Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Debt ceiling: Time to get real

Debt ceiling debate: Time to get realSen. Marco Rubio and Rep. Michele Bachmann strongly oppose raising the debt ceiling. By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney) -- It's time to get real about the debt ceiling.

U.S. borrowing is expected to soon reach its $14.3 trillion legal limit, and if the Treasury is to continue issuing bonds, Congress will need to increase the cap.

A number of lawmakers -- some of whom will speak at a Tea Party rally on Thursday -- have said they will not vote to increase the debt limit because it would be fiscally irresponsible.

But their rhetoric is misleading because it conflates two different things. There's raising the debt ceiling, which is a technical necessity. Then there is the country's actual debt problem, which is a political and policy matter.

Indeed, the debt problem won't be resolved -- and may even be made worse -- by not raising the ceiling.

Rep. Michele Bachmann has claimed that raising the debt ceiling would be "giving the Congress a license to keep on spending."

That's a little like saying that people who want to lose weight shouldn't buy a new refrigerator because it would give them license to eat more.

In fact, Congress gets its license to spend from its legislation, which creates ongoing commitments that the federal government must fund. And both parties are responsible for that legislation.

Even if Congress never approves another spending increase or tax cut, the debt ceiling will need to be raised repeatedly just so the country can continue meeting its obligations already on the books.

Raising the ceiling is also not a failure of leadership, as President Obama asserted when he was a senator.

The real failure of leadership has been the perpetual willingness by both Democrats and Republicans to say "yes" to spending and tax cuts -- all of which add considerably to the country's debt when they are not paid for.

Lastly, raising the ceiling does not have to mean "putting off the tough decisions until after the next election," as Sen. Marco Rubio wrote in the Wall Street Journal on Wednesday.

If they have the political will, lawmakers can tackle any issue they want whenever they want. And mustering that political will may mean sacrificing popularity and accepting compromises. That's the price real leaders pay.

Of course, there is a growing bipartisan consensus on Capitol Hill that the country's long-term fiscal situation is rather less than awesome and needs to be addressed.

But trying to force the discussion by holding the debt ceiling hostage to everyone's favorite fiscal demand -- no matter how smart the demand may be -- is a dysfunctional way to govern.

It's dysfunctional because it risks creating difficult situations that will make the debt situation worse, such as:

-- debt and cash management problems for Treasury, according to a recent report from the Government Accountability Office;

-- a rattled bond market, which can increase future borrowing costs;

-- draconian cuts or tax hikes if the ceiling isn't raised, $738 billion worth this year alone according to the Congressional Research Service.

And that would undermine the worthy goals of anyone who professes to worry about the country's fiscal course.  To top of page

Index Last Change % Change
Dow 16,581.81 -61.20 -0.37%
Nasdaq 4,811.21 -17.12 -0.35%
S&P 500 1,979.94 -8.93 -0.45%
Treasuries 2.18 -0.00 -0.14%
Data as of 12:15pm ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.72 0.22 2.10%
Bank of America Corp... 16.28 -0.08 -0.49%
Apple Inc 113.78 0.49 0.43%
Ford Motor Co 13.85 0.11 0.80%
Intel Corp 28.85 0.43 1.51%
Data as of 12:00pm ET
Sponsors

Sections

Good news. August is about to end. Bad news. Investors still have many reasons to be nervous about the stock market -- even though the worst may be over. More

A lot of people are urging the vice president to run for president, including a Wall Street billionaire. More

Blue Apron, Boxed, and Nature Box are worth an estimated $2.5 billion. Their co-founders all went to the same high school. More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Looking for something good on Netflix? These entertaining films will help you learn more about finance and investing. More