When in search of offbeat thinking on the economy, look no further than Alan Greenspan.
In a pow wow at the Aspen Ideas Festival on the country’s nettlesome debt problem, Greenspan said the debt ceiling, as a concept, should be canned.
“This is an unnecessary problem. The debt ceiling serves no useful purpose. Because once you’ve created a set of obligations you’ve fixed spending and we have a revenue code which engenders revenues, the difference between the two is by construction the change in the debt. And if you have a change in the debt and the level of the debt, unless your arithmetic is sub-normal, you know what the debt ceiling theoretically is.”
“All it’s doing is requiring belt and suspenders, and we’ve got lots of that type of legislation which is running around constitutionally.”
“The debt ceiling problem is synthetic and self-administered. The debt problem is a very serious issue.”
Indeed, it’s no wonder our colleagues over at Swampland have done all the heavy lifting in analyzing this debt ceiling debacle. Imposing a ticking time bomb on the country’s debt problem has yet to produce an iota of economic gain. As a way of restricting bubbling deficits, the measure doesn’t work. So says the Congressional Budget Office:
By itself, setting a limit on the debt is an ineffective means of controlling deficits because the decisions that necessitate borrowing are made through other legislative actions. By the time an increase in the debt ceiling comes up for approval, it is too late to avoid paying the government’s pending bills without incurring serious negative consequences.
The Tea Party may be having its day politically, but most economists have simply checked out. As Robert Rubin said at the Aspen event, “Our critical issues are technically solvable.” And in the words of White House debt commission chair Alan Simpson: “the time for B.S. is over.”