Treasury Secretary Timothy Geithner mentioned an interesting solution to the debt ceiling crisis: Eliminate the cap on the national debt.
"It would have been time a long time ago to eliminate it," Geithner said Friday on Bloomberg TV. "The sooner the better."
In fairness to Geithner, he didn't suggest removing the debt ceiling out of the blue; he made the statement after being asked what he thought about the idea. The secretary said he favors lifting the cap altogether because of the leverage it provides fiscal conservatives.
"Only once ... did people decide to use it to threaten default on the American credit for the first time in history as a tool for political advantage," he said.
That was in early August 2011. The federal government again is close to hitting the debt limit. But part of the deal to raise the ceiling - the Budget Control Act of 2011 - states that limit can rise again by $1.2 trillion. But that act calls for $1.2 trillion in spending cuts and tax hikes Jan. 1 if Congress fails to reach a deficit reduction deal by that date.
Geithner's statement sounds radical, until one realizes the federal government does not have a strict debt limit.
The debt ceiling was instituted by Congress in 1917. The limit has been raised 74 times in the past 50 years, including 10 times in the past decade.
In short, the debt limit is about as strict as a parent who tells a child "that is the last time for that behavior" only to repeat the admonition when the behavior continues.
Geithner is correct. The debt ceiling should be eliminated - and replaced with a balanced budget amendment.
