They paint those consequences in lurid colors depicting U.S. Democrats threaten to blame the GOP for the consequences of not raising the debt ceiling. The Democrats insist that raising the ceiling is the better choice than cutting spending. The GOP demands spending cuts or else it will block raising the ceiling. Politicians, the mainstream media, and academics simply omit-basically by refusing to admit or consider-tax increases. politics deceives by constricting its debate. Of course, combinations of them would also be possible. The real issue then is that when borrowing approaches any ceiling, the policy choices are these three: raise the ceiling (to borrow more), raise taxes, or cut spending. That situation has happened occasionally in U.S. Further, if taxes were raised enough and spending cut enough, the existing U.S.
The ceiling would become irrelevant or merely symbolic. It is elementary economics to note that if Congress raised more taxes or cut federal spending-or both-there would be no need to borrow and thus no ceiling on borrowing to worry about. A highly political ritual of threats and counterthreats accompanied each rise of the ceiling required by the need to borrow to finance deficits. The borrowings accumulated to hit successive ceilings. Those excesses required borrowing to cover them. Congress so managed its taxing and spending that it created ever more excesses of spending over tax revenues (deficits). Ceilings were intended to limit the amount of federal borrowing. Congress has imposed successive ceilings on the national debt, each one higher than the last.
This article was produced by Economy for All, a project of the Independent Media Institute. That otherwise reasonable people would be so readily deceived raises the question that will provoke those historians: How could this happen? Future historians will likely look back at the debt ceiling rituals being reenacted these days with a frustrated shaking of their heads.
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