Today turns out to be the long-awaited day that the Treasury Department hits the debt ceiling. To be clear on what this means, it’s not that we’re “out of money”—the government’s been spending more than it takes in ever since George W Bush took office. Nor is it that we’re out of borrowing capacity—the global investment community is eager to lend money to the US government at some of the lowest rates on record. Rather, the Treasury Department has run out of legal authority to borrow. This is a big problem. And it’s a problem that has an easy solution. Barack Obama, John Boehner, Harry Reid, Mitch McConnell, and Nancy Pelosi all agree that the legal authority should be expanded. But Boehner and McConnell are saying that even though they favor an expansion of legal borrowing authority, they won’t agree to one until they get unrelated policy concessions.
So you get what we have here this week. Extraordinary measures to juggle financial obligations. Here’s an illustrative graphic from the WSJ of what that looks like:
Note that historically the debt ceiling has just been the subject of substance-free partisan posturing. The idea of using it as a hostage to extract actual policy concessions is brand new and has implications for American governance beyond today.
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