Making cents of the national debt ceiling
Something in this debate about raising the national debt ceiling doesn't make sense to me. Help me out:
When a company decides not to borrow more money do they automatically default on their outstanding loans?
Let me ask it a different way?
When you decide not to borrow another $200,000 to buy a second home do you automatically default on your existing home mortgage?
No - you don't.
Okay, so when the Treasury decides not to borrow another $2 trillion dollars do we automatically default on the existing $14.3 trillion?
Hmmm.... seems like the same answer. No.
So why does Geitner keep saying we must raise the national debt ceiling by August 2nd or we default on our current debt?
If we keep paying our current obligations why are we as a nation "in default" if we don't take on more debt?
Someone explain this one to me...
www.electiangilyeat.com
When a company decides not to borrow more money do they automatically default on their outstanding loans?
Let me ask it a different way?
When you decide not to borrow another $200,000 to buy a second home do you automatically default on your existing home mortgage?
No - you don't.
Okay, so when the Treasury decides not to borrow another $2 trillion dollars do we automatically default on the existing $14.3 trillion?
Hmmm.... seems like the same answer. No.
So why does Geitner keep saying we must raise the national debt ceiling by August 2nd or we default on our current debt?
If we keep paying our current obligations why are we as a nation "in default" if we don't take on more debt?
Someone explain this one to me...
www.electiangilyeat.com
Posted by Ian Gilyeat at 5/13/2011 5:39 PM 
Categories: U.S. Budget, National debt, Economy
Tags: National debt Limited government
Categories: U.S. Budget, National debt, Economy
Tags: National debt Limited government
You are assuming that you have income sufficient to pay your expenses and your loan payments. The government is in such a bad state that they are borrowing money to make payments on existing loans. It's called going bankrupt. If they don't raise the debt ceiling so they can borrow more money, they have no money available to make debt payments. Therefore, they will default on existing debt, unless they can borrow more.
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Ahh.. so let me make sure I understand... 40 cents of every dollar the Federal government spends is borrowed money... So if we don't raise the debt ceiling then we have to cut 40% of Federal spending. This would allow us to "live within our means" and use the current tax receipts to cover current expenses...yes?
Now that's a hard choice to make...
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