Schiff on The Debt Ceiling

I couldn’t possibly agree more. The entire thing is a farce.

Doing Away With Ceiling Drama by Peter Schiff: Treasury Secretary Timothy Geithner made news last week by proposing to transfer the Congressional prerogative to raise the debt ceiling to the President. The change would essentially do away with the meaningless debt ceiling debates that have become ritual kabuki in Washington over the past few generations.

The debt ceiling debates have been simply to authorize the U.S. Treasury to issue debt to cover the ever widening gap between what Congress spends and what it taxes. As a result, these debates have become nothing more than exercises in feigned outrage. If Congress wants to control the debt, let them do so. If they don’t care, just continue on the current path. Dropping the pretense is at least more honest.

The move will also help blunt the ridiculous assertions made by those in favor of lifting the debt ceiling that doing so somehow means that the United States is taking the prudent and moral step of “paying its bills.” In a press conference this week, Obama Administration Press Secretary Jay Carney claimed that by raising the ceiling, U.S. creditors will know that our government will meet its obligations. That is taking Orwellian doublethink to new heights of absurdity.

It is impossible to “pay” one’s bills by borrowing more. Taking out new loans to retire existing debt may replace old creditors with newer, larger, creditors, but it can never be described as a real pay down. It’s like paying off your Visa card with a Master Card. Paying one’s bills requires that outstanding debt be diminished. In direct opposition to Carney’s and Geithner’s statements, the only way to force the government to actually pay its bills is to not raise the debt ceiling. But a fictitious debt limit is worse because it allows Congress to pretend that its atrocious budgeting decisions are not to blame.

And do enjoy what Remy has to say about the debt ceiling.