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Three things everyone should know about the debt ceiling

April 27, 2011

DALLAS (SMU) – SMU economist Tom Fomby is available for interview as politicians and pundits clash over the debt ceiling.  Americans should know three things about the debate, Fomby advises:

  1. “Uncertainty is not good for the economy.  The longer the debt ceiling debate goes on, the worse it is for the economy.  Economic decision makers tend to delay important decisions in the wake of uncertainty concerning our economy.”
        
  2. “The debt ceiling is a convenient patch that legislators have used to delay finding significant initiatives to reduce the budget deficit in the long run.  Either we increase taxes, reduce spending, or do a little bit of both.  Each political party has had the tendency to pursue one at the total disregard of the other and this is what has led to the decision-making deadlock.”
        
  3. “One sure-fire way to eliminate the use of debt ceilings on a continuing basis is to make the tax code more efficient.  In so doing, average tax rates could be reduced but we would be able to raise the same amount of revenue for the government, if not more.”

Fomby may be reached for interviews at 214-768-2559 or 214-543-2004.

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