WHAT ABOUT THE DEBT CEILING?

boblonsberry.com ^ | 04/13/11 | Bob Lonsberry

[shortstop]

The federal debt ceiling is the amount of money Congress will let itself borrow.

Typically, each time it has been reached, Congress has reacted by merely voting to raise the limit. Now, with the urging of the Obama Administration, it wants to do so again.

Failing to do so, according to the White House, would create “Armageddon-like” circumstances. The reference is to biblical prophesies of the end of the world.

In other words, if the federal government doesn’t authorize itself to further enslave us to national debt, the sky will fall, the world will end and things will be otherwise undesirable.

Or not.

Maybe if we don’t let ourselves borrow more money, we’ll finally be forced to live within our means.

The folks in Washington and on the evening news would have you believe that that is a simplistic view.

But then, the truth is typically fairly simple. Principle is not complex, but it is often difficult.

Doing the right thing can be hard.

And painful.

But that doesn’t mean that it’s not the right thing.

The sickening fact about the need to raise the debt ceiling is that we don’t need to raise it to buy anything, or to pay for any government programs. We won’t feed any poor children with it or care for the elderly. No public education or national defense will be funded through this new borrowing. We won’t heat a cold room or build a new college or pave a new road. We won’t be stronger, safer, freer or more comfortable.

No, we wouldn’t be buying a thing with that new debt.

That new money would be borrowed exclusively to make interest payments on old money that we already borrowed. In a clear Ponzi scheme, we would borrow from one to make payments to another.

Not principle payments.

Interest payments.

As a nation, our practice is to get a cash advance on one credit card in order to make interest payments on another credit card.

And just as that would bankrupt a family in no time flat, we are bankrupting our country and its future.

And how much would we need to lift the debt ceiling in order to make our interest payments for the rest of this fiscal year? How much interest do we have due between now and the end of September?

Almost three-quarters of a trillion dollars.

Specifically, $738 billion.

That we owe in interest. In the last half of this year.

Now, some say we should leave the debt ceiling where it is and cover our interest payments through cuts to federal spending.

I think that’s a good idea.

But in the recent budget “deal,” after weeks of wrangling and squealing, all they came up with in terms of cuts was $38 billion.

Which means we would need to take that big a bite out of spending – times 20 – to make our interest payment.And how likely is it, do you think, that with the entitlement party in charge of the Senate and the White House that we are going to cut three-quarters of a trillion dollars out of spending.

No chance at all.

Which puts us in a spot.

Do we raise the ceiling and make our payments. Or do we leave it where it is and default?

And what will default do to the full faith and credit of the United States government?

When individuals or businesses default – when they become bankrupt – the surrounding economy absorbs the loss. Creditors are cheated, but hopefully they survive because the rest of their finances are sound and they can get through. The problem with default by the United States government is that there is no surrounding economy. There is no other business and there is no other prosperity.

For a century the strength of the American dollar and the American economy – coupled with the credit worthiness of the American government – has been the foundation of world prosperity.

So the problem is a big one.

Which means we may have to raise the debt ceiling. We may have to sell our soul.

But we shouldn’t sell it cheap.

Barack Obama insists that not only should there be a vote to raise the debt cap, but that the vote should be “clean.” By that he means that there should be no conditions or connections, no strings attached.

Barack Obama, as is typical, is wrong.

And a hypocrite.

While he currently insists that not voting to raise the debt ceiling is reckless and almost treasonous, it is worth nothing that the last time it was raised – in 2006 – then-senator Barack Obama voted against it.

But as to strings. Maybe Republicans in the House should agree eventually to a raising of the debt ceiling, but only as part of a comprehensive plan to eliminate the deficit and pay the debt.

Personally, I would tack Social Security reform or Medicaid reform to it. I would say, “We will save the world economy by raising the debt ceiling and borrowing to make our interest payments, but only if the Democrats agree to structural cuts and changes that will quickly and dramatically rightsize our spending.”

And if they won’t go for that, then they can bear the responsibility of crashing the economy.

But this has to end.

And it’s going to hurt.

One way or another.

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Here's another gut check for the Stupid Party.

[wita]

Anyone with loose change they want to wager on the outcome?

