What is a debt ceiling? A simple enough question. The answer is that it is a self imposed recognition that American politicians typically put in place higher government expenditures than tax revenues can pay for. The ceiling is simply a decision to borrow money to cover the difference. Anyone student who has sat in one of my Macro classes has heard me gripe about our never ending deficit and the need reduce our interest payments on our Federal deficit. In fact, reducing the deficit in the long run is not only a smart idea intuitively, but one that economists overwhelmingly support. The reason why is that each year interest payments on our debt take dollars that could be spent on schools, roads, social programs or military spending and pays interest to bondholders instead. The taxpayer gets nothing for this. No bridges, no new police cars, no wheelchairs, subsidies for innovation, no predator drones…nothing. However, there is a time and a place for everything. There is a huge diff
