Update on the debt ceiling

For those keeping score, the US government yesterday officially went past the old debt ceiling limit of $16,699,421,095,673.60. As of last night it had borrowed a total of $17,027,544,000,000 or about $328 billion more than it had the previous night.

There was no mention of what the new limit is, the absence of which is something that I had noticed in press reports. The reason is that no new limit was specified in the law that was passed. Instead, what the law did was to ‘suspend’ the debt ceiling until February 7, 2014. Ezra Klein explains what was done:

The way it works is that the president gets the power to raise the debt ceiling and then Congress gets an opportunity to take a vote of “disapproval.” If that vote passes Congress, then the president can veto the disapproval rule. If Congress can muster the two-thirds majority to overturn the veto, then the president’s debt-ceiling increase is rejected.

In other words, the debt ceiling vote goes from a vote where a majority of Congress needs to vote in favor of it to a vote where up to two-thirds of Congress can vote against it.

This is not a new gimmick. It has been used before to resolve earlier debt ceiling battles. It is called the ‘McConnell mechanism’, named after the senate minority leader who realized that it was easier for Republicans to vote ‘no’ against raising the debt ceiling (even if it is ineffectual) rather than vote ‘yes’ to raise it. So with this new arrangement, Republicans can oppose raising the debt ceiling as much as they like, pleasing their base, while the ceiling goes up, enabling the government to avoid default and pleasing Wall Street. As long as there is no danger of reaching the two-thirds hurdle, everyone is happy.

Isn’t the way government works delightful?