There are few things in this world I enjoy as much as an opportunity to say “I told you so.” Well, I told you so.
In May of 2010 I published an op-ed where I said:
If Washington properly accounted for its debt and deficit, we might be in the same situation. A threat to the US credit rating may even be beneficial, a sign that we’ve hit rock bottom and need to recover from this deficit addiction. Credit warnings would result in a diminished appetite for Treasury bonds, forcing the Treasury Department to borrow at higher interest rates and curb its habit for runaway spending.
The full faith and credit of the US is not a depthless well. Future generations bear the risk of high inflation, increased taxes, and interest payments on Treasury bonds that take up an ever-increasing share of the federal budget.
This was in the context of my argument that the federal government should be required to include the debt of companies which it controls, including GM, Fannie, Freddie, AIG and a number of remaining companies, in the national debt ceiling calculation and in the federal government’s accounting statements. A full journal article on that issue is forthcoming in the BYU Law Review, “Separation of Bank and State.” Check it out for everything you ever wanted to know about the law of the debt ceiling and the deficit.