Tuesday 19 July 2011

The US debt limit - an angle of thought


One of the things I don't understand on the American budget discussion is actually the point that is central to the discussion.

So, the US have a law (it is an amendment to the Constituition, right?), that imposes a debt limit. Actually, that makes sense, because (theoretically) it forces Governments to keep their operational expenses under control and public investment productive. In a way, it would be a preventor to what we are seeing in some European economies.

Now, it seems for years, that actually the US Governments (don't blame it only on Obama's) didn't care too much about this law and its limit. And now, the focus is in raising the limit, without attacking the underneath causes. We are even seeing (the dreaded) rating agencies asking for that raise.

The point is - ok, the US now needs to raise the limit. But shouldn't the US focus on actually understanding how to keep their (huge! - % is not that different from the Portuguese one...) debt under control?

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