Debt Limit as Incentive: A Modest Proposal

News stories on the debt limit controversy agree that Boehner's plan, which increases the limit by $900 billion, will require further action before the 2012 election, but that Reid's plan, which increases the limit by $2.4 trillion, will not. Obama would obviously like to push the debt limit issue to some date, any date, after the election. To an economist, that suggests a simple tactic to reduce government expenditure. 

Raise the limit by an amount that will require further action before the election unless Obama manages to substantially reduce federal expenditure, but which can be pushed past the election if he does. It will then be in Obama's self-interest to find ways of cutting federal spending, which is a better guarantee than any legislative promises that Congress can pass today and break tomorrow.

Of course, it is also an incentive to find ways of increasing tax revenue—but until the election, the Republican House is in a position to deal with that problem.

P.S. I note that Reid has gotten at least one thing right. I've been arguing for some time that one way of reducing the debt problem is by selling off government assets, the policy that Greece has been urged to follow. Reid apparently agrees, although his specific proposal is on too small a scale to help much with the current situation.