Yes. Does raising the debt ceiling automatically mean we will borrow and spend more? Or does it just give us the flexibility? The worry that if the government changes parties they may spend it is real but I don’t think it automatically means we will borrow and spend. And what if we use it as a bridge finance to, say, buy back some of the 5% bonds and then sell 1% bonds? We’d be using the debt temporarily, but slash tens or hundreds of billions a year in debt service payments over the long haul.
There must be a reason for this and not just so the government can structurally borrow and spend more. That doesn’t make sense given that DOGE has been trying to cut waste and create efficiencies which should actually reduce federal spending. We could very easily have a smaller budget and no annual decficit by restructuring our debt and eliminating waste and fraud and jobs that are no longer necessary due to efficiency.
In Silicon Valley the big players have a betting pool on what year the first $1 billion one person company will be born. Think about that. They are all thinking that eventually we will have so much technological prowess that a single person will create $1 billion worth of productivity. Taking that to a simplistic overview of government - many of our most costly programs (entitlements) could theoretically be managed by a few score federal workers. The recipients won’t notice much change the checks will still come on time it just won’t require as many people to manage. This is why the left is going apoplectic. They see the writing on the wall. Big government is going to be replaced with big blue, without much disruption to the people dependent on it.
“And what if we use it as a bridge finance to, say, buy back some of the 5% bonds and then sell 1% bonds? “
The rate we have to pay on bonds is not set by our whim. It’s set by at what interest rate will get the buyers to buy. Who is going to buy 1% bonds???, and how and why would they get priced at `1%??