THE DEBT CEILING AS CREDIBLE COMMITMENT.  Donald Boudreaux likes the idea of concentrating Official Washington's mind.

An un-raised debt ceiling, therefore, will oblige Washington politicians to do what they’ve refused to do for generations: make tough choices instead of shifting the costs of today’s spending onto tomorrow’s taxpayers and continuing to spend wildly.

Of course, politicians could choose to default in order to keep more cash on hand in order to shovel subsidies to recipients who have often wheedled these pots of money through political pressure and influence. Such a move would indeed call Uncle Sam’s creditworthiness into question.

But if Washington pays all of its creditors and then — obliged by an un-raised debt ceiling — cuts spending, investors will know that the U.S. government is, for the first time in living memory, serious about keeping its fiscal affairs in good order.

Although the signalling value of a Congress respecting the government's budget constraint has some appeal, my experience with the State of Illinois delaying payments and commingling funds despite having several years to prepare for revenue shortfalls leaves me wary of any last-minute economy measures before the financial markets open next week.  That's despite any short-term gain my positions in government bonds might bring me.