“Like Frankenstein’s monster, the statutory debt limit will soon come back to life,” says Concord Coalition Executive Director Robert L. Bixby. But while swift congressional action to raise the limit is necessary, he writes in a recent blog post, it may not be as easy as many on Capitol Hill have been assuming.
A budget deal in October suspended the debt limit through this Friday, when the Treasury Department plans to begin using temporary measures to avoid defaulting on some of the government’s financial obligations. Meanwhile, Republicans say they will seek concessions but Democrats want no strings attached to a debt limit increase.
Earlier this week, Treasury Secretary Jack Lew again urged Congress to quickly raise the limit so that the government can meet all of its financial obligations on time. He says the government is likely to run out of alternatives by later this month, and that damage is already being done to the economy.
Bixby called for creation of a Debt Limit Reform Commission to come up with a way to tie the nation’s debt to an economically relevant standard such as the growth rate of the economy. In addition, he says debt limit increases should be aligned with the policy decisions that require more borrowing.
The continued partisan bickering over raising the debt limit illustrates the need for reform.
“It might get resolved without a crisis this time, but the risk is still there and will return whenever the debt limit needs to be raised again,” Bixby says. He also notes that “the real solution to unsustainable debt is not to risk default but to enact more fiscally responsible policies in the first place.”