U-T EconoMeter

EconoMeter: Should U.S. dump debt ceiling? With poll

Denmark the only other major industrial nation with official cap on what it owes

The question: Should the United States join the ranks of most other industrialized nations and do away with a debt ceiling?

Marney Cox, San Diego Association of Governments
Marney Cox

Answer: No

Removing the debt limit reminds me of price control policies instituted during the 1970s. The appeal of price controls is understandable. Wage-price controls were thought to be a useful policy option to control or silence inflation. Even though they fail to protect many consumers and hurt others, controls hold out the promise of protecting groups that are particularly hard-pressed to meet price increases. The debt ceiling isn’t the problem, nor were rising wages and prices, but they are signals that something is fundamentally wrong. Even Moody’s recommends removing the debt ceiling and suggests putting another control in its place. We don’t need another signaling mechanism to tell us we have an unsustainable spending problem.

Kelly Cunningham, National University System
Kelly Cunningham

Answer: Yes

Clearly the debt limit is not effective since it can be raised at anytime, albeit with much drama and fanfare. It appears to only be a speed bump along the federal government’s road of ever increasing spending. The debt ceiling does not deter politicians or the president from stopping spending, especially as spending is first obligated and higher debt easily allowed by simply raising it with a vote. If we had a balanced budget amendment as a percentage of GDP, the debt limit would not be needed as revenues would equal expenses and no more borrowing needed.

Alan Gin, University of San Diego
Alan Gin

Answer: Yes

Prior to the current impasse, raising the debt ceiling was a routine matter that was always done, no matter which party held the presidency or controlled Congress. There is really no point in having it since it simply finances the deficits that had already been approved by Congress. If Congress really wanted to limit the debt, it should do so at the budget stage. It shouldn't jeopardize the financial standing of the U.S. because it doesn't want to finance the deficit that it voted to incur.

James Hamilton, UCSD
James Hamilton

Answer: Yes

Congress can and should debate how much to spend and how much to tax. But once it has passed those measures into law, and those measures imply a level of spending greater than the level of revenue, for Congress then to pretend that we don’t have to borrow to make up the difference is a disgusting farce. A representative who votes to spend more than the government takes in as taxes and then not raise the debt ceiling is either treating the voters like fools, or perhaps a fool himself. Far better to eliminate the debt ceiling charade and open a clear and honest debate about which programs we’re going to keep and who’s going to be taxed to pay for them.

Gary London, The London Group
Gary London

Answer: No

And we will want to revisit debt limits on or before the year 2025 when entitlements (Social Security and Medicare) and interest payments mostly consume all federal revenues! While I am uncomfortable – as most Americans are — with the way this debate/negotiation is playing out, it’s good that we have these periodic moments of reflection. I just wish we wouldn’t have to experience these moments of terror. On the plus side, the debate has obviously catalyzed the more global discussion about the budget and government debt. Since circumstances, philosophies and "who’s in charge" changes, the issues embedded in this discussion need to be regularly revisited.

Norm Miller, University of San Diego
Norm Miller

Answer: No

We all know the real problem is continued deficit spending and the debt relative to GDP, so the debt ceiling is an artificial artifact which has traditionally prompted an automatic “yes let’s extendâ€