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Budget resolutions versus debt ceilings

9/29/2013 07:04:00 PM
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Matt Yglesias recently wrote a piece comparing "negotiating" over the debt ceiling to negotiating with Putin over a threat to nuke several american cities. It is an apt analogy. There is no disagreement between the two parties over the debt ceiling--everyone is in agreement that Congress should honor its debts, and that defaulting on US debts would be a terrible economic tragedy for the whole world. But, there's a group of republicans who want to take the debt ceiling hostage, threaten to nuke the world economy, in order to extract concessions from the democrats on unrelated matters ranging from the Affordable Care Act (the repeal of which increases the deficit) to the keystone pipeline.

Yglesias is right that this is exactly the same as Putin asking the US to give in to his demands in exchange for not nuking Chicago. The only correct response to an ultimatum is war and retaliation.

But I also want to make it clear that the budget resolution is not the debt ceiling. Unlike the debt ceiling, a budget resolution is what actually controls federal spending, taxing, and borrowing. There are genuine disagreements about these things--though perhaps less disagreement than republicans currently want you to believe--and the budget resolution is the appropriate time to argue about them and make compromises.

Unfortunately these two completely separate issues have been confused. Many people seem to feel that increasing the debt ceiling means borrowing more money; it doesn't--that money was already borrowed in the previous budget resolution, and the debt ceiling is only about honoring previous debts. Many commentators have suggested that democrats should refuse to make a deal on the budget resolution--let the government shut down--to send a signal to republicans that they won't budge on the debt ceiling either. If it genuinely dissuades the GOP from forcing a sovereign default by refusing to raise the debt ceiling, then I suppose they're right.

But that would be unfortunate, because unlike the debt ceiling, a budget resolution is where we are supposed to negotiate over budget matters.