The debt limit debate is total nonsense.
99% of economists fail to understand the importance of private debt - that is why they failed to foresee the crisis which resulted from the private sector going too much in debt (this is how all bubbles pop, and mainstream economists are caught by surprise each time). On the other hand, most mainstreamers agonize about the public debt which is always a much smaller problem.
The mainstream consensus is that we need to fear the public debt because it is "like a household debt, only bigger". In fact, it is OPPOSITE to a household debt: without federal IOUs (dollars, bonds) the public would have NO net savings! I can have a deposit in the bank, but this is bank's liability. To hold savings in aggregate, the private sector needs to hold IOUs of someone outside it. This someone is the government issuing its IOUs. Private net savings is holding government debt (dollars, bonds). No federal debt, no net savings for the private sector.
Imagine a Monopoly game. The central banker wants to "be responsible" and run a surplus - take in more dollars than he emits, thus siphoning off the players' savings. The game will stall. This "plan" is backed by neoliberal theories that defy basic accounting: supposedly this will make the players "more confident in the government" and spend more (spend what? - they have less money, go figure). That is America's "plan for prosperity". Give me a break.
One more thing: the US if off the gold standard. Gold could run out, but now the US creates money as needed with each payment. If you are thinking "what about inflation?!" - you are right. The only problem can be too much money (inflation), but the government cannot possibly run out of dollars, like a bowling alley cannot run out of points. So much for US "going bankrupt". US can create inflation, but not go bankrupt, ever. Here is Bernanke stating that US is not spending money it previously "saved":
Also: contrary to what most pundits claim the US can control the interest rates it pays, listen to people who know how the Fed and the banking system works. US could pay zero in interest if it wanted too: simply issue currency and not interest-bearing bonds (unlike Greece or Portugal, the US issues the currency it pays with, think Japan instead: 200% debt/GDP and low interest rates. The mainstream doesn't understand the fundamental difference between Japan and Greece: Greece can simply run out of Euros, Japan cannot run out of Yen and it shows in the bond yields). And if you heard that issuing currency without bonds is more inflationary, it is because the mainstream never bothered to look at the accounting. Look at agents' balance sheets.
We should ask pundits from both sides:
Do you understand why paying off public debt each time resulted in a depression? It was tried 7 times, each with disastrous consequences.
Why do you claim that public debt crowds out private savings? Accounting proves it's the opposite. Without federal bonds the public sector cannot net save.
Why do you claim Social Security or Medicare can go "bankrupt"? As we saw, the government will always have dollars to buy the next syringe or a blood test. The problem can be a scarcity of REAL resources or lack of productive capacity in the economy to supply these procedures. The government is now manufacturing this future scarcity by allowing the persistence of unemployment and the related forgone education opportunities for the young - all this to "save money" it doesn't need. The lost productivity and wasted human potential are the REAL problem (which may actually result in us as seniors being unable to obtain the care we will need), not the government "not having dollars" in the future.
Let's talk about unemployment instead, shall we? If we stop fearing the federal "debt" the answer is simple: replace the missing private demand with public expenditure, for example a public works program. Invest in infrastructure and education. It worked in 1930s.
Funny thing too: debt/GDP actually decreased then because GDP grew that much faster.
There is ONE problem with this program though: it doesn't make Wall Street richer.