Spending Ceiling

December 18, 2011

Here’s an idea for structural reform (though not structural in the same sense as, say, repealing the Seventeenth Amendment), prompted by the discussion generated by a past post: a spending ceiling.

The idea is simple:  Congress would enact a limit on the annual federal budget, similar to the total limit on national debt (the “debt ceiling”).  Any time Congress wants to spend more money than it did the previous year (or rather, more than the existing statutory limit), it has to pass a law (duly agreed by both houses and signed by the president) raising the spending limit.  

In a way, it would be no more difficult to increase spending (which the federal government reliably does every year) than it is now—either way, it is done by an act of Congress, signed by the president (or with an override of his veto).  In important other ways, however, it would be more difficult to increase spending:  The target federal budget would be a fixed number, visible to the public, subject to debate, and thus politically more difficult to change—think of the debt-ceiling fight earlier this year, or the fight (continuing to this day) over the Bush tax cuts of 2001 and 2003.

Thoughts?

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8 Responses to “Spending Ceiling”

  1. Null Says:

    While this is a good idea in theory, it will never work in practice. It would be just as useless and misleading as the “debt ceiling”. Anyone who had the mere idea that we shouldn’t simply rubber-stamp an increase to the debt ceiling was immediately labeled a “terrorist” who was “holding hostages” by not rubber stamping the “procedural” increase to the debt ceiling. Of course, this attitude raises the question: why have a debt ceiling if we’re just supposed to raise it every time we get near it anyway? Better to get rid of it and the false sense of security that Congress “can’t” incur too much debt.

    The “spending ceiling” would simply be (silently) raised every year as part of the standard “procedure” of passing a federal budget (assuming Congress bothers to pass a budget in the first place).


    • You may be right, but I think it might be worth more than nothing.

      Unlike the debt-ceiling fight, I think a spending-ceiling fight would risk only shutting down the government; it would not also risk effectively defaulting or otherwise signaling to America’s creditors that we would not make good on our debts, as the debt-ceiling fight arguably risked doing. This should, at least as a matter of degree, diminish the power of charges like “terrorist” and “hostage taker”.

      I think Thomas Sowell may be right when he argues that there should be no legal debt ceiling. Some of his argument there also applies against enacting a “spending ceiling”, but not all of it, I don’t think.

      I think the spending ceiling could potentially give an opportunity to have a real fight about whether to increase spending, rather than always and inevitably being raised silently, without public debate. It could be like the budget fights this past year, including the one in July and August about the debt ceiling, but more beneficial. You may point out that it was unusual for the debt ceiling not to be raised silently, but then isn’t Congress’s recent long-running failure to pass a budget also unusual?

  2. Snoodickle Says:

    http://www.nytimes.com/2011/12/30/opinion/keynes-was-right.html?src=ISMR_AP_LO_MST_FB

    It’s possible that cutting spending now could lead to a disaster.


  3. “Oh, man, didn’t he just post a link to that arch-hack, Paul Krugman!”

    I’m allowing your comment (little more than a link to a Krugman column), but attaching to it a handy reference to this conversation in which you and Tevyeh already explored whether we should believe something just because Krugman says it.

    • Snoodickle Says:

      Yes, I’m sure that Krugman is the only economist who says that slashing spending during a recession is a bad idea. Don’t take his word for it, though, look at the effects of austerity in Europe.


    • See also everything Tevyeh said there (and elsewhere) about inferring causation just because “this happened, then this happened”.

      • Snoodickle Says:

        Right, but your response to every set of data that you don’t like is that you can’t necessarily infer causation. At some point, however, you have to begin to draw conclusions from data. If not, there’s no point in even looking at it.


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