Washington needs to kick 'extraordinary measures' habit: Holtz-Eakin

yahoo finance ^ | 3-20-2015 | Joanna Campione

[Citizen Zed]

In Washington, D.C., sometimes the extraordinary begins to feel pretty ordinary.

On Monday, the Treasury Department started taking “extraordinary measures” to keep the government from defaulting on its debt limit, a figure which now exceeds $18 trillion. Those measures include stopping investments in a pension fund for federal employees and suspending the issuance of special Treasury securities used by state and local governments.

Last fall, the Federal Reserve wrapped up its extraordinary bond-buying program called Quantitative Easing.  The Fed began its first round of QE purchases in November of 2008 following the financial crisis and two more followed.  The central bank announced in October that the economy no longer needed the help.  (But the economy still isn't strong enough for the Fed to raise interest rates.)

“It’s become routine business to do 'extraordinary measures,'” says Douglas Holtz-Eakin, president of the American Action Forum. “We’ve done extraordinary monetary policy for six years.  We’re now doing extraordinary measures on the debt ceiling again. And it should be time to get back to taking care of the nuts and bolts of business without these extraordinary procedures,” says Holtz-Eakin, former director of the Congressional Budget Office who served on President George W. Bush's Council of Economic Advisors.

Of course the latest extraordinary measures-- amid the current debt ceiling debate-- are nothing new. In 2011, the Treasury took extreme steps when a group of GOP lawmakers tried to tie the issue of raising the debt ceiling to cuts in federal spending, Democrats refused to sign on and a game of chicken lasted until two days before the Treasury was set to run out of money.

In 2013, a similar showdown developed and was resolved at the 11th hour. 

[Citizen Zed]

Just clap your hands and believe.