The United States is fast approaching its debt ceiling. Some estimates are that we will hit our spending limit by next week.
While lawmakers argue about what to do with the debt ceiling, we are looking at what would happen if the debt ceiling is not raised. That would mean the United States does not have the money to pay what it owes to countries we have borrowed money from and to pay obligations like Social Security and Medicare and enough to pay for all the other things the federal government spends money on.
White House spokesman Jay Carney said again Wednesday that not raising the debt ceiling would be disastrous.
"We have to raise the debt ceiling because the United States is the United States. It's the most important, powerful economy in the world. The full faith and credit of the United States is essentially our reputation in the world. And to default on those obligations would be calamitous, would have calamitous consequences." said Carney
That is not necessarily true.
The U.S. debt ceiling stands right now at $14.3 trillion dollars. Think of it like a credit card, that is our borrowing limit.
If the debt ceiling is not increased next week, Treasury Secretary Tim Geithner said Monday, that we could still service debt until at least August 2. Still, he reiterated that allowing the country to go into default would be, his words, "catastrophic."
Republicans now say they want trillions, not billions, but trillions of dollars in cuts tied to raising the debt ceiling.
"It is reckless for us to increase the credit limit of this country without cutting spending, without reforming entitlements, without getting our fiscal house in order just as any family would have to do if they're seeking an increase in their credit limit. They've got to have the wherewithal to pay the loan back and that's what we're trying to do here." said Republican House Majority Leader Eric Cantor.
That is true.
To simply raise the debt ceiling without a plan for how to cut spending doesn't make any sense. But what happens if we don't raise the debt ceiling?
We would still have $2.17 trillion dollars in revenue coming from taxes.
That money could be used for debt payments ($205 billion) and paying Social Security ($741 billion), Medicare ($488 billion), and Medicaid ($276 billion),
What lawmakers don't like is that they would only be left with $395 billion for other programs. That means they would have to cut programs including defense which this year alone is $719 billion. That does not include the cost of Veterans' care, which totals another $124 billion.
Here's what you need to know.
We are adding 3 billion dollars a day to our debt which is now larger than the entire economies of China, the United Kingdom and Australia combined.
The bottom line is that we have to stop borrowing money to pay for borrowed money. You and I can't live that way in our households, and our nation can't live that way either.