What will really happen if we don’t raise the debt ceiling on Oct. 17th? Will the sky really fall as the democrats, led by President Obama, claim will happen? Here’s a simple way to grasp what is happening. Treasury Secretary Jack Lew oversaw the release of this report.
“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth — with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the report said.
When attempting to visualize the enormity of the federal budget of the United States, an easy way is to compare it to a typical household budget. You do this by simply lopping off 8 zeros from each budget number. See here for an example.
This Treasury report lays out the total receipts and outlays for FY2013 which just ended on Sept. 30, 2013. If the debt limit is not increased on Oct. 17th, it will not stop the influx of receipts to the U.S. government. In FY2013, the government took in $2,472,542 TRILLION dollars. This equates to $206,045 billion dollars per month taken in. Unfortunately, our spend-drunk politicans spent $3,227,888 TRILLION dollars, thus the need for the passage of the debt limit increase.
To visualize this as our household budget, simply remove 2 digits. This would our example household budget would have earned $24,725 dollars in FY2013. We would have spent $32,278 dollars. Thank goodness for credit cards, huh? Finally, we can see we would be earning an average of $2,060 per month.
So, our debt crisis would mean our credit card was suspended and we would have to pay our bills with the $2,060 we earn each month. We can extend this comparison further if we imagine what bills we would pay.
The alarmists are claiming we would default on our debt for the first time ever, damaging the full faith and credit of the United States. That would only happen if President Obama purposely directed his Treasury Secretary to not pay the debt interest and default on our bonds. I say only because clearly there is plenty of money available each month to pay the interest.
The debt interest paid for FY2013 was $395,826 billion dollars. That equates to $32,985 billion per month, or just $329 in our household example. As you can clearly see, we only default if the President makes a political decision to purposely do so as it isn’t necessary whatsoever.
In fact, we can nearly pay for three more vitally important categories with our monthly income despite having our credit card suspended. Defense, social security and Medicare/Medicaid. You can refer to the report yourself to see that Defense would cost us $466 dollars, social security would be $665 and the entire Department of Health and Human Services budget would be $694.
Total all 4 categories of debt interest, defense, social security and Medicare/Medicaid and you spend an average of $2,154 dollars. That’s $94 over budget each month in our household budget. We would have to cut out a few dollars, likely from defense, and we would still be able to operate our 4 most important expenditures of the federal government each month even without a debt limit increase.
When Obama and his minions pull out all the stops in the next ten days to warn of the never before seen doom and gloom awaiting the country if he doesn’t get his way, you can rest easy knowing he is full of it up to his ears.