3 Reasons Why The Debt-Ceiling Debate is Full of Malarkey

All anybody in Washington can talk about these days is the debt limit or debt ceiling -- the total amount of money the federal government is authorized to borrow at any given time. After a decade in which spending increased by more than 60 percent in inflation-adjusted dollars and the debt limit was raised no fewer than 10 times, the government is about to max out its $14.3 trillion credit line, leading to fears that Washington is going to default on its bonds, stop cutting Social Security checks, and destroy the economy more than it already has.

But the current debate over the debt ceiling is full of malarkey for at least three reasons.

1. August 2 is a phony deadline. Treasury Secretary Timothy Geithner has pushed back the drop-dead date when the U.S. finally reaches its limit a bunch of times already: March 31, April 15, May 31 were all cited as deadlines before August 2 was inked in as Armageddon. But this time, he means it, man, really.

2. Reaching the debt limit is not the same as defaulting on our debt -- which would indeed be catastrophic.

Think about it: You can max out your credit cards but as long as you keep paying the minimum amount due each month, your creditors don't go crazy. Interest on the debt is a small fraction of total outlays and the government has a series of tools -- from using cash on hand to selling assets to scrimping on nonessential payments -- to make sure interest payments are made and seniors aren't put on an all cat-food diet.

3. Legislating-by-Panic is no way to run a country. The reason we're in this mess is because government can't stop spending. And the government can't even pass a budget on a year's notice. But we're expecting them to come up with a good plan for the country's borrowing in a couple of weeks? Trying to force through an expansion of the country's credit line by promising cuts in spending down the road is exactly why we're in this situation to begin with.

It makes far more sense to do something like sell some TARP assets -- the government is sitting on $320 billion in outstanding direct loans and equities investments -- to cover interest payments through the end of the fiscal year then force Congress and the president to come up with a budget that cuts spending -- and borrowing -- for real, next year, not is some distant future.

For more information, check out Nick Gillespie's 5 Uncomfortable Facts About the Wonderful, Horrible Debt-Limit Debate: http://reason.com/archives/2011/07/08...

And Mercatus Center's Jason J. Fichtner & Veronique de Rugy's The Debt Ceiling: What is at Stake: http://mercatus.org/sites/default/fil...

About 2.35 minutes.

Produced by Nick Gillespie and Meredith Bragg, edited by Joshua Swain.

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[jxsilicon9]

Wow!What a stupid video. Geitner was able to keep pushing it back by using the cash that it keeps on deposit with the Federal Reserve and by temporarily suspending billions in special-purpose borrowing programs so it can instead borrow money to finance general operations. But that would be exhausted by August.Once that money was exhausted they would have to make general operations cuts like interest payments,Social Security,wages,etc.

[americanliberal09]

Obama is a corporate puppet, ha ha ha ha!!!!!!

[americanliberal09]

obama is a corporate puppet, ha ha ha ha!!!!!!

[eleutheromaniac]

Debt is morphine: you may numb the pain but the reason for the pain doesn't magically disappear.

[Finnbar01]

Problem is though, those TARP assets are probaly worth very little, I would even say worthless.

[Joe11Blue]

Essentially, what I am trying to say is that you shouldn't count the US out of anything. The people are still very vibrant and determined. The people just need to fix the mess that the last generation let get out of hand in D.C. first. Let the people straighten that shithole out, and everything else will come together again just like it did after WW2.

[Joe11Blue]

It's not just knowledge required to build CPU's, you need competence and the scientific base to surround it. The amount of research that goes into the the next gen chips grows exponentially with each new one.

I never denied the US was losing ground, I said that you were wrong saying that nothing is made here, and took issue with you saying the US is done. That statement is ignoring the history of this country. The US is filled with talent, and it always can come back..

[Joe11Blue]

I agree the debt is an issue, but they will solve itself when the credit market finally pops. There can be no recovery until that happens.

I'm not blaming the Unions for anything. I was just pointing out the reasoning for those manufacturers moving back into the US.I'm hardly protectionist, considering I'm an Anarchist that's sort of funny.