If We Reach the Debt Ceiling and Dont Extend, the Government has Enough Money to Cover What We Owe

The rhetoric by Obama and Congress that we must extend the debt ceiling is completely bogus. Since the media enjoys interchanging debt ceiling and default without scrutiny, there is a big difference between the two terms. This confusion is making many Americans antsy. The main thing is that when we reach the debt ceiling, in the next couple weeks, life will continue without the dramatic "the sky is falling." The only changes that we will see is that Congress will not be able to create more debt, and public employees may see a delay in their paychecks. But the more important to note, USA will be able to pay the interest on our debt obligations. Also, the USA will not default. Don't believe the hype from the media and from Washington.

(The New American) At this moment the national debt, according to the U.S. National Debt Clock, is at $14.094 trillion and increasing by $4 billion every day. With the current ceiling on the U.S. National Debt at $14.294 trillion, there are just 49 days left until U.S. government spending hits the ceiling. Expect the noisy chorus of misinformed warnings about the consequences of such an action to rise as well.

The new Speaker of the House, John Boehner, explained on Fox News that the Republicans would push for spending cuts regardless of the imminent coming of the debt ceiling, and he was then pilloried by a Fox News writer. Boehner said:

If the president is going to ask us to increase the debt limit, then he’s going to have to be willing to cut up the credit cards. I think our team has been listening to the American people. They want us to reduce spending, and there is no limit to the amount of spending that we’re willing to cut.

Just because the bank has pulled the credit cards from the government (to expand on Boehner’s analogy) doesn’t mean the government won’t have the money to continue making the minimum payments, as noted by newly elected Senator Pat Toomey (R-Pa.) during an interview with Neil Cavuto:

The debt service, [the] interest on our debt, is about 6 percent of everything the federal government has to pay. So we would be taking in enough revenue to cover more than 10 times all the interest we owe. There is no reason we would have to default on our interest obligations….

Now, there are vendors who would have to wait to be paid. There are probably employees of the federal government who would have to wait to get paid. This [would result in] lots of dislocation. I am not suggesting that this is a desirable path, but I am suggesting that we have to get serious about getting our budget under control.