We go through this every few years: an alleged crisis over the federal debt limit. There is a strong aura of deja vu: the Democrats say the sky is falling, and Republicans try to bargain for something in exchange for raising the debt limit, while the press, all the while, beats up on Republicans.
This time the hysteria is, if anything, even more over the top than in the past. Much news reporting is downright false. Thus, for example, today’s New York Times asserts:
If the U.S. breaches the debt limit, it can no longer borrow money, and has to default on its existing debts.
I would call this a lie, except that Times reporters are so ill-informed they might actually believe such nonsense. As I have written before, there is zero chance of the U.S. government defaulting on its debt obligations. If the debt limit is not increased, it simply means that the total debt can’t go up. There is plenty of revenue to pay interest on the debt, and new debt can be incurred to pay off existing debt as it matures.
The effect would be the same as if a balanced budget amendment were suddenly adopted: going forward, spending would not exceed revenue. In order for this to happen, discretionary spending would need to be cut. As a reader puts it:
Failing to pay interest in full and on time is the only way to default. Failure to continue an executory contract to a diversity consultant is not a debt default.
Of course, cutting discretionary spending is exactly what the Democrats and their press minions are desperate to avoid. Who knows, voters might find that they like a balanced budget.