Prolonging a debt-ceiling debate could be catastrophic for the U.S. and world economies and should be off the table for negotiation, some budget experts argued on Tuesday.
Economists and policy experts argued that rehashing the debate in the summer of 2011 is the wrong approach and that Congress needs to ensure that increasing the limit doesn’t caught up in a net of other larger issues such as tax and entitlement reforms that could hamper, at least, an increase.
Simon Johnson, an entrepreneurship professor at the Massachusetts Institute of Technology, told members of the House Ways and Means Committee that it is “ridiculous” and a “big mistake” that lawmakers are again having a conversation about raising the debt ceiling that is resembling the posturing of previous debates, which led to a downgrade in the nation’s credit rating.
Johnson argued that continuing to create a confrontation over the nation’s $16.4 trillion debt limit creates “uncertainty for everyone” from the private sector to consumers and the economies of Europe, which are still struggling to recover from their own financial crises.
“They can’t make decisions if don’t know what’s going to happen,” said Johnson, the former chief economist of the International Monetary Fund.