How to Avert Another Debt-Ceiling Crisis

The United States borrows 46 cents for every dollar it spends, and despite congressional approval of the expenditures, a few members cling to a self-imposed debt ceiling, insisting that partial default may bring new discipline and spending priorities. “Had the debt ceiling been breached, the damage to the U.S. and world economies could have been measured in trillions of dollars,” write James Leitner, president of Falcon Management, and Ian Shapiro, Yale professor of political science. The US must lift its debt ceiling again in February, unless Congress agrees to cut spending or raise taxes. Before a minority group in Congress threatens default once again, Leitner and Shapiro urge the US Department of Treasury to consider issuing “consols” – consolidated bonds with no set maturity date and thus no principal obligations that would add to the federal debt as defined by the debt-ceiling legislation: “consols would be an effective arrow in the Treasury’s quiver to prevent rogue minorities in Congress from undermining the full faith and credit of the United States.” – YaleGlobal