July 14 (Bloomberg) -- Congratulations to Senator Mitch McConnell for suggesting a strange but plausible device to avoid a U.S. government default, should talks on a debt-limit deal break down. Let’s agree to forget the recklessness, cynicism and intellectual incoherence that have characterized this debate and just say: Good, now let’s get on with the hard work.
McConnell’s plan -- which has received tentative support from some lawmakers, including Democratic Senate Majority Leader Harry Reid and, notably, some Republicans -- would authorize President Barack Obama to request an incremental increase to the debt limit to avoid default. Congress could pass resolutions blocking each increment. But the president could veto those resolutions. Overriding a veto would require a two-thirds majority.
In brief: The debt limit would get raised, and members of Congress would still be able to say they voted against it.
It’s a jury-rigged approach, to be sure, but the very fact that McConnell, a Kentucky Republican, has suggested it indicates that he and other members of his party recognize that default would imperil the fragile U.S. economy.
A Positive Element
There is a positive element to all this. The months-long debt-limit upheaval and the many plans offered to resolve it have unearthed the outlines of an agreement that would reduce deficits and put in place the structural reforms needed for long-term economic health.
Any such deal will require a commitment to spending cuts from Democrats and to modest revenue increases by Republicans.
We believe it should include an overhaul of the subsidies, deductions and credits that distort the tax code, and an increase in income taxes for families making more than $250,000. Affluent older Americans should pay more for their Medicare, and Social Security’s cost-of-living increases should be adjusted to save money and better conform to recipients’ actual living costs.
These conditions are subject to negotiations -- which are far better conducted without a catastrophe looming in the background.
In an ideal world, the changes recommended by Obama’s fiscal-reform commission would serve as a broad model. In the real world, we’ll settle for a plan that gets serious about reducing deficits without seriously harming the social compact.
Given all that Americans have endured, it doesn’t sound like an unreasonable request.
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--Editors: Timothy Lavin, David Shipley
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