As America bumps up against the debt ceiling, Republicans and Democrats are talking about controlling the deficit through targets and triggers. Whether such a plan works depends on its design.
As Congress again nears the need to raise the ceiling for more US debt, talk in Washington is of tools to reduce the federal deficit. Both parties throw around words like “target,” “trigger,” and “enforcement mechanism.” The idea is to come up with a process that will force lawmakers to budget so that government lives within its means.
This discussion may be just a lot of political hoo-ha to make it look as if Congress is getting fiscally tough. That way, lawmakers have the cover to increase the nation’s debt limit so that the United States can continue to pay its bills.
A sure sign of Washington’s unwillingness to make hard choices is when everyone is talking about process instead of substance. Deficit targets and triggers are process. Spending cuts and tax increases are substance.
On the other hand, to do something truly substantive with deficit reduction would be nigh impossible by mid-May – when the US is expected to reach its current $14.3 trillion debt limit.
Economists warn of havoc if the debt limit is reached and Congress does not vote an increase: default on the government’s bonds and interest payments, a market meltdown, higher interest rates. Goodbye recovery, hello recession.
Bookkeeping tricks might win Congress a few more weeks on the debt-ceiling deadline. But even that won’t be adequate time to agree on how to cut defense spending or reform the tax code and entitlement programs such as Medicare. These are the kinds of tough decisions that need to be made to have real impact as annual deficits pile up into long-term debt.