We hear it everyday now….the “Debt Ceiling”….but what is it?
James Hamilton put it well back in 2006:
One of the peculiar embarrassments of the American political process is the fact that Congress votes separately on the deficit and debt, as if they were two different decisions…
If the government is (a) required by the deficit legislation to spend, and (b) precluded by the debt legislation from borrowing, the Treasury would be forced into default. The greater the likelihood markets attach to such an event, the higher will be the interest rate the government has to pay on Treasury debt. A politician who votes for the spending and tax measures that produced the deficit but against a debt ceiling consistent with these is deliberately wasting taxpayer dollars for no purpose other than to grandstand before voters as a “fiscal conservative”. Anyone playing such a game has complete contempt for the intelligence of their constituents.
We are bombarded every day with this politician or that about the national debt and why we need to raise or ignore the ceiling……some say screw it! Let the government shutdown…..others say we need to protect the nation and our credit rating in the world….and others just do not seem to care……but what is the story behind each of these positions?
From Rep. Michelle Bachmann……darling of the Tea Party….
With the national debt at $14 trillion and counting, Congress’ spending frenzy cannot continue.It’s time to force our elected officials to stop spending cold turkey, and we can start by making sure they do not raise the debt ceiling.
That’s why I’m asking you to personally tell Congress not to increase the amount of money the government can borrow by signing your name to the “Don’t Raise the Debt Ceiling” petition. To date, we’ve collected over 75,000 signatures for this petition. But I know we can collect more. So I’m challenging conservative activists to collect an additional 50,000 signatures in the next week. Will you help me reach this goal?
The President’s front man on this is Austan Goolsbee….
Austan Goolsbee, chairman of the U.S. Council of Economic Advisers, said if Congress fails to raise the debt ceiling, the “impact on the economy would be catastrophic.”
“I don’t see why anybody’s playing chicken with the debt ceiling,” Goolsbee said today on ABC’s “This Week” program. “If we get to the point where we damage the full faith and credit of the United States, that would be the first default in history caused purely by insanity.”
There are two options…..increase it or not…if it is NOT then the government will showdown…is that a good thing to do just to make a point? It was done in the 1990′s when Newt and the boyz were there in the House….a mini revolution if you will……but is it a good idea?
- Shutdowns actually cost the government more money ($800 million last time according to Time) than it would otherwise spend and, therefore, increase the deficit compared to what it otherwise would be. Departments and agencies have to begin to implement shutdown plans within a few days of the possibility that their appropriations might expire. At a minimum, this involves additional communications security, building maintenance needs.
- The last shutdowns taught us the definition of “essential services” because of a ruling by the attorney general that, even if no appropriation had been enacted, the government may continue to do whatever this might be. But there’s no agreed-upon list of what is “essential” and last time the definition seemed to change as the shutdowns continued.
Will the government shut down? Doubtful….sadly all this is just another political game that the mindless twits are playing…..they are trying to intimidate…..the use of threats……Keep in mind that the deficit and the debt are NOT necessarily the same thing, although ALL spending is interconnected…….Nothing about this will create a job….and if memory serves me right……that was the promise of the GOP….to create jobs…not to continue the play these political games…..
Just how many of you, out there, think that this is a good direction for the government to travel?