With time running out to avoid a debt default, Congress and President Obama agreed to a modest increase in the nation's borrowing limit — the debt ceiling, as it's called. Based on the rate of spending and borrowing of our federal government, we probably have five or six months of peace before we have to get nervous again about a default.
Can we all agree on at least this: Having the good faith and credit of the United States called into question every five or six months is no way to run a country.
So let's rethink this whole charade. First, let's stop calling it a debt ceiling. If we are always raising it, it's not really a ceiling. And besides, everyone likes high ceilings — they're fancy, they're comforting and they're protective. Who doesn't want a higher ceiling?
The only reason we call it a ceiling is because some economist drew the graph upside down. So let's call it a debt basement instead.
Debt basement makes more sense to me. A basement is where the monsters lurk. It's where you put the stuff you'd rather your friends didn't see when they come over to visit. And a basement is literally in a hole in the ground.
In this case, it's a hole we keep digging deeper and deeper, all the while hoping it won't cave in. So when the president — any president — needs the authority to borrow more money, he should say: “We need to dig ourselves into a bigger hole.” He should be required, by law, to actually phrase it that way. No mincing words.
But that doesn't really address the bigger problem, which is the brinksmanship over the total debt. Most people think it's bad policy for the country to carry so much of it.
But debt can be helpful, if used correctly. If we borrow to invest in capital expenditures for the nation's needs for many decades — fighting to defend ourselves, improving our education system, land for parks, breakthrough research at a university, or new transportation or infrastructure — that seems right to me.
The problem comes when we borrow for more current needs. That means that our government has made too many promises to too many people, and simply can't afford it all. And it means we are borrowing from critical investments in our future to pay for today's expenses.
If our economy were growing consistently faster than our deficits, we could worry less. If we had a credible repayment plan, an $800 billion deficit wouldn't be quite so bad. After all, outside of a brief, glorious period in the late 1990s, we have run deficits every year of my life. Some of those deficits were puny compared with the growth of our total economic output. So, on balance, deficits aren't the problem. The size of our economy in relation to the deficit is the problem.
So let's take all the anger over the debt basement and channel it into some ideas to grow our economy.
No Labels, a group I co-founded with others interested in creating a positive dialogue in Washington, has a good idea. How about passing a law called ‘Jobs First' that would not allow any further changes in federal taxes and spending programs until the unemployment rate reaches 6.5 percent? That would mean about 1.1 million currently unemployed Americans would be back at work.
Call it a ceasefire — no new taxes and no new spending. Put everything on hold until 1.1 million more people get a job.
Yes, the debt would keep growing and the debt basement would have to get bigger. But at least the economy would have a chance to keep moving forward without the threat of a big government debt default.
If Democrats want to change the law to raise taxes and spending, they would have to wait until the economy starts to warm up. If Republicans are so intent on bringing the deficit down, they would have to wait until we finally get some traction on bringing down unemployment first.
I know the Democrats and Republicans love a good scrap, so here's my promise to them: Once you do the work for the people, you can go right back at it.
From where I stand, that makes a lot of sense. The whole debate over the debt basement is a classic Washington exercise. It involves imaginary limits, empty threats, a giant pile of IOUs and innocent bystanders. We need to focus on the one thing that really matters: getting people back to work. This time, let's use the shovels to rebuild instead of digging ourselves deeper in debt.