Senator Rubio raises an interesting point. We’re told that if Congress doesn’t increase the debt ceiling it will be imperiling the full faith and credit of the United States. But, if Congress simply approves in a routine vote an increase in the ceiling, the implications are just as profound: We’d be telling the world that we’re simply unserious when it comes to spending. If you’re planning on running trillion-dollar-plus deficits in perpetuity, you have no intention of paying it back, and eventually the rest of the planet starts to operate on that assumption. In that sense, voting for or against the debt ceiling are merely different routes into the same abyss.
I doubt very much that declaring this the last ever ceiling increase would mean much in practice, but, if an increase in the ceiling is not accompanied by plans for spending cuts, regulation rollbacks and the other reforms Senator Rubio proposes, the message it sends to the world is devastating. It simply is not possible for the dollar to survive as global currency under such a scenario. And that’s all that’s holding up the joint right now.