James Capretta argues for the American Enterprise Institute that it’s time to get rid of the federal debt limit.

The federal government has a major debt problem, but the solution is not the current statutory limitation on government borrowing, which is counterproductive and could inadvertently cause permanent damage to the U.S. economy. The limitation should be scrapped immediately and replaced with a less risky modification to the budget process, one that encourages political leaders to focus on long-term deficit reduction.

Last September, President Trump and Congress agreed to suspend the current limitation on federal debt — set at $19.8 trillion — through December 8, 2017. Congress has not acted to raise the debt limit since it was re-imposed late last year, but Treasury Secretary Steven Mnuchin has been able to get around it by using so-called “extraordinary measures.” Those measures include holding back on the crediting of investment balances to government-owned accounts in order to limit the amount of implicit government debt that counts against the limit. Notwithstanding these extraordinary measures, the Congressional Budget Office (CBO) now expects the federal government will be unable to both pay all of its bills and stay below the current borrowing limit starting sometime in the first half of March.

Congress and the Trump administration should use the need to address the debt limit in the coming weeks as an opportunity to get rid of it once and for all.

Placing a limit on federal borrowing is dangerous and risks squandering one of the United States’ most important economic assets.