POSTED: Wednesday, October 9, 2013 - 5:54pm
UPDATED: Monday, October 14, 2013 - 12:00am
Part of the problem with the national discussion on the debt limit, is that most folks don’t understand it.
It seems some members of Congress don’t either.
When the House of Representatives passed the so-called Ryan budget two years ago, it would have raised the national debt one trillion dollars in 10 years.
The debt limit would have to be raised to accommodate that spending…that spending that had been authorized.
That seems to be the issue most Americans don’t understand according to the latest polling.
The debt limit hike was always just a formality, since everyone knew it isn’t authorizing more spending, but simply paying for what has already been approved by congress.
The National Journal poll shows 62% of Americans believe a debt ceiling hike authorizes more spending.
Only 28% understood it’s to pay for spending that’s already taken place.
Then there’s the new point of view that a default wouldn’t be so bad.
The short answer is, nonsense. But to explain, we had a minor, accidental default back in 1979, when a glitch in a Treasury Department computer missed the deadline on $122-million in T-bills.
Just that small whiff of fear in the market cost the US $12-billion in borrowing costs.
The 2011 debt fight cost us our triple – A bond rating, but a true default would raise the cost of loans, not only to Uncle Sam, but for your car or house. It would plunge the market immediately, and return us to recession if not worse.
Both sides understand that.