Local economists: Debt ceiling itself is bad idea

January 16, 2013

Washington is yet again fighting over the debt ceiling, trying to pay the bills they’ve racked up through deficit spending. Meanwhile some local economists say the debt ceiling itself is a bad idea.

The University of Chicago’s Booth School of Business has a panel of economists they poll about big policy issues. This time around, they posed this statement to some 40 academics about the debt ceiling: "Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates uneeded uncertainty and can potentially lead to worse fiscal outcomes."

Eighty four percent of the group said they "agreed" or "strongly agreed".

"It’s crazy to raise doubts about whether or not we’re gonna honor promises that we’ve already made," said Anil Kashyap, an Economics and Finance professor from the University of Chicago. 

Kashyap says congressmen on both sides of the aisle need to focus more on finding actual solutions.

"Have an honest debate about the inconsistency between the level of taxation and the level of spending promises," he said.

The Treasury department says it will run out of borrowing power sometime between mid-February and early March.