It's about to happen. Next week.
The republicans seem to be unwilling to bring any legislation in the house to raise the debt ceiling.
If they don't raise it, it means that the US government will be forced to live with NO DEFICIT. The alternative would be to print, but let's say they
are sane enough not to do that.
Thing is, even if congress would be unwilling to spend, due to the existence of the private federal reserve, outside of congress control, the FED
could print by itself. This is what happens when it's not the people who control (anymore) all the money.
The budget would end up like that :
Taxes - Interest on the debt = Budget
2.17 trillion - 250.7 billion = 1919.3 billion
From the 3.82 trillion projected budget, it's a cut of 1.9 trillion +, just shy of a 50% cut.
Those numbers are just projected numbers from the 2011 budget.
likely will change.
From the 2011 budget :
787.6 billion in pensions.
898 billion in health care.
140.9 billion in education.
928.5 billion in defense.
464.6 billion in welfare.
57.3 billion in protective services.
104.2 billion in transportation.
29 billion in general government expenses.
151.4 billion in other spending.
So... You need to cut 1.9 trillion. Good luck with that. This is what congress is gonna have to do in a week. Or raise taxes and cut. In this economic
climate, good luck.
Or like they always do, they'll back down and raise the debt ceiling.
Thing is, AT ONE POINT, they will be FORCED to make those choices. And the interest on the debt will be much higher. So they should do it NOW before
the interest on the debt explodes... or it's gonna be MUCH WORSE.
Edit : A bloomberg article related to this.
Rubio’s Demands Show Tea
Party May Not Bend on Raising U.S. Debt Limit
The U.S. will breach the limit by the end of May, according to Treasury, and could default if Congress fails to authorize an increase.
Two lies here. By the end of May is a joke. It will hit it within 2 weeks MAXIMUM. And the US will NOT default if they fail to authorize an increase.
It will pay the interest on the debt with tax money, which is NOT defaulting.
Democrats, who control the 100-seat Senate with 53 votes, probably won’t need Rubio’s support to raise the debt ceiling, though Senator Jim
DeMint, a South Carolina Republican, is threatening a filibuster of any measure unless lawmakers accept a balanced-budget amendment.
A balanced budget amendment would still mean cutting/taxing 1.9 trillion.
I don't know in which world they live, but they seem to really think the debt ceiling is only gonna be reached at the end of may/early june. This is
edit on 2-4-2011 by Vitchilo because: (no reason given)