On the Debt Limit

Remember this?

Mr. President, I rise today to talk about America’s debt problem. The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies....

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.

That was Senator Barack Obama opposing an increase of the debt limit in 2006, when government debt was 35 percent of GDP. Now it's 98 percent.

Of course, not raising the debt limit in 2006 would have been bad policy, as not raising the debt limit now would be. My own view is close to that of Jason Furman and Rohit Kumar, who advocate repealing the debt limit entirely, so we don't regularly have these artificial legislative crises.

But I recognize that is unlikely. And as long as we have a debt limit, politicians will use it to play politics. That is what Senator Obama did in 2006, and for better or worse, that is what Senate Republicans will likely do over the next few weeks. The open question is what political advantage they will get from doing so.