Op-Ed: Capping the debt hyperbole -- Failure to raise the ceiling doesn’t mean default

The Daily ^ | July 25, 2011 | Donald J. Boudreaux

[GoodDay]

The popular narrative about this summer’s struggle to raise the federal government’s debt ceiling centers on the word “default.” If the debt ceiling isn’t raised, we are told, the U.S. government will be forced to default on many of its financial obligations, reducing Uncle Sam’s creditworthiness and decreasing our government’s ability to effectively carry out its duties. Sounds scary.

But a failure to raise the debt ceiling wouldn’t necessarily cause a default or any reduction of creditworthiness. Indeed, keeping the debt ceiling fixed might actually increase investors’ willingness to buy U.S. bonds.

[GoodDay]

Professor of economics Donald J. Boudreaux (who blogs at the popular free market site "Cafe Hayek") writes about government spending, the debt ceiling, and attempts by politicians and pundits to induce an atmosphere of panic.

[cripplecreek]

I’ve been saying it all along. Default would have to be intentional.

[Bernard]

Many people involved in the reporting on this crisis have no basic understanding of economics, or at best were subjected to one course of econ in college, most likely heavily oriented to an ideological exposition of the virtues of Kensyian programs.

And now they suggest that uncontrolled spending of money we don't have can turn out well. I'd like to see each liberal journalist provide a list of people they know personally who act like the government does; max out the credit cards and then get more credit cards.

[fortheDeclaration]

This is TARP all over again.

[Roccus]

I’ve never taken a course in economics, but I think I’ve figured out this debt ceiling thingy pretty well.

Congress voted a debt ceiling in order to protect taxpayers from Congress overspending the taxpayers’ money.
Congress decided that Congress really doesn’t want to stop overspending the taxpayers’ money, so Congress wants the debt ceiling raised.
Congress will now tax the taxpayers more tax money so that Congress can raise the debt ceiling, thereby protecting the taxpayer from the Congress that will continue to overspend even more of the taxpayers’ money.

Who said this was complicated?

[cripplecreek]

I think of the spoiled rich kid with more money than brains who always wants more money when he already has too much.

[ViLaLuz]

Robbing Peter to pay Paul means you are already broke.