Robinson O'Brien-Bours at No Left Turns gives us a helpful précis of what'll happen in about three weeks:
With less than a month to go until the United States of America reaches its debt ceiling, lawmakers are scrambling to address the crisis. President Obama is addressing it by comparing Members of Congress to schoolgirls and complaining about the rich being rich, Congressional Democrats are screaming about the impending doomsday, and Congressional Republicans are sticking to the "Just Say No to Taxes" mantra (for now).Obviously, no one is going to let this happen, but to raise the ceiling is to declare that there really is no ceiling. To raise it without imposing serious curbs on more spending is irresponsible, yet this is what the administration would have us do.
Meanwhile, the Obama Administration and some intellectuals are looking into the silly notion that the 14th Amendment allows the president to do whatever he wants to ensure that the public debt of the United States is not defaulted on. This follows an even worse vein of logic than the "I don't need to talk to Congress about Libya because dropping bombs on human beings is not being hostile" argument of late.
[T]he United States is fully capable of paying off the interest on its debt if we needed to. As the Washington Examiner points out, defaulting would be a purely political choice. We would have the money to pay our interest payments if it came down to it; the debt ceiling just means that the government cannot accumulate any more debt. By the law of the 14th Amendment, the President would be forced to pay off the interest on our debt with the monies regularly collected by the Treasury Department; he is not legally allowed to let us default on the debt if those funds exist.
However, this would mean an instant end to almost all programs and offices of the federal government in order to pay our interest on the loans. We have the money to pay our interest, but then President Obama would have to choose between things like paying senior citizens their social security checks or paying for dropping bombs on the people in the not-war of Libya. We will not go into default if we hit the debt ceiling; the federal government would just stop most of its work.
And make no mistake on the severity of hitting the debt ceiling. Some people think it will be like when the government cannot pass a budget, as in the 1990s and as was threatened earlier this year-- this is false. In those instances, only nonessential parts of the federal government stop working immediately. If we hit the debt ceiling, everything stops. The FBI, the military, the TSA, Social Security, Medicare, the courts, federal prisons, IRS refunds, and every single employee of the federal government would instantly be forbidden from working. We will have $306 billion in expenses for the month of August, and only $172 billion in revenue.
That means $134 billion worth of government programs and offices would instantly need to be shut down-- and not just tiny ones, but major services that Americans are now used to. If we hit the ceiling, then come August 3rd we will have an instantly balanced budget by the pure fact that we have no choice but to just lay off millions of federal employees.
For those who may have never read their Aesop I offer this 1934 Disney version of the fable of the ants and the grasshopper to illustrate the difference between the two sides in these negotiations: Winter's coming.