Friday, April 15, 2011
Debt Ceilings and Pet Rocks
Well, turns out it’s kind of a big deal. The White House and Congressional Democrats are warning that if the $14.294 trillion debt ceiling – the cap set by Congress on the amount of debt the federal government can legally borrow – isn’t raised immediately and we default, interest rates will soar, another financial crisis will be sparked and hundreds of thousands of businesses will be crippled. Also, the sky will fall, evil madmen will fire their laser death rays at heavily-populated areas from caves around the world, SpongeBob SquarePants will become U.S. Secretary of Education and Pet Rocks will make a comeback, sparking riots in Dollar Stores across the country.
Just kidding about that last part.
The U.S. had $14.212 trillion in debt as of last week, putting it $82 billion under the ceiling. We’re set to hit our heads on the ceiling around May 16. No one knows for sure what’ll happen then because it’s never happened before. But everything I’ve read recently leads me to assume it won’t be pretty. According to the Congressional Research Service, "Not only the default but efforts to resolve it would arguably have negative repercussions on both domestic and international financial markets and economies.”
In theory, the limit is supposed to help Congress control spending. In reality, the debt limit is ineffective in controlling spending and deficits. Budget experts say the right forum for that is the debate over the federal budget.
Yeah, good luck with that. There’s no such thing as reasoned debate in Washington anymore. Thanks again, electorate.
The thing that’s missing in much of the coverage of this issue is this: politicians have already committed to incurring the obligations that require them to raise the debt ceiling. In the words of former Congressional Office Director Rudolph Penner, “Much of the political rhetoric is misleading because the money has already been committed and lawmakers are arguing over whether to pay the bill.”
Eric Cantor and his cohorts really are the brown stain on the underwear of politics, aren’t they?
The debt ceiling has been raised 74 times since March of 1962. (Ten of those times have occurred since 2001.) I say lift the damn thing again and then reprioritize government spending, focusing not on the wants of the rich but the needs of the not-rich.
And let’s bring our soldiers home from Iraq and Afghanistan and see if that saves any cash.
Sources: Wall Street Journal, CNNMoney.com, Huffington Post