Let me know if you’ve heard this story before.
In May the U.S. Treasury hit the debt ceiling, a self-imposed limit supposedly designed to curtail our ongoing deficit spending. While this deficit hawk noted the event here in May, it was clear at the time that “emergency measures” would ensure that exceeding the cap was generally a non-event.
In time however, even emergency measures are exhausted. It was reported today that these accounting maneuvers may leave the U.S. government unable to pay its bills by mid-October, sooner than many expected. With that, cue the headlines for a full-blown government shut-down, complete with furloughs, missed military paychecks, slow(er) IRS processing and a suspension of Social Security benefits. Yawn.
Until there is either a sincere effort to improve the nation’s cash flow or fundamental shift in the mindset of our creditors, the revolving debt ceiling debate is merely a ploy used to raise various Congressional demands. In addition, the predictable recurrence of this so-called crisis undermines the seriousness of the nation’s modus operandi – unbridled spending and insufficient revenue. Yet again, a political circus held under the guise of a fiscal policy debate is of limited interest to constituents and investors alike.