Six dangerous myths about the debt ceiling

Six dangerous myths about the debt ceiling

With the myths about debt ceiling looming, many people do not realize the lies and misconceptions being spread around about the debt ceiling.

Six dangerous myths about the debt ceiling

Six dangerous myths about the debt ceiling


1) The debt ceiling is a different animal. If it's not raised by mid-October, the Treasury can no longer pay about a third of the government's bills. Those payments amount to about 6.5 percent of gross domestic product.

2) It's true that the government will still collect revenue far in excess of what it needs to pay interest on Treasury bonds, only about 7 percent of total spending. That would prevent a default that would clog the global river of credit—much like the collapse of Lehman Brothers in 2008—sparking another financial markets meltdown.

3) Some wonks—and more than a few members of Congress—are seizing on language in the 14th Amendment they claim would let the White House order the Treasury to borrow. Section 4 says, in part: "The validity of the public debt of the United States, authorized by law …shall not be questioned."

4) This brainless whopper surfaced the last time Congress played chicken with the debt ceiling. While it seems to be in remission, look for it to reappear on cable talk shows. Under this silly scenario, the Treasury uses its powers (under Title 31,Subtitle IV,› Chapter 51, Subchapter II, paragraph 5112(k) of the U.S. Code) to mint a coin worth a trillion dollars, deposits it in its account at the Federal Reserve.

5) The debt ceiling does nothing to limit or reverse spending already legally authorized by Congress—from military pay to Social Security. All it does is allow the Treasury to borrow the money to make good on those spending decisions.

So freezing the debt limit doesn't "take away the government's credit card.

6) Congress can't be that stupid, but That's what everyone said about the government shutdown. Since engineering that self-inflicted fiscal wound, House Speaker John Boehner, D-Ohio, has reportedly told congressional colleagues that they won't let the debt ceiling standoff force the government to default.

Six dangerous myths about the debt ceiling

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