Don’t Worry About Default

As the nation once again nears its borrowing limit, we are starting to see all the old talking points intended to bully representatives into unconditional support of incurring more debt.

The latest estimate puts the debt ceiling deadline at November 3, just in time for John Boehner to hammer out a deal before his semi-forced retirement from Congress.

The national debt now exceeds $18 trillion, and Congress’ inability to pass a balanced budget ensures that the problem is only going to get worse. Within 10 years, interest on the debt alone will exceed our country’s total spending on national defense. One would hope that such statistics would inspire political leaders to get serious about reining in spending, before the debt crisis becomes insurmountable. Yet every time anyone breathes so much as a whisper about the need for spending reforms to go along with a debt ceiling increase, the Democrats scream that Republicans are playing politics with the full faith and credit of the United States.

Failure to raise the debt ceiling, we are told, will result in an immediate and catastrophic default. We will have failed to fulfill our promises to our creditors, jeopardizing our ability to borrow in the future and sending waves of panic throughout the economy.

Okay, everybody calm down.

In fact, that’s not how the debt ceiling works. Hitting the debt ceiling simply means that we cannot borrow any more money, but revenues from taxes, fees, fines, and other sources continually pour into the nation’s coffers. True, we have promised to spend more on goods and services than we can afford, but the revenue we receive is more than enough to cover interest payments on the national debt.