Wrong Answer

Treasury Secretary Janet Yellen wants Congress’ authority over the debt ceiling abolished.

She argued Congress makes the decisions on taxes and spending, so it should also provide the ability to pay those obligations.
“If to finance those spending and tax decisions, it’s necessary to issue additional debt, I believe it’s very disruptive to put the president and myself, the Treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions[.]”

This would, of course, mean that the concept of a debt ceiling itself would be removed.

Wrong answer.

The right answer, which would make a debt ceiling unnecessary (although not abolish it), is to limit spending to within revenues.

Of course, to prevent Congress from running away with tax rates, as the current Progressive-Democrat-run Congress is attempting to do, it would be necessary to limit Congress’ ability to raise tax and fee rates or to create new taxes or fees. One way to achieve that would be to define a priori the specific purpose of each individual tax or fee increase and each individual new tax or fee and then put each one, individually and separately, to a national plebiscite. If the plebiscite rejects the proposition, then the associated spending cannot occur and existing spending must remain within existing revenues.

A fillip: financial planners recommend individual families each maintain a rainy day/emergency fund of some months’ worth of expenses. Texas, and some other States, also do this at the State level. It would be useful if Federal spending were required to be limited to 90% of Federal revenues until a national level emergency fund were accumulated—say an amount equal to a year’s worth of established Federal spending. A year, rather than the several months that planners recommend for individuals, because of the Federal government’s empirically demonstrated profligacy.

Another fillip: index the size of the Federal Emergency Fund to positive inflation as measured by the Producer Price Index or its successor. Positive inflation: the required level of the FEF could never decrease, even in a deflationary environment.

Of course, this would require a Constitutional Amendment in order to be permanent.

Oh, and never mind the horror of Yellen being inconvenienced by the tasks of her job.

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