The US hit the debt ceiling Monday. As things stand right now, we can stretch dollars until about August -- and then we go into default. I don't think people have a good understanding of what raising the debt ceiling means. It doesn't mean we're borrowing money to spend more money, it means that we're borrowing money to cover money we've already spent. It means meeting our obligations. If we don't raise the debt ceiling, we will default on payments. Social Security checks may stop going out, paychecks to soldiers may stop being cut, grants to states will evaporate, and bond holders will find themselves in possession of nearly worthless pieces of paper.Meanwhile, Republicans are playing on people's misconception of the debt limit. They've got everyone freaked out about spending and are counting on people equating the debt ceiling with new spending. It's a suicidal game of chicken, because one player is on rails -- it can't swerve. The GOP is playing chicken with an oncoming train.
Speaker of the House Boehner is demanding "trillions" in cuts or he says he'll let the crack-up happen. This is typical for the Orange One, whose political strategy playbook seems to consist only of a single page marked "Hostage Negotiations," with his party as the hostage takers. But, in this case, Boehner offers a Hobson's choice -- as economist Mark Thoma puts it, "Republicans are threatening to blow up the economy if they don't get budget cuts big enough to blow up the economy."...[CLICK TO READ FULL POST]
