Budget squeeze

The recurring farce of lifting the U.S. government debt ceiling began again this week. As total debt surpasses $31.4 trillion — the current statutory limit — the Treasury is undertaking a series of bookkeeping maneuvers to disguise new borrowing and keep the government operating. At some point, these methods will be exhausted. If Congress doesn’t vote to increase the limit, new borrowing could be halted and outright debt default is possible.

The farce demands that this dire result gets headed off at the last moment, but it might be unwise to take this for granted. A system that envisages the mere possibility of a self-inflicted default proves that, when it comes to fiscal incompetence, the U.S. Congress leaves no path unexplored. When this pantomime was last played through almost to the end, in 2011, default was indeed avoided — but financial markets were destabilized, the country’s credit rating was cut, and taxpayers faced nearly $20 billion in additional borrowing costs.

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(1) comment

69660

If interested I suggest we all ask our new Representative what she thinks about the debt ceiling. https://chavez-deremer.house.gov/ She thinks her experience in Happy Valley shows how to proceed. I hope she might get some more education before she buys the standard Republican scree.

Perhaps we should consider things like raising taxes in a really progressive manner or a tax on stock buybacks instead of trying tho cut Social Security and Medicare.

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