While waiting to go on Larry Kudlow’s show tonight I heard Sen Mitch McConnell say something to the effect of “there will never be another clean debt ceiling. From now on, it will be a dollar in spending cuts for every dollar the debt ceiling is raised.” [I’ll link to the clip when CNBC posts it.]
Totally predictable, of course, but think about this for a sec. He’s essentially saying the following:
“We in Congress cannot be counted upon to come up with budgets that pay for the spending we authorize. Therefore, we will have to borrow to make up the difference. But if that borrowing hits the cap, we will not raise the cap to cover the borrowing we signed off on, unless we get the spending cuts we want.”
To understand how nonsensical Sen McConnell’s position is, you have to appreciate that Congress knows when they pass their budget whether it will breach the debt ceiling or not, just like you know when you order your lunch whether you’ll be able to pay for it. He’s saying, I’m going to keep ordering lunches I can’t pay for and when the cashier hands me the check, I’ll hand it right back and tell her it’s her problem.
The budget process is the time to square the ledger. Or not—there will be budgets, especially in recession, that add to the deficit and breach the ceiling. In such cases, Congress must borrow to make up the difference, and sometimes that will mean raising the ceiling.
But Sen McConnell would rather budget by threatening default. I’m certain that is not the way of great nations.