Obama: Let's Scrap the Debt Ceiling

President Barack Obama told the Wall Street Journal‘s CEO Council meeting on Tuesday that the U.S. should scrap the debt ceiling, which he described as a “loaded gun” creating perpetual crisis in American politics.  “We’re probably better off with a system in which that threat is not there on a perpetual basis,” he said. The president did not address the problem of federal spending except to claim that he has cut deficits.

Obama’s argument that he has cut deficits rests on the assumption that he is not responsible for the massive expansion of the 2009 fiscal year–even though he voted for the unusually high spending of that year while still a U.S. Senator, and added the massive stimulus as president. Obama also claims credit for a sequester cuts that, while originally proposed by the White House, he has spent more than a year trying to undo. 

Leaving aside the merits (or lack thereof) of Obama’s fiscal hawk pretensions, the argument he made for removing the debt ceiling agreed with an Organization for Economic Cooperation and Development (OECD) report issued on Tuesday, which advised the U.S. to “abolish” the debt ceiling entirely because repeated political battles over raising it were causing instability to the fragile global economic recovery.

In both of the two major debt ceiling battles of Obama’s presidency, his advisers have considered executive alternatives, including minting a $1 trillion coin or simply claiming the power to pay the nation’s debts under the 14th Amendment. Republican Mitch McConnell, the Senate Minority Leader, has proposed letting the president raise the debt ceiling subject to Congressional approval, rather than putting Congress first.

None of these proposals deal with the underlying problem of federal spending, which is a bipartisan legacy of which Obama’s profligacy is the latest, and by far the worst, example. The president’s preferred option of boundless spending authority would only delay the inevitable reckoning. While removing the short-term threat of formal default, it would make budget fights worse and government shutdowns more likely.