Cornelius Hurley on the debt ceiling crisis
With the August 2 default deadline looming, President Obama and the GOP are still miles apart on an agreement in their debt ceiling crisis debate. Cornelius Hurley, a professor at Boston University’s School of Law and director of the school’s Center for Finance, Law & Policy, gave his view in a post earlier this week on PoliticoArena. He expands on his comments in the following opinion piece.
“The debt ceiling is the tea party’s war of choice just as Iraq was Bush’s war of choice.
“Minority Leader Mitch McConnell has gotten a lot of mileage out of mischaracterizing the issue by saying the U.S. doesn’t have a revenue crisis, it has a spending crisis. However, as Martin Wolf pointed out in a recent Financial Times op-ed, revenue as a percent of U.S. GDP was 18.2 at the end of Ronald Reagan’s terms (sans wars) versus 14 percent today (avec wars). So, yes Virginia, it is a revenue problem and a spending problem.
“Most economists will tell you that if the U.S. went cold turkey on spending right now, the impact on the economy would be simply awful. For example, in June the Fed at its FOMC meeting was discussing a new round of monetary stimulus. Radical fiscal measures would be the anti-stimulus. Simply stated, the debt ceiling is a long-term issue and the deficit is a short-term issue.
“So why threaten to blow up the economy now? Well, as they say, there’s no zeal like that of a new convert and the same folks who applauded multiple debt ceiling increases, two wars and an unfunded prescription drug benefit, have gotten religion. If the tea partiers are nothing else, they’re zealous.
“Again, quoting from Wolf, the tea party has an unstated motto: “Fiat justitia, et pereat mundus” – let right be done even if the world perishes. But they’re not even right on the issue. So why do the rest of us have to drink their “no taxes” Kool Aid? Hang tough, Mr. President!”