Former CBO Director Doug Holtz-Eakin told FOX Business the debt ceiling has become an economic problem that can be resolved by having the federal government abolishing the practice of having Congress periodically raise it.
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“I would get rid of it,” he said on “After the Bell” Wednesday.
Congressional leadership in both the House and the Senate have been in discussions with the White House about how to move forward with raising the debt ceiling. The U.S. government may not have enough funding to pay its bills in September, forcing the Treasury Department to breach the borrowing limit, according to the Bipartisan Policy Center.
Holtz-Eakin said reaching an early September "drop-dead" date runs the risk that financial markets begin to lose its faith in the Treasury.
“I think you let Treasury manage the structure of the debt, long versus short borrowing, things like that [and] you let the market price it and you move on,” he said.
Holtz-Eakin added that failure to reach agreement on spending caps and the debt limit will result in $120 billion in spending cuts across the board.
“That’s bad public policy,” he said. “We have Defense Department that we have to fund appropriately.”