With the fight over fiscal cliff issues only just resolved, the battle lines already are being drawn and important policy and economic implications measured for a coming showdown on the federal debt ceiling.
The federal government is expected to run out of borrowing authority by the end of next month, and both parties are readying a high-stakes game of chicken, with Republicans hoping to leverage new spending cuts in return for a debt limit increase and Democrats promising to hold firm in opposition…
Steve Bell, senior director of economic policy at the Bipartisan Policy Center and a former top congressional budget aide, is skeptical that the federal government could pick and choose its expenditures and worries that breaching the debt limit would inflict economic damage.
“The impact of failing to pay our debt on time and in full, and I mean all of our debts, it’s unimaginable,” he said. “It is inconceivable to me that the United States government would ever do that.”