That Debt Ceiling Again

Responding to my post from earlier this week, a reader wrote me this:

This current article has raised questions for me. Why is it assumed that failure to raise the debt ceiling must necessarily result in a default? Is it not feasible that when forced to choose between default and cutting something that the correct choice would be made? It seems to me that until that awful decision is faced, meaningful spending cuts will never occur. Your example of [Senator] DeMint’s inconsistency drives home that point. Even conservatives cower from these painful choices. You must admit that the history of Democrats’ honoring their concessions is not a strong one. I know of nowhere other than government where it would be suggested that the way to cut spending is to borrow more, yet that seems to be what you are suggesting in raising the debt ceiling. As long as it is assumed that the ceiling will be endlessly raised, spending will not decrease.

Here, I think, is the answer to his question. Our debt is not a function of immediate spending decisions but of very-long-term spending trends. That means that in order to pay just the interest on the debt, the government has to roll over some existing debt by borrowing. It is simply not possible to cut spending enough immediately to avert this with some additional borrowing. Spending cuts will reduce the debt in the long term, so that we don’t have to raise the limit again; but they cannot reduce it immediately and could only put off the need to borrow more for a very short time. Raising the debt ceiling is about, as I wrote, existing obligations racked up by Obama and the last Congress.

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That Debt Ceiling Again

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