Laffer: Raise the Ceiling, But Get a Lot in Return
In the Wall Street Journal today, economist and iconoclast Art Laffer offers advice that strikes me as just right--and the first big test of the Republican leadership in the House:
[I]t would be a mistake to use the debt ceiling as the means to control Mr. Obama's spendthrift ways. But there is no reason why House Republicans shouldn't seek and get major concessions from the Democrats in exchange for raising the debt ceiling.
There are, for example, many truly bad provisions in the Dodd-Frank financial-reform law and the president's health-care legislation that should and could be repealed. The Republicans should target these provisions for repeal and attach them to the bill to raise the debt ceiling. Once the bill...passes the House, it would likely also pass the Senate. Who among the 21 Democrats and two independents whose terms are up in 2012 would vote against raising the debt ceiling, especially if the legislation also removed the least-popular features of other bills? Once passed by the full Congress, it's even less likely that Mr. Obama would veto it.
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Aug '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
I'd hate to see us obtain the repeal of the least popular parts of the health care bill, because once you've gotten rid of those, it makes it harder to get rid of the more popular parts, and some of those more popular parts are in fact the most destructive parts. For instance, requiring insurance companies to sell insurance to people with pre-existing conditions is so popular that I've heard Republicans refer to it as an aspect of the bill they'd like to keep, yet it completely destroys the very concept of insurance. For this reason, I think it's important to try to repeal Obamacare in its entirety (in 2013), with public reassurance that immediately upon doing so we intend to go back to square one and deal with the problems in a different way.
I don't have a problem with a piecemeal approach to financial regulation reform, though.
May '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
Laffer is one of the economists I trust most. But I fail to see how he hopes to achieve spending cuts after raising our national credit limit. Threat of default is a strong motivator, right?
I'd prefer that the GOP refuse to raise the limit outright. I do wonder, though, whether the particular cuts Democrats would choose would be worse than waiting until 2012.
Assuming our debts will hold until then (undoubtedly compounded by new spending by executive orders in the meantime), can Republicans count on having the leverage of imminent default if/when they take the leadership position? Or will this latest round of loans keep us safe in la-la land until 2016?
May '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
I'd be interested in what kind of concessions Laffer thinks they should ask for, and/or can get.
Peter and the other Ricochetians chime in too.
Me, I want a pony for Christmas and world peace (although as an Illinoisian I'd settle for repeal of the recent income tax hike, which is much less likely than world peace).
Dec '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
I anticipate something very different will transpire. Weiner of NY and Frank of MA have already hinted that they "will not fight" the majority over the debt ceiling. I expect them (and other Dems) to just sit back and force the Republicans to increase the ceiling on their own. In that scenario, they will allow the Republicans to pass whatever they like and take ownership of the elevated debt ceiling. If the ceiling is raised, that's the Republican's fault. If it isn't, it won't be the fault of the minority.
Then, when the Senate passes a clean elevation, the House will have the Senate and the White House against them, going into conference. Brinksmanship.
Jul '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
Totally with you, Paul. Just sad that 90% of people don't understand what you're talking about.
Sep '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
Laffer has done some good work but completely missed the melt down and was a big supporter of TARP. He did vote for Clinton instead of Bush and Dole and I give him points for that. I was not aware that anyone was talking about simply not raising the debt ceiling. The question is what conditions. The most unpopular feature of the HC bill is the mandate and if this is removed the bill unravels doing anything less is window dressing. If they try it O will play chicken with them and win. I take note of what is not being mentioned. How much will the ceiling be raised. The GOP can insist that it be raised only 200 or 300 B. and tying it to a reduction in the size of the federal government. This would ensure the issue would come up every 2-3 months and give them continuing leverage during the next 2 years. They won’t do this because they don’t really want the leverage.
May '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
The debt ceiling can be raised in increments, as an adder to each appropriation. That way there is a debate on each appropriation over whether the best approach for that piece of funding is cut-go or raising the debt limit.
That ties the debt limits issue to the spending issue each and every time, in the context of the regular cash-flow issues of the feds. There isn't a perfect correspondence between daily cash demands and appropriations, but there is no reason we can't start to correlate them more closely.
Aug '10
Re: Laffer: Raise the Ceiling, But Get a Lot in Return
Kenneth
Totally with you, Paul. Just sad that 90% of people don't understand what you're talking about.
I know I'm only one person (or very small reptile), but I understand -- despite having like a dozen preexisting conditions of my own.
If people like me don't pay some more in to offset the extra we take out, then everyone has to pay more, pricing marginal healthy people out, until the whole pool turns sick and it all goes kerflooey.
Is it unfair we have preexisting conditions? Maybe. But that's a beef with God, not risk analysis.