Some investors may have breathed a sigh of relief after the House of Representatives passed a bill to extend the debt ceiling for three months, postponing a fight that might have roiled financial markets and damaged the country’s credit rating.
Yet the 90-day extension does not help the market and does not end the crisis, argues The New York Times in an editorial.
“Postponing a crisis for 90 days does nothing to reassure markets, or businesses or ordinary bondholders worried about their investments,” The Times states.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
The temporary extension, according to the newspaper, also does not increase voters’ confidence that Congress will deal with the budget in a serious way.
“[The] bill doesn’t even raise the ceiling. It simply suspends its enforcement, showing how meaningless the mechanism is,” The Times says.
“Now that it is clear that the ceiling can be easily eliminated, both parties should agree to do so, averting not just this crisis, but all those in the future.”
House Republicans say they want spending cuts to equal increases in the debt limit, but have yet to propose what to cut. A balanced budget would mean drastic cuts to Medicare and Medicaid and other popular programs.
At least the postponement will match the debt ceiling debate to the annual budget approval timeframe. “Let each chamber put its policy priorities on the table for public examination,” The Times states, “and then hash out the differences in the full glare of the C-Span cameras.”
Other commentators and experts also argue that the debt ceiling limit should be eliminated, not simply raised.
In fact, 84 percent of the 38 economists participating in a University of Chicago survey agreed that a debt ceiling limit only creates unneeded uncertainty and can lead to worse fiscal outcomes, the Los Angeles Times reports.
“Separating out the spending from the actual payment for the spending is just a reckless fiscal policy,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics, according to the Times.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
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