Before it created the debt ceiling in 1917, Congress had to vote to approve each new government bond issue, specifying the amount to be borrowed and the terms. This is in stark contrast to today's practice, when Treasury is generally free to borrow at will until it hits the statutory borrowing limit. Congress could repeal the debt ceiling and go back to approving each new debt issue.Maybe it's the accountability part that keeps them from doing it...
Returning to the pre-1917 practice might provide better negotiating leverage to limit taxes and spending. It would also make Congress again directly responsible for government borrowing, returning some political accountability for federal debt accumulation that hasn't existed for nearly 100 years.
Wednesday, February 12, 2014
End the debt ceiling debate by getting rid of it: