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Long-Term Implications Of The Debt Ceiling Blunder

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"Long-Term Implications Of The Debt Ceiling Blunder"

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To try to slightly bypass the metaphysical dispute over whether the Obama administration’s approach to the debt ceiling has been a blunder or a secret plan to hatch a bipartisan budget deal, it’s worth emphasizing that it sets a terrible precedent.

Basically, the way the debt ceiling has worked from the day it was instituted until the winter of 2010-2011 is this. Congress would enact tax laws. Congress would also enact appropriations. Gaps between tax revenue and appropriations would be filled by borrowing. And when Congress’ tax laws and appropriations required borrowing, congress would raise the debt ceiling so as to accommodate the needed borrowing. The need to do the vote would result in a certain amount of political theater, but that’s it. The dynamic was explained in a West Wing episode:

Obama, by agreeing to hold negotiations on this subject, has fundamentally changed the dynamic. Once the president has conceded that the debt ceiling is a good opportunity for bargaining, the bargaining never stops. Recall that an increase in the debt ceiling could be blocked by as few as 40 senators, so we can expect the hostage situation to recur every time there’s a need to increase the ceiling. The time of knowing insider clucking about the political theater is over, and the era of repeated high-stakes clashes has begun. And basically the only way for it to end is with someone, at some point, going too far and turning the game of chicken into a car wreck.

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