A few weeks ago Tim Geithner had this to say concerning the coming debate over raising the debt limit. MSNBC:
"Never in our history has Congress failed to increase the debt limit when necessary," Geithner said in his letter.
..."Even a very short-term or limited default would have catastrophic economic consequences that would last for decades," Geithner said. "For these reasons, I am requesting that Congress act to increase the limit early this year, well before the threat of default becomes imminent."
Like a rube, I had previously assumed that we were taking on new debt to cover new spending rather than to service existing debt. Apparently not. Rather than search for some mysterious arcane gov. machination as an explanation for what could just as easily be congressional shiftlessness, I chose to let time solve the question.
Enter Tim Pawlenty two weeks later...
You can sense the stunned silence that that 15 seconds has produced in the media as they realize that this nation's cash strapped citizenry will identify with this simple approach... one we all live with day to day.
Of the congressional duties assigned to members of congress is that of forging a solution from the divergence between federal want and federal receipts. Unfortunately Congress has been derelict in this respect for decades. After all, solving national fiscal incoherence can be difficult while suffering the strains of growing a social state.
A solution had to be found.
The first solution was the liberal use debt outside of war time. Another solution was to only consider servicing that debt until after new spending had been taken on.
One must respect the congressional penchant for self delusion, this crafting of a mechanism by which the national budget appears much larger, meaning congress gets more of its wants, by answering the question of paying creditors only after satiating wants.
Sadly, today this approach makes possible Geithner's fear mongering prediction of a calamity of confidence in the United States if the debt limit is not raised.
Pawlenty's argument, though, shorts Geithner's fiscal incontinence.
Pawlenty's approach, paying debt first and only then considering new spending, has the strength of our familiarity with personal budgeting as well as being under girded by common sense fiscal discipline.
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