Time to abolish the debt ceiling?

Moody's says it is, because D.C.'s partisan wrangling over borrowing unnecessarily unnerves the markets

House Speaker John Boehner and President Obama are trying to reach a deal to raise the nation's $14.3 trillion debt ceiling before the Treasury runs out of money to meet its financial obligat
(Image credit: REUTERS/Larry Downing)

As congressional Republicans and the Obama administration butt heads over a deal to raise the U.S. debt limit before an Aug. 2 deadline, credit-rating agency Moody's has a different suggestion: Scrap the debt ceiling altogether. The current system requires that Congress authorize any increase in the Treasury's borrowing limit, and creates "periodic uncertainty" every time the feds need to to rack up more debt to pay our bills, without doing anything to actually rein in spending, says Moody's analyst Steven Hess. Should we abandon the debt ceiling altogether?

Yes. We don't need the debt ceiling: Scrapping the anachronistic debt ceiling "is very, very good policy," says Dylan Matthews at The Washington Post. Denmark is the only other country with anything like our artificial borrowing limit, and not only do other developed nations seem to get along fine without it, but so did the U.S. between 1979 and 1995, when the "Gephardt rule" automatically upped the debt limit every time Congress increased our national debt. And obviously, eliminating the debt ceiling altogether would vastly reduce the number of needless partisan standoffs in D.C.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up