NEW YORK ( TheStreet) -- The debt ceiling in the United States stands at $16.7 trillion and Treasury Secretary Jack Lew has told the world that the government will run out money to pay its bills on Oct. 17.
This debt ceiling fiasco began during World War I when Congress decided to put a limit on expenses in 1917. This concern was unfounded and since 1960 Congress raised this limit 78 times without a single default on U.S. debt and without missing a Social Security payment or suspending Medicare. In my opinion this makes the debt ceiling a formality, one that should be abolished.
As the U.S. economy and population grows so does our national debt. As long as U.S. debt is considered a risk-free investment around the world there should not be a limit to its size, it just keeps growing. Supply and demand will determine our debts' value. If debt is growing too fast investors will slow purchases and the interest rates paid on this debt will rise. When Congress sees the cost of our debt rising it's time to cut government spending to reduce the growth of the debt. That's economics 101.
When you consider that the United States guarantees the $6 trillion in debt and mortgages of Fannie Mae and Freddie Mac during conservatorship, the U.S. debt is at least $22.7 trillion, but Congress is not concerned with this fact. This only shows that the ceiling of our debt will continue to rise, so why have a limit?The U.S. dollar is the medium of exchange in the global economy and Congress should not risk losing this leadership status. The largest economy in the world is the only country that should not have a debt limit, but in reality the United States is the only major country in the world with a debt limit. Today, Congress and the White House are putting the global leadership of our country at risk. We do not want a weaker dollar. We can't afford not to have countries around the world invest in U.S. debt, debt that should always be known as a risk-free investment.