Ceiling, noun, 5: an upper, usually prescribed, limit (Merriam-Webster Dictionary)
According to the US Congress, a 'ceiling' is now whatever you want it to be. What it isn't anymore is a 'limit'. We are referring to the debt ceiling of course.
According to Bloomberg, it has been 'temporarily suspended':
“The U.S. House voted to temporarily suspend the nation’s borrowing limit, removing the debt ceiling for now as a tool for seeking deeper spending cuts.
The measure, passed 285-144, lifts the government’s $16.4 trillion borrowing limit until May 19. It goes to the Senate, where Majority Leader Harry Reid said lawmakers will pass the measure unchanged and send it to President Barack Obama.”
The measure passed today, H.R. 325, would allow the nation’s borrowing authority to automatically rise May 19 to accommodate the amount the U.S. Treasury borrowed during the three months that the limit is suspended.
So the 'debt ceiling' will now simply be defined by however much the treasury borrows until May. What is the message conveyed by this measure? House speaker Boehner offers an interesting interpretation:
“The premise here is pretty simple; it says that there should be no long-term increase in the debt limit until there’s a long-term plan to deal with the fiscal crisis that faces our country,” House Speaker John Boehner, an Ohio Republican, said during floor debate. “This is the first step in an effort to bring real fiscal responsibility to Washington.”
Yes,it does conjure up images of tax-and-spenders shaking in their boots, provided one has a big enough imagination.
However, not all is lost, as other deadlines are looming:
“The revised strategy eliminates the risk that House Republicans would be blamed for a default in the short term. Republicans plan to focus on other fiscal deadlines and say they aren’t giving up their fight for cuts to federal programs.Republicans plan to use two other approaching deadlines — the March 1 start of automatic spending cuts and the need to pass a bill to fund the government by the end of March — to extract spending reductions from Obama and congressional Democrats.”
And what are the targets of this planned extraction of spending cuts thinking?
New York Senator Charles Schumer said at a news conference that while Democrats would prefer a longer debt limit increase, House Republicans’ decision “shows that the Republicans are in full-on retreat on fiscal policy.”
“They blinked,” Schumer said. “Gambling with default was never a sound plan by the Republicans.”
To be sure, no-one ever 'gambled with default' anyway. If the government were forced to spend no more than it takes in, it would still be free to prioritize its spending in such a way that no debt default occurs. Actually, threatening not to raise the debt ceiling unless spending cuts were part of the deal was a sound strategy. We find it a bit surprising that it was taken off the table.
As far as the term 'temporary' goes, there are countless examples of 'temporary' measures that have become a permanent feature of the landscape. We eagerly look forward to learning the fate of this one.
US federal debt: for now sans ceiling. not that it makes much of a difference … via St. Louis Federal Research – click for better resolution.
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