Treasury secretary Janet Yellen and the other members of the Biden Administration are all predicting a catastrophic default that would send the country into oblivion if we don’t increase the debt limit in June.
Don’t believe it.
If we don’t raise the debt limit ceiling it simply stops the government from borrowing more money, but the government has ample statutory authority to reshuffle its tax revenues to meet all of our basic needs for a long time with no borrowing even if the debt ceiling isn’t raised.
EJ Antoni of the Heritage Foundation writes that “cumulative revenue in the current fiscal year is $2.687 trillion, while net interest on the debt comes to $364 billion.” The tax revenue, which we can continue to spend without any increase in the debt ceiling is over seven times what is needed to avoid a default. Antoni points out that “In fact, major government programs could still be funded in the event of a partial government shutdown.”
Cumulative outlays in the current fiscal year for Social Security, Medicare and Veterans’ Benefits and Services are $770 billion, $426 billion, and $157 billion, respectively [a total of $1.353 trillion].
That means the Treasury would still have enough money to both pay for these programs and service the debt, all from existing revenue, without the need to issue any new debt.”
Adding up the numbers, Antoni points out that “the Treasury would even have enough revenue to pay for the entire bloated defense budget, another $465 billion in cumulative outlays in the current fiscal year, and still have $505 billion left over.”
Here’s the shell game in Washington:
Democrats know that a government shutdown or reaching the debt ceiling would not endanger Social Security, Medicare, Veterans Benefits, or Defense spending. But they pretend that it would protect the rest of their budget: Other cash transfers, Medicaid, normal operations of federal agencies, etc.
They know that these priorities are a lot less sexy and don’t feature them as possible hostages to the debt limit.
Democrats say they are protecting Social Security and Medicare but what they are really doing is protecting the routine government spending that funds the jobs of federal workers who are in their labor unions.
The Republicans are happy to play a variant of the same game. They let the public believe that programs like Social Security and Medicare are in jeopardy but know full well that they are not.
Instead, the Republicans pretend that these programs are in danger in order to force cuts in federal spending and limits on future spending growth.
While the Republican motivation is more laudable than the Democrats, they are both phony.
There will be no default.
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