Why You Should Ignore the Coming Debt Ceiling Debate

Under the guise of yet another debt ceiling debate, Republicans and Democrats will spend much of the week demonizing each other on the Washington stage.

But don't be fooled. This so-called debate will be nothing more than a planned-in-advance sideshow to supply each side with 2012 election campaign fodder.

The deal put in place on Aug. 2 essentially guaranteed that the limit on the U.S. national debt would be raised to $16.4 trillion in January. That means any sound and fury that emanates from Washington this week over raising the debt limit will signify nothing.

"It's pro-forma. They already made a deal to raise the debt ceiling last time around," said Shah Gilani, Money Morning Capital Waves Strategist and author of the Wall Street Insights & Indictments newsletter. "The President has to ask for the increase -- which makes it look like he caused it -- and the Republicans get to display anger that "here we are again.' But it's a game they agreed to earlier."

The deal in August intentionally split the debt ceiling increase into three separate requests to set up these faux debates for public consumption.

U.S. President Barack Obama did his part on Thursday by making a formal request for the $1.2 trillion increase in the debt limit.

That was the cue for Republicans in the House of Representatives to draft a "resolution of disapproval" which they will debate and vote on this week. And given that the GOP has a majority in the House, the resolution is guaranteed to pass.

In this play's next scene, the Democratic-controlled Senate rejects the resolution, which allows President Obama's requested debt ceiling increase to take effect by default - just as all sides envisioned back in August.

And even if a few rebellious Democratic Senators vote with their Republican colleagues, President Obama can veto the resolution. With the odds of Congress overriding a veto near zero, the debt ceiling increase is pretty much a lock.

But the show must go on.

Expect both parties will recycle liberally from the script written during last summer's bitter debt ceiling debate as they play out the charade. The Republicans will again decry the Democrats' fiscal irresponsibility while the Democrats tag the Republicans as extremists unwilling to compromise - talking points that will come in handy on the campaign trail.

The hypocrisy of it all is so blatant even some lawmakers are pointing it out.

"Anyone who supported this deal back in August but then votes to oppose the debt limit increase this upcoming week should take no credit for standing against reckless spending," Rep. Tim Huelskamp, R-KS, grumbled to Fox News.com. "The real opportunity to stand for fiscal responsibility was in August."

News and Related Story Links:

• Money Morning:
  The 2012 Election and the Truth Behind the Debt Ceiling Debate
• Money Morning: The Debt Ceiling Debate: Will the Democrats' Gambit Lead to a Victory in the 2012 Election?
• Money Morning: The Debt-Ceiling-Debacle: The Surprising Way a Default or Downgrade Could Crush the Global Economy
• Money Morning: The Painful Consequences of a Debt Ceiling Increase
• Money Morning:
  Why America Hates Congress
• Investors Business Daily: Inside the latest debt limit fracas: How D.C. pols play us like violins
• Reuters:
  Obama seeks $1.2 trillion debt limit rise
• Capitals and Gains: White House Formal Request Of $1.2 Trillion Debt Ceiling Increase Will Not Be Disapproved