Okay, I’ll admit the title of this post is an exaggeration. How to fix the mess at the IRS is a fiscal policy question, and that requires tax reform rather than spending restraint.
But allow me a bit of literary license. We just had a big debt limit battle in Washington and, after a lot of political drama, politicians kicked the can down the road.
So we need to ask ourselves whether that fight accomplished anything?
It did focus attention of the flaws of Obamacare, and I suppose there’s some value in that.
But the debt limit was not a vehicle – as has been the case in the past – for changes in fiscal policy. We didn’t get something good, like the sequesterwhich resulted from the 2011 debt limit legislation. And we didn’t get something bad, like the tax hike in the 1985 debt limit legislation
Some are asking whether we should even have a debt limit. A number of critics have suggested we should get rid of the borrowing cap because it creates the risk of default. I think those concerns are very overblown.
I’m more persuaded by those who argue that the debt limit diverts attention from better options to improve fiscal policy.
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