Fiscal Responsibility

Bloomberg Op-ed: Debt-Ceiling Deja Vu Could Sink Economy

Stop us if you have heard this one before: Speaker Boehner’s debt limit demands are unproductive at best and threatening our fragile economic recovery at worst.

But don’t take our word for it, just ask University of Pennsylvania Wharton School professors Betsey Stevenson and Justin Wolfers, who write in Bloomberg today:

“John Boehner, the leader of the House Republicans, has promised yet another fight with the White House over the debt ceiling -- the limit Congress has placed on the amount the federal government can borrow.”

“If this sounds familiar, it’s because we suffered through an identical performance last summer. Our analysis of that episode leads to a troubling conclusion: It almost derailed the recovery, and this time could be a lot worse.”

“…In principle, the extra level of approval can serve as a useful mechanism, forcing Congress to debate its priorities. But refusing to raise the limit wouldn’t free the government of its existing spending obligations. Rather, it would leave the government with no choice but to default on its debts.

“In other words, congressional Republicans are taking the government’s creditworthiness hostage when they threaten not to increase the debt ceiling. Politically advantageous as this may be, it is terrible economics.”

So far this Congress, House Republicans have not been good at putting good economics over politics, but it’s never too late to start.