Crisis averted! I guess this one will go to waste. Both Boehner and Obama have departed on insipid victory laps. Boehner takes his at a conference declaring to all those who lament that he was rolled that he will presently roll back. Obama puts on an Abercrombie windbreaker and does a more literal lap around the Washington monuments, encouraging the moppets to thank HIM that they will get to sit on Lincoln’s knee today. Well, not that, but they are going to get in. I suppose all is well then. Everyone incensed and outraged yesterday can just stick your toes in the pool over the weekend, we’ve got it all worked out.

And how is that exactly? We’ve got a budget for the half of this fiscal year that remains and it cuts some $31b, while preserving the Cherry Blossom Festival and Cowboy Poetry Slams as well as paying the GIs, somewhat important, but mostly this deal, a beatific demonstration of the bipartisanship the nation called out for last November, preserves our dignity. Lovely. Except for one thing. It didn’t happen. Allegedly the deal is “in place”, a state of affairs not really contemplated by the Constitution. What was actually passed, signed off on by all necessary parties, was just another Continuing Resolution for another week’s daily expenditures. The deal on the budget that is “in place” awaits yet more wrangling of this or that issue, meaning it is NOT a done deal which suggests to me that next week will be exactly like this week with an identical non-outcome. But it’s only Sunday so we can dream for 72 hours or so, can’t we?

Sure, let’s allow that the Obama/Boehner deal is signed, sealed and the law of the land. With a whopping $31b in cuts. By now everyone who cares to know should understand that these cuts were symbolic at best. Just the interest payments on just the nominal debt wipes this out in a moment. Even Paul Ryan’s budget proposal, as sweeping in its revisions as it is, will at best only slow the rising debt, and then only with a serious infusion of good luck. The Ryan Proposal should be considered by all serious observers to be the bare minimum of austerity. Even a President Ryan would have to be dragged screaming to any serious cure for our fiscal problems.

But these simple facts may yet take years to become plain to America at large, and then years to break into the awareness of our political class so we need to decide where the next, slightly less futile blow might be delivered. The controversy on the tee is the Debt Ceiling. The Democrats want to raise the debt ceiling. The Republicans? Same. Yes, the same. On Day One of the new austerity Boehner has already publicly declared that we must increase the Debt Ceiling. Now, we’re not going to do it without getting some genuine cuts passed, saith he. But didn’t he basically blow it, then? If he has admitted in front of cameras and mics that the Debt Ceiling has to go up, doesn’t that mean that ultimately he will go along with an increase no matter what else occurs? You can be certain this is how the Plouffes and Jarretts of the world will interpret it, and they will be right. John Boehner has just surrendered about the most potent weapon at his disposal without gain and without a fight.

The Debt Ceiling is an issue tailor made for our needs, which are to impose fiscal restraint on a resistant government while maintaining our borrowing power in the bond market. First off, what IS the Debt Ceiling exactly? The figure that we are about to reach, at $14t or so, represents outstanding Treasury Bonds. That is the principle we owe. A good chunk of that is owed in older bonds that are constantly coming due. Absent continuous borrowing we cannot pay back these maturing bonds. Since most maturing bonds are then rolled over, buying new bonds, you see that any burp or bump brings the whole contraption to a halt. No one wants that. So ever higher amounts of bonds must be sold, and at good terms (about 3%) just to maintain our current altitude. Only then can new spending/borrowing be contemplated. Given the TARP, stimuli, auto bailouts, healthcare expansion and numberless other lesser programs it shouldn’t be surprising that the nominal debt, which is still just a tiny fractionof our REAL debt, has curved up to nearly vertical. But it has, mercifully, hit its head on the Debt Ceiling.

You might be surprised to learn that we left the debt unceilinged until around the ’30s. So was the sky the limit then? No. Before there was a Debt Ceiling the sale of bonds was passed through the Congress like any other action of government. What the invention of the Debt Ceiling did was pre-approve bond sales up to a certain point, the Ceiling, so the Treasury wouldn’t have to propose the sale and get it through both the House and the Senate. It was a streamlining of the process, a simplification. A reform.

Those are always just great, aren’t they. Reforms. But in this case the “reform” took a kink out of the federal money hose that served an important purpose. Apparently if you pre-approve a certain amount of borrowing and you do it publicly, everyone assumes you are going to go right up to it and in fairly short order. The Debt Ceiling turns out to be  a floor from which, with every raising of the Debt Ceiling, some new, previously unthinkable level of debt is locked in. This, we should be confident, we can do without. There is no need for any legislation of any sort, Congress just needs to decline to raise the pre-approved limit and authorize bonds as needed going forward. Each and every trip to the bond market, to sell off your childrens’ and grandchildrens’ future incomes will have to get past John Boehner, Harry Reid and Barack Obama.  It is a slower process than the one that got us here but it might be worth the risk of this mad experiment that slows down, however slightly, the vortex of borrowing and spending that is devouring the floor beneath our feet.

So in the coming weeks when the Debt Ceiling is being canonized and mourned as the basic foundation of our Republic and economy, you will know better. The Debt Ceiling has proven to be little more than a shortcut to impossible debts, not a restraint on same. We should never have had it and unless you are in the bond business, you won’t miss it.

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