SPRINGFIELD, Ill. (CBS) — The threat to block an increase of the federal debt ceiling is probably no more than that, according to an economics professor at the University of Illinois.
As WBBM Newsradio 780’s Dave Dahl reports, professor Fred Giertz says refusing to move the ceiling is a bad political move, and probably a bluff.
LISTEN: Newsradio 780’s Dave Dahl reports
“We have these two things happening. Congress and the president are appropriating and spending money, and part of that is being financed by debt, and the accumulation of debt now is running up against the debt ceiling,” Giertz said. “Now, what typically is done is to raise the debt ceiling. At this particular time, especially because of the arrival of the new Republicans in the House, they’re arguing that we’re not going to raise the debt ceiling, or we’re not going to raise it unless there are substantial cuts in spending, so it’s kind of an impasse.”
Giertz says raising the debt ceiling was not always a newsmaking proposition, but this year’s change in the composition of Congress has changed that.
He says raising the debt ceiling– currently $14.3 trillion – is more of a problem if there is no long-term deficit-reduction strategy to go with it.
“The debt ceiling is a symptom of the problem, but it’s not the problem itself,” he said. “If you want to really address the issue, you need to get at the cause, which is either spending or taxation. But it has to be done in a measured way over a period of time, not cold turkey.”
Congressional leaders are meeting at the White House Thursday to talk about the debt ceiling. President Barack Obama says is if the debt ceiling is not raised by Aug. 2, the U.S. will go into default and an economic catastrophe will result.