Jul 28, 2011 at 5:15 pm
The thing I like least about the Boehner plan (that I’m hearing may pass the House later) is that it raises the debt ceiling in two stages, meaning we’re back in the middle of this debate in another few months. (The other thing I dislike about this plan is its implications for entitlement cuts that would start soon and cut deep. It’s one thing to put entitlements on the table; it’s quite another to hack away at them like this.)
As I noted last night, facts are on extended holiday in this debate, and it’s just a silly, I guess, to point out blatant hypocrisy.
But you’ve got to have amazingly strong facial muscles to pull off, with a straight face, the R talking point on how a) economic uncertainty is hurting the economy, yet b) we should raise the debt ceiling in not one, but in two steps.
As Goldman Sachs researchers put it in a note out today:
Debt limit uncertainty: Proposals that increase the debt limit for a longer period appear to have a better chance of leading to more positive rating outcomes, by reducing uncertainty regarding interest and principal payments. This implies that an increase in the debt limit of $2.4 trillion that occurs in two stages would, all things being equal, pose more risk to the US AAA rating than a single increase of $2.4 trillion.
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