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Beyond the Debt Ceiling Rhetoric

Anthony Randazzo
August 2, 2011, 9:19am

There is a lot of rhetoric being thrown around Washington, many victim cards are being played, and enough victory is being claimed to satisfy even the most morose Charlie Sheen. You might say that we all won because there was no default. Not that it was necessarily guaranteed if we didn't raise the debt ceiling. And in theory our triple-A rating could still get downgraded. But we don't have to find out. And at the end of the day the deal was more or less a political wash since there were no major new policy changes added in the bill. But from a political perspective there is a lot of misinformation to be filtered through in determining who won and lost in this strung out fight:

Democrats

And to top it all off, the debt ceiling will cover us through the next election, so President Obama doesn't have to worry about a debate over fiscal responsibility getting in the way of his November 2012 victory. That is a huge win for the White House.

Republicans

Ultimately, if the goal of the debt ceiling debate was to achieve substantial fiscal reform, then this failed. But if the goal was to just avoid a chance of default and get some savings in the process, then it succeeded. 

Also see my comments yesterday on the terms of the deal.


Anthony Randazzo is Director of Economic Research


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