Monday , 20 August 2018

Top Myths Regarding the U.S. Debt Ceiling Crisis

The debate in Washington over when and how to increase the debt limit isdebt-ceiling less than 100% accurate. Here are some myths about the debt ceiling and the debate about raising it.

The original article by Michael D. Tanner has been edited here for length (…) and clarity ([ ]) by munKNEE.com to provide a fast & easy read.

1. Failure to pass means defaulting on our debts

If there has been [one] consistent message from the White House, it [has been] that the United States can’t afford to “default on our debts.”  That is almost certainly true, however, refusing to raise the debt limit does not mean defaulting on our debts.

The U.S. Treasury currently takes in more than enough revenue to pay both the interest and the principal on the debts we currently owe…but, once we had paid our debt-service bills, there wouldn’t be enough money left over to pay for everything else…The government would have to:

  • prioritize its expenditures [such as] sending out checks for the troops’ pay and Social Security first. Other spending would have to wait…

There is nothing wrong with forcing government not to spend money that it had planned on spending.

2. Failure to pass the debt-ceiling increase on time would be unprecedented

Both the administration and the media sound as if we are at the edge of zero hour, the time at which economic Armageddon will erupt if we have not raised the debt ceiling. That’s not quite so.

It is true that Congress has never refused to raise the debt ceiling but it has, in fact, frequently taken its time doing so. In 1985, Congress waited nearly three months after the debt limit was reached before it authorized a permanent increase. In 1995, four and a half months passed between the time the government hit its statutory limit and the time Congress acted and, in 2002, Congress delayed raising the debt ceiling for three months. In none of those cases did the world end. It won’t this time, either.

3. It’s always a “clean bill”

The administration is also insisting that it would be shocking for Congress to add any conditions to the debt-ceiling increase but such conditions are far from unprecedented. There have been numerous amendments and conditions attached to debt-ceiling bills throughout the years

4. This is not about future spending

The administration insists that raising the debt ceiling is just about paying for spending that’s already occurred. Not quite.

Depending on how high [the ceiling] is raised, it may be about paying only for spending that is already authorized — or much more. Authorized and spent are not the same thing. There is nothing wrong with forcing government not to spend money that it had planned on spending…

Conclusion

So far, [Democrats]… have not been very good about presenting their message. If they want to win this fight, they are going to have to do a lot more to correct the record [- to dispel these prevailing myths about a supposed debt-ceiling crisis.] 

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A Related Article From the munKNEE Vault:

A Government Shutdown Would be a Blessing in Disguise! Here’s Why

Since 1962 Congress has voted to raise the debt ceiling 75 times without a single reduction so, practically speaking, a ceiling that is raised automatically is no ceiling at all so why not dispense with the pretense of a debt “ceiling”?

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