A risky fiscal strategy is gathering strength in Congress: reduce federal spending and the deficit by freezing the national-debt limit.
Republican budget hawks are pushing that course of action, absent a compromise budget-cutting deal. But the idea we can stop profligate spending by clamping down on further borrowing by voting against raising the debt ceiling will not necessarily, by itself, reduce spending or even further debt.
In fact, spending and the gross national debt could continue to rise at an irresponsible rate. Take, for example, Social Security payroll taxes that the government uses to pay its bills, leaving an IOU slip in the cash drawer that adds to the national debt.
Even in the real world, when business saw their profits disappear and their debts mount in the Great Recession, they didn't respond to their looming insolvency by refusing to pay all their debts. They cut spending, laid off workers, reduced salaries, or sold off assets, and in many cases raised funds through bank loans or bond sales to tide them over until the economy and their own finances improved.
The federal government, whose national debt spilled over the $14 trillion mark last week -- or $45,300 for every man, woman or child in the country -- must do the same: Slash spending and raise the debt limit in the short term until we can climb out of the bipartisan financial hole we've dug over many years.
The fight is between two forces: Republicans who want to whack the budget with deep spending cuts and the Obama administration, which wants modestly slower spending and an increased debt limit to boot.
The best strategy in this situation is to leverage the need to raise the debt limit by demanding deeper spending cuts, stricter budget rules and caps to curb future spending.
Instead of "fighting against a debt-ceiling increase that absolutely must take place because of the odd way it is defined in law or adding killer provisions, Republicans should unite to attach effective new rules that restrain spending and the size of the government," wrote free-market economist David Malpass in the Washington Times this week.
A blizzard of recent memos and blogs among conservative think tanks agree that we have to do both, making it crystal clear to the president that he must accept deeper spending cuts in this first round if he wants a debt-limit increase. If he wants to call it hostage taking, so be it.
"Any increase in the debt ceiling should be accompanied by immediate, substantial spending reductions," Heritage Foundation assistant director of strategic operations Conn Carroll wrote in a blog last week.