Tags: debt ceiling | deficit

Debt Dilemma Distorts Decision Making

By Barry Elias   |   Friday, 22 Jul 2011 07:50 AM

The debt ceiling debate will permit $2.4 trillion in additional debt  to accumulate.

The proposed debt ceiling of more than $16.5 trillion will “conveniently” occur AFTER the 2012 presidential election.

The dichotomy:

This transparent methodology exacerbates the fiscal pathology the president purports to solve.


To wit, additional debt creation, caused by excess expenditures, will be remedied by reelection.

The immaculate conception, redux.

Consider the following fiscal remedy.

Short term (every 6 months):

* Legislative statute for a maximum debt ceiling increase of $750 billion.

* Future debt increases would require additional approval (every 6 months, given the current rate of debt accumulation).

* This time frame will highlight fiscal deficiencies frequently and publically.

* This mechanism would provide incentive to rectify fiscal inadequacies timely.

 Medium term (1 - 10 years): 


* Reduce annual federal government expenditures by 1% for 10 years in every program.

* Reduce annual debt level increase by one percentage point of Gross Domestic Product (GDP) for 10 years (currently, the debt increase represents 10% of GDP) .


Long Term (10 - 20 years)

* Legislative statute to limit federal government expenditures to 20% of GDP.

* Annual Federal budget deficit of zero (balanced budget).

* Eliminate annual debt level increase.

 * Permanent debt ceiling equal to highest debt level attained prior to balanced federal budget.


Anathema to the current political philosophy, prudent fiscal performance that benefits society can actually enhance future electoral success.


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The debt ceiling debate will permit $2.4 trillion in additional debt to accumulate.The proposed debt ceiling of more than $16.5 trillion will conveniently occur AFTER the 2012 presidential election. The dichotomy:This transparent methodology exacerbates the fiscal...
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