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What to do about the debt ceiling


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Should Congress vote to raise the debt ceiling? If it does, what should Republicans get in exchange from the White House? National Review Online asked some experts — economists, academics, and politicos.

 

Joseph Burke
The United States should not raise the debt ceiling. The current unfunded liabilities of the United States are $113 trillion, mostly because of Medicare. This is more than $1 million per taxpayer. Now more than ever, there is the political will for serious fiscal reform. This is what the American people want: It is why the Tea Party was formed, and why the Republicans were successful last fall. This is a historic moment, and if the Republicans kick the can down the road, they will pay dearly for it next year.

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Medicare reform should be a priority; the age of eligibility for benefits should be increased, and all entitlement programs should be means-tested. Obamacare should be repealed, as it will increase the cost of health care and, by extension, our Medicare liability. Better yet would be to leave these programs to the states. Just a couple of days ago, the S&P downgraded the outlook of U.S. sovereign debt. Raising the debt ceiling will send the signal to markets and voters that the Republicans are not serious about fiscal reform. This would increase the interest rate on our debt, worsen our financial condition, and accelerate us along the track to a fiscal crisis.

 — Joseph Burke is assistant professor of economics at Ave Maria University.

Douglas Holtz-Eakin
Yes, Congress should raise the debt limit. Being a good steward of the U.S. credit rating means that it has to pay Obama’s credit-card bill. And it should do so as quickly as possible — on the day it returns from recess.

Yes, Congress should attach conditions to raising the debt limit. Being a good steward of the U.S. economy means that business as usual — a clean increase in the debt limit — cannot be an option. Quickly changing direction is imperative to avoid the looming financial crisis. Simply passing a straight-up debt-limit increase would send financial markets the message that the U.S. is content to continue toward its fiscal abyss.

Conservatives should attach to the debt limit annual caps on total spending for the next ten years equal to those in the House-passed budget. There are other viable contenders ranging from alternative spending limits (such as those proposed by Senator Corker) to a balanced-budget amendment that limits taxes and spending (such as that of Senators Hatch, Cornyn, and Toomey).

But the House has already agreed to the levels in the budget. If it passes those caps quickly, the onus will be on the Senate to pass a debt-limit increase and on the president to sign it. If either balks, the battle shifts from raising the debt limit to whether there should be spending restraint. That is the right battle for conservatives to fight from both a policy and a political standpoint.

 

— Douglas Holtz-Eakin is president of the American Action Forum.



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