The government debt is quickly approaching its $16.394 trillion limit, signaling another bruising battle between the White House and congressional Republicans to get it raised.
The best solution: “Repeal it [the debt ceiling],” former Federal Reserve Chairman Alan Greenspan tells CNNMoney.
As of last week, government debt was only $154 billion away from the limit. The Treasury expects the ceiling to be reached by year-end, though it says it can avoid default until early 2013.
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The debt ceiling is an archaic concept established in 1917 because prior to that every individual debt issuance by the federal government required some form of congressional approval, Greenspan says.
“That’s the same debt ceiling we’ve had ever since.”
There’s no need for it, given that government appropriations legislation already is passed by Congress and signed by the president. “That tells us the difference between receipts and expenditures, or what the change in debt will be,” Greenspan notes.
The debt ceiling creates a separate process to validate spending that already has been approved. We should just use “the normal means of determining what debt will be through appropriations and tax policy,” he says.
As for the here and now, many experts don’t expect quick agreement on a debt-ceiling increase.
“It would be nice not to go down to the drop-dead date, but with the way the process has evolved over the last 20 years, operating on auxiliary engines is standard practice now," Lou Crandall of Wrightson ICAP tells Reuters.
Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans
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