Stanford economist John B. Taylor was among the more than 150 economists to sign a statement saying, “Increasing the debt ceiling without significant spending cuts and budget reforms . . . will bring further harm to private-sector job growth in America.” Today he has an op-ed in the Wall Street Journal outlining “the enormous benefits to the economy from linking the debt limit to spending reductions”:
“[G]overnment spending has increased rapidly in recent years, rising to over 24% of GDP today from 18.2% in 2000. If Washington does not change the budget game now, people will sensibly reason, it will never change the game.
“If politicians just increase the debt limit now without simultaneously correcting that rapid spending growth, then they will be expected to do so in the future. In contrast, if they tie any increase in the debt limit to a halt in the explosion of spending, then people will give them better odds that they will control spending in the future. Linking the debt limit vote to spending thus establishes a precedent and valuable credibility. ...
“The principle of linking the debt increase and spending reductions—put forth by the House Republicans in the White House meeting yesterday—is therefore an important goal worth trying to achieve.”
Read the whole op-ed here. Taylor also makes the case for spending cuts that are larger than any increase in the debt limit, a point made again by Speaker Boehner yesterday after meeting at the White House:
Paying down America’s debt over time and stopping Washington from spending money it doesn’t have are key parts of the Republican Plan for America’s Job Creators and the Path to Prosperity budget. Learn more here from the Office of the Majority Leader and the House Budget Committee.