Congress Has Time and Options on Debt Limit

J.D. Foster, Ph.D.

By Dr. JD Foster: The massive federal budget deficit is unsustainable today because of out-of-control spending. Consequently, the federal government is about to run up against its statutorily imposed debt limit. Fortunately, Congress has options, and it has time to consider them carefully.

If Congress chooses not to raise the debt ceiling, then it could act swiftly to indicate that net interest is the highest priority to allay any remaining concerns about the possibility of defaulting on the debt. Congress could also declare exactly where spending should be cut to align total spending with receipts, not leaving this to a President acting without statutory guidance. If Congress inclines toward raising the debt limit, then it should also impose immediate, substantial spending reductions along with strong new rules such as hard spending caps to require continued, sharp spending reduction in future years. The outcome should reflect a clear, quick path to a sound fiscal policy. The responsibility for driving down spending and borrowing rests—under our Constitution—squarely with the Congress and the President of the United States.  [Read Full Report]
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J. D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

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