I love gut checks with absolutely no history, of past success.

[yldstrk]

How about no.

[InterceptPoint]

I question some of the conclusions of this article. We are running a deficit of about $1.6 Trillion per year or $130 billion or so per month. If we run out the ability to borrow we need to extend that credit card limit to something like that $130 billion times the number in months in question just to be able to pay our bills.

But payments on the current national debt are no where near this figure. The real debt that we pay interest on is about $10 Trillion and that interest must be in the range of $200 to $300 Billion dollars ANNUALLY. So the idea that we are raising the debt limit just to cover our interest payments is nonsense. That’s just not true. Most of that borrowed money would be used to fund the normal operation of the Government.

The Government is still drawing in taxes at a $2 Trillion dollar annual rate. That money can service the debt, the Military and whatever we like. But we are running $1.6 Trillion annually short of what Obama is spending. And the debt ceiling is drawing near. If it is not OK’s by congress then we will have to start cutting about $130 Billion/Month out of the current and future expenditures of a Government that cannot manage to cut more than $5 Billion/month in the latest FY2011 negotiations.

I see little hope of this debt ceiling gaining us much. Maybe a few budget concesssions. But zeroing it out completely would instantly force a balanced budget and even Paul Ryan thinks that will take a couple of Decades or so.

And there is ZERO chance that the U.S. would fail to make debt payments. That is not in the cards. It would lead to a certain global financial meltdown.

[Tao Yin]

I'm tired of the lie that we'll default if we don't raise the debt limit. We have billions coming into the treasury every day. We have plenty to keep our debts current and perform the constitutional responsibilities. Everything else comes after.

It's called a prioritized spending plan. List expenses. Prioritize from most important to least important. Start at the top, keep moving down, and stop when you run out of cash. The lie that we'll default if we don't borrow more is silly. Yes, there will be pain. So ask the American people to find the pain and help their fellow Americans.

[668 - Neighbor of the Beast]

Lest we forget: DRILL BABY DRILL. That would help. Drill like our lives depend on it.

It’d help a lot more if red-blooded Americans went to those two places where Democrats prevail (and are riding us toward the cliff) and dragged them out bodily...but we know that won’t happen.

Comes a time when our votes are so diluted as to be meaningless. Non-producers, not to mention the illegal, the undocumented, and the dead, are voting to vampirize us out of existence. Yet we keep voting and playing by the old rules.

We hear the Constitution is not a suicide pact. It appears we don’t need a pact at all. We just need to relax and give blood.
Don’t care for it? Sit down at the keyboard and let off a little steam.

[Thermalseeker]

The lie that we'll default if we don't borrow more is silly.

You obviously have not have drank enough Kool-aide yet. Everybody knows when your credit card is maxed out the best way to get out of debt is to increase the debt limit....../s

[Dilbert San Diego]

When Obama was a senator, he said that raising the debt ceiling was a failure of leadership.

Now that he’s president, it’s a necessary step to take under the circumstances.

The way we are supposed to judge various actions depends on which party is in charge. If a Republican president is faced with raising the ceiling, it’s a failure of leadership. If a good Democrat president is faced with raising the debt ceiling, it’s a necessary step to prevent future financial problems.

And Chris Mathews and others will get tingles in different places as they praise Obama for his leadership and foresight on this issue. Can’t wait to hear what the talking heads have to say about this.

[Georgia Girl 2]

Agreed. We will not default on the debt if they fail to raise the debt ceiling. There is more than enough revenue every month to pay the interest on the Tbills. There will have to be a prioritizing in order to do it. Its about time. We have to stop it at some point why not just take the pain now?

[paulycy]

We have to stop it at some point why not just take the pain now?

Exactly. Force them to stop spending on something else. Like we have to. Morons.

[Pollster1]

The federal debt ceiling should be raised to $500B more than our current debt over the next year, perhaps $250B more than that the following year, level in the third year, and then reduced by $500B a year until it reaches zero. The “Santa Clause” libs in DC cannot be trusted to spend responsibly or to only use debt in a national emergency. We need to put an end to their ability to borrow, inflicting some harm but far less than they will inflict if left to their own devices.