Spending cuts and debt ceiling debate not necessarily as divisive
By Holly A. Bell
While I am skeptical of the current fiscal cliff deal’s ability to resolve the uncertainty that has been plaguing our economy, there might be one advantage to pushing sequestration out two months: Spending cuts and the debt ceiling might be a better match for negotiation purposes. By ending the tax debate, we know what income is going to be. We also know what current spending is and what it is projected to be.
The debt ceiling indirectly creates a spending cap. Discussing spending cuts while at the same time determining what the debt ceiling will be provides a great deal of incentive for both sides to come up with a solution. In many ways the debate about increasing taxes versus decreasing spending was actually and psychologically very divisive, which made a solution very difficult. However, the debt ceiling and spending cuts debate is more synthesized, which is psychologically and practically important. This is an and debate rather than a versus debate.
Holly,
why do we have a debt ceiling if all they do is raise it when they want to spend more? Is that really a ceiling – I don’t understand the sense of it.
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Brian,
It\’s really interesting to go to the US debt clock site here http://www.usdebtclock.org/ and notice the debt limit is blinking because we have reached the limit. Yet the debt continues to rise and a debt breach category has been established. The problem we have is that there is essentially no way to shut off the spending in the short run. It\’s out of control.
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