22 January 2013

Debt Ceiling: I Think You're Skipping a Step

Now that we're in the tedious intermezzo between the Fiscal Cliff "Deal" and Debt Ceiling "Deal" I've seen about a thousand people make some form of this statement:
How dumb is the US Congress? How can you simultaneously order the Treasury to spend $X dollars, and yet also order them not to borrow the money necessary to spend $X dollars? Clearly this 'debt ceiling' thing is a big farce that should be wiped away so the US Gov't can spend $X immediately.
(0) Seriously? You're surprised that Congress is simultaneously commanding people to do both Foo and Not Foo? Where have you been? Didn't I just sit through an entire election cycle where both main party candidates were simultaneously promising to not raise taxes on the middle class and raise import tariffs? Have you not noticed how much money we spend on subsidizing people's food purchasing while also artificially raising the prices of food?

This is the United States Government we're talking about here. Why should they put their thumb on the scale when they could be putting each thumb on a different side, and botch things up coming and going?

(1) Okay, fine. Congress has passed two contradictory laws. Why are we assuming that the one that needs to go is the "Spend Less" one? If you're constrained to A XOR B = TRUE, then NOT A and NOT B are both legitimate options. How do you skip from "Can't do both A and B" to "Must do only A, not B"?

(2) Analogies between the federal budget and household spending are fraught with peril, but I think it's justified here. You know how most people spend their money? They just merrily roll along all month buying what the decide to, and then get to the end of the month and tot everything up to see how they did. Any half competent financial advisor will tell you to do it the opposite way around. First decide how much money you're going to spend, then divvy it up to decide how much to spend on each category.

If Congress got off their entitled duffs for a bit and passed an actual budget for the first time in god-only-knows, we could straighten all this out. "Hi, Congress? The is the US Treasury. You've got $X left to spend. If you could maybe write up a list of priorities... maybe divvy your spending up into different categories... make some decisions about what's more and less important... you know MAKE A BUDGET... that would be super."

(3) See, in particular, RWCG's Split the Difference method for debt ceiling catastrophe avoidance.

(4) Is ordering the fisc to spend $X but not to borrow the necessary funds actually as ridiculous as everyone is making it out to be? Landsburg argues (convincingly) that they're not, since Congress as a whole does not have a single, unified set of preferences vis-a-vis spending.

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