Debt Ceiling Language is Being Manipulated By Scare Mongers in Congress: What a Debt Ceiling Really Is

There are certain key phrases that Congress and President Obama will be throwing around in increasing frequency as the days and weeks go by.  And they will manipulate what each term means, in the hopes of confusing and scaring the public to pressure the other side to agree to something.

First, the debt ceiling is how much the United States government can borrow from the banks and other nations.  If the ceiling is not raised, we will be able to fund 60% of government operations at full strength with incoming federal taxes and other federal income.  This is critical to understand.

Next, being able to “service the debt” means to be able to pay the interest on the debt, plus some of the principle.  We CAN service the debt whether there is a debt ceiling or not using incoming federal taxes.  If we do default on being able to service the debt, it’s because the Obama Administration has diverted the money used to service the debt on a monthly basis into funding part of the government under the “obligations” discussion below.   They have 100% control over whether the monthly bill is paid or not.  We’ve never failed to pay this, even when the government was “shut down.” 

Finally, being able to meet our obligations.  This simply means running the government at 100% of what President Obama wants.   We will hear that we will “default on our obligations” if the debt ceiling is not raised.  This is not true.  We will have enough to fund 60% of current  government operations.

Seems to me if the government was operating at 60%, we’d be cutting deeply into the debt and reducing it, while living within our means instead of borrowing money and running up the debt like many Administrations have chosen to do.

If the government is shut down due to no action on the debt ceiling, it’s actually 40% of the government that is shut down, though President Obama could order 100% of the government to shut down as a political weapon to increase pressure on his political opponents to agree to his terms.

This is why the GOP will not knuckle under quite as easily as they did over the “financial cliff” stupidity.  The government could stand to get a haircut.