By Fareed Zakaria, CNN, July 28th, 2011
I know you have all heard so much about the debt ceiling that you're probably exhausted. But I think it's important to point out a few facts because this matter has been so clouded by rhetoric. Why does no one else, except Denmark, have a debt ceiling?
Because when a legislature votes to authorize spending at a certain level but authorizes tax revenues at a lower level, it is assumed that the government will have to borrow the difference. The vote to have higher expenditures than tax revenues is - in effect - a vote to borrow money to cover the difference. And in the United States, Congress - including Republicans - voted for a budget in which expenditures exceeded tax revenues. The logical consequence of that budget - again, passed by Republicans and Democrats, is that the government has to make up the difference by borrowing.
To come at it now after the budget has been passed is like getting your Visa bill and calling up the company
to say, "Actually we don't want to buy all that stuff we bought."
None of these things are happening because the United States is running deficits. In fact, the world has been lending money to the United States more cheaply than ever before. We face downgrades and investor panic not because of our deficits but because we are behaving like deadbeats, refusing to pay our bills.
We do have a large deficit and debt and we do need to get it under control. But that is not an excuse to endanger the good standing of the United States. First you pay the bills and then you figure out how to change your spending habits. The tragedy here is that the damage may already have been done. From now on, every time the debt ceiling needs to be raised, the world will wonder: Will the U.S. stand by its promises or will it break them? Something that was taken for granted - the credibility of the United States - is now surrounded by uncertainty.