Morgan Stanley analysts figure there’s a non-trivial chance the debt ceiling doesn’t get hiked and that the US will default on its debt.
Yesterday Felix Salmon wondered why we have a debt ceiling in the first place when a) it doesn’t have any deterrent effect on taking on more debt and b) it raises a non-trivial chance of disaster.
John Carney responded with a long history of how spending and debt works in America (something to do with something called the “Constitution”).
As for why it’s a good idea, he writes: “One of the ways in which government is able to operate unaccountably—that is, outside of democratic checks and balances—is by facilitating public ignorance about its activities. The debt ceiling vote helps raise public awareness about the costs of government, keeping government accountable and increasing democratic participation.”
This sounds nice in theory, but the great thing is we don’t have to rely on theory. We have the real world, and in the real world we know that the debt ceiling doesn’t promote public awareness, it promotes public ignorance and demagoguery.
Remember that MSNBC segment about the debt ceiling where the reporter dressed up as “spending” and likened the debt ceiling to a “credit limit”?It was seriously just about the dumbest explainer you could imagine.
And it’s not just that the media has a tough time explaining this.
Our politicians demagogue this issue like crazy.
Did you know that when Obama was a Senator and George W. Bush was the President he voted against lifting the debt ceiling?
It sure doesn’t look like the debt ceiling promotes accountability. It looks like it’s mainly a vehicle for opposition Senators to engage in pointless politics.
Beyond that, if the debt ceiling had any delimiting effects, why has spending grown parabolically?
Again, the point is that we don’t have to rely on theory to answer this. We just have to look at what’s actually happened, and none of the purported benefits have ever come to pass.
And finally: It’s just no defence of anything to say that increasing public awareness/participation is a good thing. The public is useful when it’s right. When it’s wrong it’s harmful.