Tim Harford tells you all you need to know to get a grip on the absurdity that is the U.S. debt ceiling debate. Key sentences:
“Mum, I’m confused. You and Dad knew what your income was going to be and you agreed all the spending. So, basically, you agreed spending that would guarantee that you’d break through the debt ceiling. So you’ve agreed to exceed the debt ceiling.”
“Yes – we agreed to exceed the debt ceiling. But we haven’t agreed to raise it. That’s the problem.”
“But that doesn’t make any sense!”
“It doesn’t matter that it doesn’t make any sense. The point is he has bargaining power now.”
As they say, read the whole thing.
I find the debate bizarre. Why have a debt ceiling, if it doesn’t actually mean anything? Because of its misguiding name, one might have thought the point of the law was to direct lawmakers into creating budgets that would keep the balance from breaking through the ceiling. But instead, it’s just an opportunity to get a new roof every few years.