What the debt ceiling really means

posted by
July 12, 2011
The Orange County Register    
Posted in PND Commentary

"The clock is slowly ticking toward Aug. 2, the date on which the U.S. faces 'fiscal Armageddon' -- according to the Obama administration -- unless Congress agrees to raise the debt ceiling. But would we? The Obama administration, as well as much of the media and many economists, tend to equate failure to raise the debt limit with default. That's not precisely true. ... If the government is not able to borrow more money after Aug. 2, spending will have to be reduced to the amount of revenue that the government has. That would require roughly a 44 percent cut in federal spending. This will almost certainly hurt. But it's not the same as default." (07/11/11)

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