More than 80 percent of the country's leading economists say that the nation's debt ceiling creates unnecessary uncertainty and can lead to worsening the nation's financial picture, according to a new survey of more than 40 academics.
The survey by the IGM Forum at the University of Chicago's Booth School of Business says that 84 percent of the nation's economists agree or strongly agree that because all federal spending must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse financial outcomes.
President Obama said Monday that he would not negotiate over the $16.4 trillion debt ceiling, which will be breached at some point between Feb. 15 and early March without further action by Congress. Obama wants to raise the limit unconditionally, but Republicans say they intend to use the moment to force deep cuts in federal spending.
The IGM survey, which periodically asks top economists about their opinions, reported that 3 percent of survey respondents said they disagreed with the statement and none said they strongly disagreed. When weighted by each economist's confidence, 97 percent of the experts agreed with the statement.
The survey tends to include a wide range of economists of differing backgrounds and political inclinations. The academics are given the option of offering a comment on their vote. Here is a sampling:
Angus Deaton of Princeton, who strongly agreed: "It does indeed provide some break on long-term spending, but there has to be a better way."
Austan Goolsbee of Chicago, who strongly agreed: "OBVIOUSLY."
Pete Klenow of Stanford, who agreed: "It sure looks like it's been adding uncertainty lately (e.g. 2011.) But it could conceivably be a force for good."
Luigi Zingales of Chicago, who disagreed: "It can also lead to potential better outcomes."
Robert Hall of Stanford, who expressed no opinion: "This is a question about the behavior of members of Congress. I don't see how an economist could have an expertise on this."
Klenow showed the impact of the debt ceiling debate in 2011 through an uncertainty index: