The recurring farce of lifting the US government debt ceiling began again this week. As total debt surpasses $31.4 trillion — the current statutory limit — the Treasury is undertaking a series of bookkeeping maneuvers to disguise new borrowing and keep the government operating. At some point, these methods will be exhausted. If Congress doesn’t vote to increase the limit, new borrowing could be halted and outright debt default is possible.
The farce demands that this dire result gets headed off at the last moment, but it might be unwise to take this for granted. A system that envisages the mere possibility of a self-inflicted default proves that, when it comes to fiscal incompetence, the US Congress leaves no path unexplored. When this pantomime was last played through almost to the end, in 2011, default was indeed avoided — but financial markets were destabilized, the country’s credit rating was cut, and taxpayers faced nearly $20 billion in additional borrowing costs.