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Keep the Debt Ceiling


Perhaps Buzz Lightyear of "Toy Story" should be considered to join the Obama administration as Treasury secretary, much as the outgoing incumbent, Timothy Geithner, endorses the idea of "To infinity and beyond!" when it comes to the national debt. reported recently that Geithner said (Nov. 16) that Congress should stop placing legal limits on the amount of money the government can borrow and effectively lift the debt limit to infinity." He was appearing on Bloomberg TV's "Political Capital" news show.

In August 2011, the debt ceiling — the amount of money the federal government is allowed to borrow — was raised by $2.4 trillion, to $16.394 trillion. According to the National Debt Clock, as of Nov. 23, the total debt was nearing the limit, at $16.30 trillion. You also could think of it as about $51,000 per person in the United States.

"I would have rather not raised it, personally," Mark Calabria told us; he is director of financial regulation studies at the libertarian Cato Institute and served on the Senate Committee on Banking, Housing and Urban Affairs. But he said the reality is that Congress will raise the debt ceiling because otherwise it would have to immediately cut at least $1 trillion in spending.

Given that Congress always ends up raising the ceiling, why not just get rid of it?

"After working seven years in the Senate, I'm convinced Congress does absolutely nothing in the absence of a crisis," Calabria said. "If we didn't have a debt ceiling, does he really think we would have smaller deficits?"

Calabria said the "sequestration" deal resulting from deficit-reduction negotiations in 2011, which mandates $1.2 trillion in budget cuts over a decade, would not happened without the need to raise the debt ceiling.

Congress and President Obama are working to avoid large cuts before sequestration kicks in Jan. 1, part of the "fiscal cliff."

Calabria also said there's a simple way for Congress to avoid raising the debt ceiling: Make spending and revenue match. After all, it did so in the late 1990s, when Democratic President Clinton and the Republican-controlled Congress balanced the budget and produced surpluses for the first time since the late 1960s.

"Clearly, Congress has not budgeted responsibly," Calabria said. "The system today is not rational. But it will stay in place until Geithner has a whole plan to fix the system with overall budget restructuring. But I don't see him putting that on the table."

Instead, what Geithner is giving us more of the same. He's the first treasury secretary who ran four straight trillion-dollar-plus deficits. Said Damien Paletta of the Wall Street Journal, "The two people most-frequently mentioned by current and former administration officials as likely successors to Treasury Secretary Timothy Geithner, who wants to leave the post, are White House chief of staff Jack Lew and Clinton administration chief of staff Erskine Bowles."

Bowles helped President Clinton turn deficits into surpluses. And with former Sen. Alan Simpson, he chaired the Simpson-Bowles commission in 2010 that recommended $4 trillion in savings. Officially it was called the National Commission on Fiscal Responsibility and Reform.

So there's at least a little hope that someone with a better handle on what needs to be done could replace Geithner.




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