CNN does some he-said, she-said, but throws in some data:
The administration’s proposal also requests that Congress authorize an increase to the nation’s debt ceiling. Currently, it’s set to rise to $10.6 trillion for fiscal year 2009 – which runs from October 2008 through September 2009. But the proposal requests that limit be increased to $11.315 trillion to allow for the purchases of mortgage-backed assets. [emphasis mine]
Now, strangely, I have always heard that assets have a positive value. When I buy $100 worth of a stock—say, PWND—my Net Asset Value doesn’t change. The same should be true of buying a MBS worth $0.30 on the dollar.
So why would we need to increase the deficit ceiling by $700,000,000,000 if we’re buying assets worth $700,000,000,000?
The only reasonable conclusion is that we plan to pay $700,000,000,000 above market for the securities. No wonder it has to be “clean and quick.”