Legg Mason investment manager Bill Miller has a single simple suggestion for avoiding that potential standoff: eliminate the law that imposes a debt ceiling in the first place.
“This legislation was passed during World War I,” Miller points out. “The last veteran of that war has died; perhaps it’s time to recognize that this law no longer is serving its purpose.” (The last U.S. veteran of the “Great War” died in 2011 at the age of 110.)
Given how strenuously the Republicans are fighting to ensure that the debt ceiling stays in place and isn’t raised, you might think that this idea would be a non-starter, politically speaking. Not so, Miller says: “If the Republicans really want to curb government spending, they should vote to eliminate this law.”
Then, he adds, they could replace it with a more rational rule that could have the same effect – one that establishes a ratio between the national debt and GDP that can’t be exceeded. It will be easier to manage and is more rational, Miller argues. “Politicians will be able to see clearly when they will require faster economic growth in order to keep spending and borrowing.”
Logic suggests that this idea should work, and it has the merits of being a flexible tool in a way that the current debt ceiling requirement certainly isn’t. (It also would help us avoid the threat of constitutional crisis every time the debt ceiling issue becomes the focus of another Congressional tug of war.)
Sadly, logic and pragmatism aren’t hallmarks of political debate in Washington these days, so it’s perhaps unsurprising that this suggestion is being advanced from someone beyond the Beltway.