I don’t understand why the debt ceiling issue is so mysterious. DeLong approvingly quotes Glenn Hubbard and then elaborates:
Glenn Hubbard in the Financial Times:
Forget the debt ceiling and focus on debt: On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furor…. [T]he problem is not the debt ceiling per se. My wife and I don’t vote on whether we will pay our bills. Rather, we discuss whether our spending or income needs adjustment. So too must it be for our national “family”….
A good beginning. It should have been followed by a couple of paragraphs talking about how ludicrous it would be for a household to decide to spend in excess of its income and not to borrow. But Glenn then drops his opening paragraph theme and goes in a different direction…
So let me make sure DeLong, Hubbard, and everyone else recognize the non-ludicrous position a lot of us have been consistently taking on this: The Congress should not raise the debt ceiling, and it should slash spending.
Yes, there are odd rules governing the operation of Congress, but there’s nothing particularly crazy about having a separate vote on the overall debt, versus the individual spending items. In the same way, a husband and wife can decide, “We’re not spending more than $1000 on groceries this month,” and then separately decide whether to buy hamburgers when they’re on sale next Tuesday. There’s nothing ludicrous about such a procedure.
Sure, the rhetoric of many Republican politicians is inconsistent and tries to be all things to all people. But that doesn’t mean the “adult” thing to do is raise the debt ceiling, as DeLong and others suggest.
In other words, Tea Party-type voters and the politicians catering to them are demanding the simultaneously impossible (a) no debt ceiling increase, (b) no tax hikes, and (c) no cutting of old-age programs. But DeLong et al. assume the only way to resolve this contradiction involves denying all three. Why? I can consistently say yes to (a) and (b), and no to (c).
Last way of making my point. After quoting Hubbard favorably, I could just as easily have written:
“A good beginning. It should have been followed by a couple of paragraphs talking about how ludicrous it would be for a household to decide not to borrow, and to spend in excess of its income.”
In other words, given that Congress may decide not to raise the debt ceiling, then it has to slash spending (and/or sell of assets to raise revenue).
So framing the options before Congress doesn’t somehow make raising the debt ceiling pop out as the only logical thing to do. Yet DeLong, Krugman, and many others are writing as if the true austerians are defying the laws of arithmetic.