Keeping the Debt CeilingJuly 20, 2011
Dear Speaker Boehner:
The House is responsible under our Constitution for proposing how our taxes are to be spent. A debt ceiling means that you have determined that the government will not spend more than it takes in once the ceiling is reached. Of course if more than that is authorized to be spent, the president can currently determine what to pay first, effectively taking Congress' power to determine how our money is spent. I think it is imperative that Congress (not the president) lay down guidelines for where money is to be spent first in case the ceiling is reached. I suggest you propose and pass a bill that lays down a payment priority order. Having such an order would eliminate the possibility of making unjustified threats and calm the people as it would allow planning. Here is an order I would suggest:-
1) Military salaries.
If you ever actually hit the ceiling, you may also tax every individual and corporation upto 1% of their controlled assets once per year to give the government some breathing room. Given the $54T estimated net worth of US households in 2009, this would provide upto $540B/year. If you use controlled assets instead of net worth, it could be much higher and may allow the income tax to be eventually eliminated.
If you argue that this would cause a rush to cash and devalue assets, that is a deliberate feature. Most people do not have the werewithal to save using assets and save cash instead - inflation is a silent thief that robs them of their savings.