The Debt Ceiling: The Aftermath

Proving that when the chips are down, our elected representatives can craft a deal that nobody likes, the debt ceiling was successfully raised before the government ran out of cash. So, unless you’re working for the FAA, let the good times roll.

I have been stunned by the outpouring of scorn that has been heaped upon tea party Republican freshman in the House of Representatives. One op-ed piece in the New York Times actually compared them to terrorists. They have been called irresponsible for creating a crisis in Washington. How dare they threaten the full faith and credit of the US? The insolent nerve, to demand spending cuts and refuse to increase taxes! Didn’t they understand how bad a default would be? If government spending had forced to be reduced by 40% overnight, that would have been like running into a brick wall!

The attitude of the tea partiers seems to have been that it was better to run into the brick wall with $14 trillion in debt than wait ten years and run into the brick wall with $28 trillion in debt. And by run into the brick wall I mean have the Chinese government impose austerity plans on us in exchange for continued access to credit, ala the IMF and Greece. Created crisis? Certainly. Crisis that needed to be created? Maybe.

Looking at the deal that finally got done, I’m not entirely sure that it would not have been better to hit the wall now. At least that would have forced some tough choices. As it is, the deal that got signed does nothing to address entitlements and transfer payments. And the increase in the debt limit pushes the issue down the road two years, until after the next election. In two years we are going to go through all of this all over again. Only next time, the national debt will be $17 trillion, not $14.3 trillion.

So after all the Sturm and Drang, what we ended up with is pretty much business as usual. So much for hope and change.