President Barack Obama, Treasury Secretary Tim Geithner, and many in the media continue to forward the absolute farce that the federal government will default on August 2 if we don’t increase the debt ceiling.
If the government fails to raise the ceiling, the worst-case scenario is a cold-turkey balanced budget, not a default.
The government borrows 40 cents of every dollar it spends, which still leaves the 60 cents of revenue coming in—enough to pay the government’s mandatory bills (including entitlements and the interest payments on the debt).
This scenario isn’t pretty. The government’s discretionary operations would stop, and in order to fund defense, the government might have to partially pay for entitlements through the two trust funds and get some help from the Federal Reserve.
But still, the government will never default unless Geithner and the Obama Administration decide not to use the $2.2 trillion of annual revenue to pay our most important bills.
America faces a financial cliff, but that cliff isn’t from the debt ceiling. It’s from the debt itself. The Obama Administration must stop using scare tactics to force their big-government agenda down the throats of the American people.
Not only has this administration said we face this faux cliff in the debt ceiling, they’ve also implied that conservatives want to push Granny of a cliff by cutting entitlement programs. Considering no serious plan cuts benefits for those over 55, this is another fanciful, faux cliff.
America’s youth face the only real financial cliff in this debate.
The debt is all but literally dragging my generation off a cliff. At $14.3 Trillion, the US national debt would weigh approximately 315 million pounds in 100 dollar bills—the equivalent weight of 32 million golf balls or 600 Air Force Ones.
Those are some heavy shackles. In more graspable terms, by 2020 the interest payments on the debt alone will equal around $5500 per taxpayer. Paying this interest, not even the principle, on our nation’s credit card will result in a big enough tax increase to severely damage our economy in the coming decade.
Failure to enact serious entitlement reform will doom my generation to fiscal servitude to the government.