our fiscal landscape. If the pols want to play politics let them do it with a shutdown.

[unclemick]

There is no free lunch. If we screw the pouch internally, I suspect the world currency traders 'will make us an offer we can't refuse.'

With all kinds of quirky consequences.

Remember the history of those retired on the French Franc and later though not quite as bad the mighty mighty British Pound Sterling.

heh heh heh - If one can't get Washington to do it your - diversify and stay agile mobile and hostile.

[samclem]

Quote:

Originally Posted by Automatika I don't see where not raising the debt ceiling makes us default on our loans. Its not like there isn't income always coming in to pay for things, it just means we would have to choose between making interest payments on the debt or paying for something else. Just like your choice to pay for your mortgage, food or credit card interest.

I agree that the government still has enough money coming in to service the debt (if it stopped paying for some other things--SS, military, Medicare, etc), so we wouldn't necessarily default just because the debt ceiling wasn't raised. OTOH, the reaction of the markets is just as important as the black-and-white default/nondefault issue, and if folks holding our debt believe there's a chance they might not get paid back then we will have significantly higher borrowing costs and other big problems in the financial markets.

I wonder if someday we'll be forced to adopt a balanced budget amendment simply as a way to demonstrate to creditors that we're serious about living within our means. Soon, if not already, finding some way to shave a few points off the interest rates paid on Treasury debt will become really important.

[RetiredGypsy]

Lower the debt ceiling until it becomes an income flooring. Then any positive cash flow could go into an emergency fund for war (a real one) or national crisis (not to be confused with a national stupidity). Actually being able to raise the debt ceiling for a specific thing like that would be a good idea, provided that the debt raise be only for that and steps are taken afterward to immediately pay it off.

[HFWR]

Any debt ceiling would likely have to be raised periodically, due to hyperinflation growth in the economy...

[unclemick]

1937. Arguable but they worried about debt and Congress successfully retarted the Depression.

Of course that's not what they had in mind.

heh heh heh - we are smarter now - right.