Happy Debt Limit Day!

Say, shouldn’t there be an official song for Debt Limit Day?  I’m thinking Enough Is Enough, except that would mean I’d have to play a Barbra Streisand song.  Today, the Treasury will hold a sale on bonds that will take the US to its statutory debt limit, beyond which we cannot borrow without a raise in the ceiling from Congress.  ABC calls this D-Day:

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First thing this week, the United States will have hit its $14.3 trillion congressionally-mandated borrowing limit and the federal government will be running on fumes.

While the treasury says it can continue funding Uncle Sam’s $3.8 trillion annual spending spree by tapping into what is effectively an emergency credit card — borrowing from government worker retirement funds and cutting off federally-backed state and local bond programs — many people are wondering what, if any, impact not extending the debt limit might have as the May 16 deadline comes and goes.

Survey says — not much!  Treasury Secretary Tim Geithner has already assured bond markets that the US can meet its obligations for the next three months, and some believe that we don’t have to default at all.  However, statutory spending will eventually force the federal government to do something to ensure proper payment on obligations.  Even economists in ABC’s D-day story believe that the White House will cut a deal well before any default dates.

But what should that “something” be?  Large majorities in several polls oppose any increase in the debt ceiling, at least not while the issue doesn’t appear to be critical.  That will make it rather difficult to get Congressional approval on a ceiling hike — which puts deficit hawks in the driver’s seat.  They will demand significant concessions from the White House before assuming an unpopular position on a debt-ceiling hike, and by significant, I mean something that will make a further hike unnecessary.  It may be a spending cap, it may be entitlement reform, but whatever deal is made will almost certainly require both, either explicitly or as a consequence to agreed structural changes in spending.

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But back to my first question.  What should we be singing around the Debt Limit Day cake?  And where in tarnation am I going to find 14.3 trillion candles?

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