About that Debt Limit

Here's the bit that gets my attention, and should make everyone more than nervous; "The public is worried about the inconceivably large budget deficits and a total national debt that approaches 100 percent of GDP." Maintaining that ratio can't lead us to a place that is good for anyone. We are simply putting off the inevitable by shuffling the numbers, cooking the books, and feeding the public misinformation through the hack mainstream media. It's going to be a quick ride to the bottom. Hold on tight!

What's the point of a debt ceiling if raising it is a mere formality?
As the U.S. government neared its $14.29 trillion debt limit, the congressional vote to raise it was expected to be uncontroversial. That's pretty much how it's been in the past. In the first decade of this century, the limit was raised a half-dozen times. But this time it's different. The public is worried about the inconceivably large budget deficits and a total national debt that approaches 100 percent of GDP. Politicians, opportunistically and otherwise, decided to cash in — pun intended – on the public's concern: There would be no raising the debt limit without a deficit-reduction plan.
At first this position was treated as outrageous. Grownups, the "serious" pundits said, don't act like this. Grownups would simply raise the limit – enabling the government to incur new debt in order to pay the interest on old debt. It's an odd idea of what grownups do. But the public was in a deficit-reducing mood, so the demand for a "clean" debt-ceiling bill softened.
So here we are. The debt limit technically was reached in May, but Treasury Secretary Tim Geithner engaged in some accounting maneuvers to pay the bills, extending the de facto deadline to early August. (Robert Murphy has the details.) That leaves just a few weeks to come up with a deal. Efforts at compromise so far have yielded nothing. The hitch is that President Obama and congressional Democrats want new tax revenues to go along with spending cuts, while Republicans oppose increasing taxes. There's been some ambiguity in the GOP ranks over whether ending corporate tax credits or deductions counts as a tax increase. We'll let that go here, except to say that giving politicians more money to spend is the nuttiest thing I can imagine.

More: http://www.thefreemanonline.org/columns/tgif/about-that-debt-limit/