Fundamental Spending Reform: The Solution to the Debt Ceiling Debate
High and increasing debt has adverse consequences for our economy. There are a number of institutional reforms that can be implemented to check the spending that drives this growth in debt. Entitlement reform is essential, as rapidly burgeoning growth in entitlements is driving the growth in spending. The latest increase in the debt ceiling gives us some time to reach an agreement that reflects real reform, and there are sufficient assets available that default is not a concern.
The heated rhetoric coming in March 2017 about whether Congress should raise the debt ceiling will obscure the federal government’s real problem: an unprecedented increase in government spending and the future explosion of entitlement spending has created a fiscal imbalance today and for the years to come. No matter what Congress decides to do about the debt ceiling, the United States must implement institutional reforms that constrain government spending and return the country to a sustainable fiscal position.
Real institutional reforms, as opposed to onetime cuts, would change the trajectory of fiscal policy and put the United States on a more sustainable path. Such reforms could include: a constitutional amendment to limit spending, meaningful budget reforms that limit lawmakers’ tendency to spend, the end of budget gimmicks, a strict cut-as-you-go system, a BRAC-like commission for discretionary spending.