Everything I've heard from Washington politicians about the debt limit is nonsense. I propose the simplest option: Do nothing. Don't raise the debt limit, period.The Tea Party is starting to resemble the Libertarian Party, at least when it comes to fiscal policy...
None of the deals I've heard would do anything to cut federal spending. Some reduce the rate of growth a little bit, but I'm afraid that doesn't count. And of course, some of the proposals would increase taxes, which Libertarians are totally opposed to.
The best outcome would be no deal at all. If the debt limit is not raised, then the federal government will have to cut its spending by over 40%. That would be the best outcome for the future of America, and it's certainly the preferred outcome for Libertarians.
I'm actually shocked at how resistant both the Republicans and Democrats are to making cuts. I wasn't expecting much, but their proposals are downright embarrassing. For example, consider Speaker Boehner's plan. According to the Cato Institute, the Boehner plan doesn't cut spending. It just sets the spending increases slightly below the imaginary Congressional Budget Office (CBO) 'baseline.'
According to the CBO report released yesterday, the Boehner plan has practically no effect on the deficit in 2012, the only year that really matters. In fact, the Boehner plan actually increases Pell Grant spending by $4 billion in 2012. (So does the Reid plan in the Senate.)
Of course, the Reid plan largely takes advantage of massive errors in the CBO baseline to claim 'cuts.' (For example, the CBO predicts absurdly high levels of spending for the wars in Iraq and Afghanistan.)
As usual, Republicans and Democrats are trying to create the illusion of a high-stakes game between two vastly different visions. In fact, their visions are practically identical. I hope Americans will see through all the smoke, and consider the Libertarian option to make real reductions in the size and scope of government, across the board.
Source: Press Release (2011, July 27), Libertarian Party.