Should we raise the debt limit?

I have been asked recently whether or not the Congress should raise the debt limit. It would be foolish not to. The economy cannot stand and immediate cut off of $1.85 from the federal spending, so some increase needs to be allowed.

However, this opportunity could be used to impose some discipline for the long run. How about a bill that increases the debt ceiling by $50B this month, and then each month after that, the bill increases the debt limit by $1B less than it did the previous month? In other words, increase $50B this month, $49B next month, $48B in December, $47B in January, 2014, and so on. This eliminates any sudden crises and moves toward a balanced budget in a little more than four years.

Furthermore, to calm the markets, there should be a provision in the bill to prioritize spending in case the debt limit requires deferral or elimination of some payments. I would suggest that the law state that the top priority is the authorizations to the Defense Department since without them, we do not have a country. The next priority should be debt obligations to assure the markets that the USA pays its bills (and the Treasury department functions to collect and disburse funds). Next priority should be the benefit amounts and the activities required to be sure that those entitled get their benefits that they are counting on. Next would be the State Department, then Justice Department and the Court system, followed by everything else not in this list, then (lastly) pay compensation of the elected and appointed officials who allowed us to get to this state of affairs.

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