*Debt ceiling serves no legitimate purpose - never really has

For folks first tuning into the moronic debt debate in Washington, it's worth repeating that this is a faux crisis. Having a debt ceiling of any kind serves no legitimate fiscal or economic purpose; this is money that Congress has already authorized. In effect, those refusing to lift the debt ceiling are refusing to pay the check. Virtually every other democratic government has managed just fine without one. Moody's says that the U.S. should eliminate a statutory limit on government debt to reduce uncertainty among bond holders. Don't hold your breath on that one, however. House Republicans consider the debt ceiling just nifty because it provides instant leverage in securing mega budget cuts. From the New Yorker's James Surowiecki:

If the debt ceiling isn't raised, we'll face an absurd scenario in which Congress will have ordered the President to execute two laws that are flatly at odds with each other. If he obeys the debt ceiling, he cannot spend the money that Congress has told him to spend, which is why most government functions will be shut down. Yet if he spends the money as Congress has authorized him to he'll end up violating the debt ceiling.

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In fact, by turning dealmaking into a game of chicken, the debt ceiling favors fanaticism. As the economist Thomas Schelling showed many years ago, "It does not always help to be, or to be believed to be, fully rational, coolheaded, and in control of oneself" when it comes to brinksmanship. It doesn't, in short, help to be President Obama. That may be why all the deals that have been taken seriously this season rely much more heavily on spending cuts than on tax increases: the deals represent Republican priorities, because the Republicans seem to be more willing than the Democrats to let the country default.

I blame the media, at least in part, for not doing a better job of laying out these particulars (this story is still being covered by too many political reporters, many of whom know next to nothing about economics or financial markets). Obama certainly hasn't helped his case over the months with vague policy positions, but that's no reason to portray both sides at this point as equally at fault. They're not.

*Time magazine tweet captures the irresponsible coverage:

Only eight days until Debt Armageddon | http://ti.me/nJdUzN (via @TIMEPolitics)