My two cents on the debt ceiling

This is all really dumb.

Source: The Seattle Times

Seeing as how the US might breach the debt ceiling after Memorial Day Weekend (Happy summer! Let’s enter a recession!), and everywhere you turn someone has an opinion about it, I thought I’d offer my own two cents.

It is important to remember the recent history of raising the debt ceiling.

Since 1960, Congress has raised, extended or revised the debt limit 78 separate times - 49 times under Republican presidents, 29 times under Democratic administrations.¹

Quite simply, if a Republican was President right now, or if the Democrats controlled the House, this would not be an issue. Congress would raise the debt limit like it has 78 times since 1960 and we would all go about our merry way. No one would be worrying about a default and the potential destruction of the global economy. No one would be thinking about minting a $1tn coin or invoking the 14th amendment.

But alas, here we are. Let chaos reign.

Paul Krugman, the Nobel Prize-winning economist and New York Times columnist, described the debt ceiling debacle using a simple metaphor,

Let’s say you took out a large mortgage to buy a house. Maybe you made the right decision, maybe you didn’t. Either way, you signed the contract. And your next monthly payment on that mortgage is due.

So how do you respond? Do you (a.) grumble but pay the bill, since that’s what you promised to do? Or do you (b.) refuse to pay, giving a speech about how debt is bad and your family must cut spending, even though defaulting on your mortgage will ruin your credit rating and could cause you to lose your house?

On Monday, Kevin McCarthy, speaker of the House, decided to go for option (b.).