It looks like we may avert a debt disaster after all. Of course, this will come at a heavy price, namely deep cuts which will stifle an already nearly-dead recovery. Furthermore, this proposed agreement would include approximately $2.5 trillion in cuts over the next decade with absolutely no increased revenue. Considering the GOP currently controls one-half of one-third of our national government, this is a Republican coup de grâce if there ever was one.

Below are my thoughts, adopted from an email I wrote yesterday to friends.

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Most people in this country believe that the debt ceiling allows us to spend more money, take on bigger obligations, etc. This is not the case, and is a hugely important distinction, especially because almost everyone doesn’t realize this (unless they follow the debate closely, which most Americans don’t). It simply allows us to pay for our existing debt obligations. Obama loves to use the analogy of someone who buys a car, drives it off the lot, and then refuses to make his monthly car payments. In that case, the debt ceiling is hit when he fails to make a payment, not when he tries to buy a new car.

Interestingly, I think it was in the Economist that someone mentioned that the debt ceiling itself is an archaic and almost obsolete invention, and only the US and Denmark, I believe, use it (although, true to stereotype, the Danish are much more timely about getting it raised).

But the point is, the debt ceiling represents money we’ve already spent. Increased spending down the road is an entirely separate issue. (Ironically, if we do default on our debts, the nation’s debt is going to increase significantly due to interest rate hikes alone.) Furthermore, Republicans raised the debt limit 7 times under Bush, 11 times under Reagan, etc. and, while the potential of its raising has occasionally been used as a cudgel to enact small reforms, the threat of default has never yet been wielded to my knowledge. Many like to bring up the fact that Obama voted against raising the debt limit in 2006, for which he has since (conveniently) expressed regret, but it is important to note that he did so in protest against a then-assured debt ceiling increase (in a Congress in which both houses were controlled by the GOP). There is a huge difference between taking a symbolic no vote against certain passage and actually holding the nation hostage until one’s own rigid policy prescriptions are implemented, the threat of default be damned.

Finally, in that we do have a debt ceiling and in that it does represent existing — not future — spending, it might be helpful to take a look at who’s contributed the most to its ever-increasing levels and draw one’s own conclusions about fiscal hypocrisy.

Related articles

• Bond Downgrade Likely Consequence Of Debt Ceiling Increase (npr.org)
• Why Republicans Win On Debt Deal And Democrats Don’t (alan.com)
• Could a Debt Ceiling Veto Be Unconstitutional? (volokh.com)
• America’s Default Debt Ceiling Clock Is Ticking (milepostsproductions.wordpress.com)
• Lindsey Graham Still Not Ready to Back Debt Ceiling Deal Even After it Appears GOP is Getting Everything They Wanted (crooksandliars.com)
• The Debt Ceiling, in Pop Culture (economix.blogs.nytimes.com)