Get ready for Round 2 of a main event that’s going to play our over the next 18 months. And the bell rings on the debt ceiling debate.
So here’s a question for everyone to ponder. If you were loaning someone money, which type of person would you prefer?
- A person who is taking this loan as their last loan without any further borrowing, and has a comprehensive plan in place to pay off the money you are loaning them, as well as all the other money they owe.
- A person who is borrowing money from you, is already in debt equal to about 60% of their yearly salary, and has no plan in place for paying any of the debt off, in fact, is certain that they will have to borrow more money in the future.
In this scenario, if we were to simply vote to raise the debt ceiling, we are the second example. If we refuse to raise the debt ceiling, and put a plan in place to pay off our debt, then we are first example.
So why does anyone think that if we don’t raise the debt ceiling, we will default? We will actually become more attractive to lenders if we decide to get our fiscal house in order.
The fact is that we have more than enough money from tax revenue to cover the interest on our national debt without raising the debt ceiling. We will not default on any payment regardless. We will however have to cut other expenses.
Only the Treasury deciding not to continue to pay interest on our debt from current tax revenue would cause a default, not a failure to raise the debt ceiling.
Don’t fall into the trap of believing that not raising the debt ceiling is catastrophic – its fear mongering.
Not raising the debt ceiling and SUBSTANTIAL spending cuts is exactly the message of fiscal responsibility we need to send our creditors.
Who would you loan money to?
Guest Blogger Jeff