http://globalpublicsquare.blogs.cnn....one/?hpt=hp_c1
Fareed's Take: The damage is already done!
By Fareed Zakaria, CNN
I know you have all heard so much about the debt ceiling that you're probably exhausted. But I think it's important to point out a few facts because this matter has been so clouded by rhetoric.
Did you know that there is only one other country in the world that even has a debt ceiling? That's Denmark, a strange anomaly, and its debt ceiling is deliberately kept very high so that it will never need to be raised.
Why does no one else have a debt ceiling?
Because when a legislature votes to authorize spending at a certain level but authorizes tax revenues at a lower level, it is assumed that the government will have to borrow the difference.
The vote to have higher expenditures than tax revenues is - in effect - a vote to borrow money to cover the difference.
And in the United States, Congress - including Republicans - voted for a budget in which expenditures exceeded tax revenues.
The logical consequence of that budget - again, passed by Republicans and Democrats, is that the government has to make up the difference by borrowing.
To come at it now after the budget has been passed is like getting your Visa bill and calling up the company to say, "Actually we don't want to buy all that stuff we bought."
Read: Will I get my social security check?
That's not how it works. First you pay the bill, then you can change your spending habits.
So why do we have a debt ceiling?
Ironically, it was put in place during World War I so that Congress didn't have to authorize every new issue of debt. It was assumed that it would be a formality to raise it. Since 1960, the debt ceiling has been raised 78 times.
My basic point is that this is a crisis that we have manufactured out of whole cloth. We have created a cir stance in which the world doubts our credibility, rating agencies are thinking of downgrading our debt and the dollar's role as the world's reserve currency could be jeopardized.
Please understand that none of these things are happening because the United States in running deficits. There was no indication - by any metric– that the United States was having difficulty borrowing money one month ago. In fact, the world has been lending money to the United States more cheaply than ever before.
We face downgrades and investor panic not because of our deficits but because we are behaving like deadbeats, refusing to pay our bills, pouting while the bill collector waits at the door.
We do have a large deficit and debt and we do need to get it under control. That the Tea Party has raised awareness about this is admirable. And I agree with their view that the current set of en lements - Medicare especially - have to be reformed dramatically to get our fiscal house in order. But that is not an excuse to endanger the good standing of the United States.
First you pay the bills and then you figure out how to change your spending habits.
The tragedy here is that the damage may already have been done.
From now on, every time the debt ceiling needs to be raised, the world will wonder: Will the U.S. stand by its promises or will it break them?
Read: Political elders tell us what to do to resolve the crisis.
Something that was taken for granted - the credibility of the United States - is now surrounded by uncertainty. In her interview with me to be aired this Sunday at 10am ET/PT on GPS, IMF Managing Director Christine Lagarde says that "Global markets have always had a positive bias towards the United States but that is now eroded somewhat."
For this erosion, we have only ourselves to blame.
one thing I don't get is why didn't they raise the debt ceiling as they were approving the budget??
pretty ing stupid. This is a self imposed limit, why could they not think about it at the same time they were approving the budget?
this is a like a family saying "we will not spend more than $20,000 this year. Hey honey, go ahead and order that $30,000 living room set."
Brilliant chess move by the republicans. Because they have control of a legislative branch, they saw this oversight, and decided to use this as leverage...one thing I don't get is why didn't they raise the debt ceiling as they were approving the budget??
pretty ing stupid. This is a self imposed limit, why could they not think about it at the same time they were approving the budget?
this is a like a family saying "we will not spend more than $20,000 this year. Hey honey, go ahead and order that $30,000 living room set."
Now, maybe we are playing the wrong game... Maybe instead of playing chess, we are actually playing poker (chicken) and someone with some brains is going to flinch...
"Not chess, Spock. Poker!" - James T. Kirk, The Corbamite Manuver...
"This is a self imposed limit"
yes, the debt limit is a stupid concept, has never worked to limit spending.
making the debt limit into a national crisis is totally dishonest, a 100% fabricated crisis.
The REAL national crisis is the jobs and the economy, but the VRWC has yet again succeeded, by their hatchet men tea baggers, to deflect the national attention away from the VRWC so the poor people pay for the VRWC ing up the country.
problem is I don't think this move has anything to do with the Republicans. More like the renegade Tea Partiers.
definitely playing chicken, but at the expense of the USA financial credibility. That's a huge loss, for a stupid game of chicken. Not smart, IMO.
What budget?
And in the United States, Congress - including Republicans - voted for a budget in which expenditures exceeded tax revenues.
When is the last time the Senate passed a budget.
Since there has been a debt ceiling Congress has passed close to one hundred budgets.
Why manufacture a crisis now?
When is the last time the Senate passed a budget?
Relevance?
If the problems with spending only began a few years ago, you might have a point.
They didn't, so you don't. Whether they pass a formal budget the usual way or not, the money is allocated and spent and is a measurable amount, correct?
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