Harvard's Jason Furman Says Debt Ceiling Deal 'Too Close For Comfort' — It's In US Interest To 'Eliminate The Debt Limit'

Harvard professor and noted economist Jason Furman believes the debt ceiling agreement is significantly better than nothing but said it was too close for comfort.

"The budget/debt agreement is vastly better than nothing and probably about where things would have landed in a regular appropriations debate. I am hoping we are getting close to the end of this process and removing an unnecessary and completely self imposed risk to the economy," Furman said in his tweet.

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President Joe Biden on Sunday reached a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025. Biden also the deal was ready to move to Congress for a vote.

The agreement would suspend the debt limit through Jan. 1, 2025, and limit spending in the 2024 and 2025 budgets, claw back unused COVID funds, accelerate the permitting process for some energy projects among other things.

Furman, however, noted that eliminating the debt limit could be in the best interests of the country. "…this was much too close for comfort. It is in both parties—and the country's—interest to eliminate the debt limit. Fallback could be a semi-automatic process eg the @BPC_Bipartisan plan. And barring that, a much stronger set of norms against brinksmanship and hostage taking," the economist tweeted.

The Harvard professor had earlier expressed optimism about the debt limit being raised but had expressed his doubts about the 14^th amendment and platinum coin solutions if talks were to fail.

IRS Funding: Speaking about the Internal Revenue Service's funding reduction, Furman said it is particularly galling especially since it will increase the deficit. "It should not be repeated ever again," he said in his tweet.

The debt ceiling deal would take away $10 billion each in fiscal years 2024 and 2025 in funding from the IRS, reported Reuters. However, the White House believes the IRS can make due in the short term since they were funded over a 10-year period, according to the report that cited an official.

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