Monday, October 7, 2013

Will we default on our debt if the debt ceiling isn't raised?

We don't have to default on our debt if the debt ceiling isn't raised.  We'll just have to make painful cuts.  Imagine that--if you don't have enough money, you have to re-prioritize and spend responsibly instead of profligately. 

From the column I posted Friday:
Perhaps the biggest of the big lies is that the government will not be able to pay what it owes on the national debt, creating a danger of default. Tax money keeps coming into the Treasury during the shutdown, and it vastly exceeds the interest that has to be paid on the national debt.

Even if the debt ceiling is not lifted, that only means that government is not allowed to run up new debt. But that does not mean that it is unable to pay the interest on existing debt.

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