By now you’ve more than likely figured out that Media coverage of anything coming out of D.C. is tainted. The same holds true in all the fear mongering about the debt ceiling. The truth is not nearly as cut-and-dry as they would have us believe.
Take, for example, the current trope that the debt-ceiling is all about “paying our bills,” or that it concerns “money we’ve already spent.” That is a lie! As bills come into the Treasury, they are paid however, paid doesn’t necessarily mean paid with money from taxes since tax revenue only covers about 70% of what the government spends. The rest is paid from borrowed money.
The government borrows money for a set period of time; currently around 5 years. When the debt comes due, the government pays only the interest on the old borrowed money and then borrows more money. Since the old debt is never repaid, the government must continue to raise the debt ceiling to borrow ever more money which is almost never spent on paying bills the government has already incurred.
In other words, only a very small part of the debt ceiling discussion concerns money the government spent yesterday. The bigger piece deals with money the government wants to spend tomorrow. That is why limitations on future spending have become part of the debt ceiling conversation.
Former Congressman Dave Brat, who has a Ph.D. in economics, explained to Washington Watch guest host Jody Hice, that it’s “impossible for the government to default,” because a “default means you default on the U.S. Treasury Bond and if we ever defaulted on the U.S. Treasury, we’d all be fishing under a bridge with Frodo,” he joked. “It would be the end of Western civilization. So that’s not even in play.”
The only other possible default would be if we didn’t pay the interest due on the national debt. “Failure to pay other bills, while not a good thing, isn’t a default. Most politicians know this and by “massaging the truth” they mislead the public into believing that nonpayment is a default on our obligations as opposed to a default on our debt.”
As a point of interest, we haven’t paid off a single dime of the national debt since 2001 and, we haven’t paid off the whole balance since 1835.
Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit,” since 1960. The increases to the debt ceiling has been approved under both Democratic and Republican presidential administrations, 29 times and 49 times respectively, over that period.
It was announced over the weekend that Biden and House Speaker Kevin McCarthy had reached an “agreement in principle” to raise the nation’s debt ceiling and avoid a default. The agreement includes some spending cuts demanded by Republicans, but it is short of the reductions of the sweeping legislation passed by the Republican-led House last month.
To reduce spending the package includes a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025. That’s in exchange for raising the debt limit for two years, until after the next election. It also expands some work requirements for food-stamp recipients and tweaks an environmental law to try to streamline reviews to build new energy projects.
It now must go before the House and Senate for approval so nothing is certain. A $4 Trillion dollar debt ceiling is nothing to sneeze at! Unfortunately, something will pass, the debt ceiling will be raised, both sides will claim a victory and the game will continue until the country collapses under the weight of the debt, which at $4 trillion shouldn’t take too long!
With the Uniparty Swamp, the only thing certain is that when they’re happy with their actions and results, we should be very worried. The American people invariably get screwed over by government’s successes. J.D. Rucker
Source: No, Raising the Debt ceiling is Not Really About ‘Paying our Bills’ by Mike Mulvaney, MSN.com; Econ Expert on the GOP’s Debt Ceiling Hand: ‘We’re Holding Four Aces’ by Suzanne Bowdey, Washington Stand; House Republicans Threaten to Vote Against McCarthy’s ‘Unacceptable’ Debt-Ceiling Deal with Biden by Ronny Reyes, New York Post