Plain English with Derek Thompson Econ Megapod: The Debt Ceiling Is Dumb, and the Inflation “Crisis” Might Be Over
Feb 3, 2023
Jeanna Smialek, an economics reporter for the New York Times, and Jason Furman, a Harvard economist and former Obama advisor, tackle the absurdities of the U.S. debt ceiling. They unveil how it's more political theater than effective fiscal management and discuss its historical context. The conversation dives into negotiations from 2013, the psychological tactics of both political parties, and the sustainability of national debt. They also contemplate the potential for a 'soft landing' in the current economy amid rising interest rates and mixed inflation signals.
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Banshees Analogy
- Derek Thompson uses the movie Banshees of Inisherin to illustrate a point about seemingly irrational behavior.
- He connects the character's choice to self-harm with the debt ceiling debate.
Debt Ceiling Basics
- The debt ceiling is a limit on government borrowing to pay for already-approved spending.
- It's unique to the US and Denmark, forcing separate approval for funding.
Why US Has Debt
- The US debt exists because the government spends more than it collects in taxes, creating an annual deficit.
- Borrowing funds this deficit, accumulating into a large debt.