OpinionEditorial

The debt ceiling merry-go-round

PoliticsElectionsBusinessFinanceRepublican PartyU.S. Debt CeilingU.S. Government Shutdown (2013)

Having acceded once, and disastrously, to the demands of a rump group of tea-party-affiliated Republicans, House Speaker John A. Boehner (R-Ohio) is now actually leading the Shutdown Caucus in the right direction — albeit not very far. On Thursday, Boehner and other top House Republicans called for a temporary increase in the government's borrowing authority, which would prevent the Treasury from running out of cash in about a week. Although President Obama didn't embrace the offer immediately, it was one of several signs that the fiscal deadlock that has paralyzed Washington — again — may be easing.

Yet it's hard to take much relief from the latest developments. The House Republicans' plan wouldn't end the partial government shutdown they instigated in a misbegotten bid to derail the 2010 healthcare law. And as part of the deal, they want to ban the Treasury Department from taking extraordinary steps to avoid default when the temporary borrowing authority expires in six weeks. Such a ban would increase the risk of Washington stiffing some creditors, beneficiaries and contractors in November.

Senate Republicans, meanwhile, are developing a proposal to end the government shutdown in exchange for a few less-controversial changes to the healthcare law. But like Boehner's plan, their offer would raise the debt limit only temporarily, setting the stage for them to threaten the government's credit again in a few weeks to force more concessions.

The GOP's supporters say there's nothing novel about bargaining over an increase in the debt ceiling. But this time, influential Republicans in both chambers contend there's nothing to fear about the Treasury running short of cash; it would still have enough revenue to make its debt payments. That's mind-bogglingly Panglossian. As numerous business leaders, economists and financiers have warned, there would be real financial consequences if Congress decided for the first time in 231 years not to pay some of the bills it had rung up. Nor is there any guarantee that the Treasury could alter its payment systems to favor some creditors over others.

Failing to raise the debt limit on time would drive up interest rates, damaging the economy and exacerbating the federal budget deficit Republicans say they want to reduce. So instead of suggesting ways to face the limit again in a few weeks, or to make it harder to avoid a default, Republicans should recognize that limiting the government's ability to keep its commitments isn't the way to narrow the deficit or slow the accumulation of debt. The right place to address those issues is by negotiating a budget for the current fiscal year, a process House Republican leaders had blocked until Thursday. And in the meantime, Republicans should agree to end the shutdown and stop using the debt ceiling as a negotiating tool.

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