Debt Ceiling question
Can anyone answer me this question – If we don’t raise the debt ceiling, will that mean we default on our debt? Or will it mean that we simply cannot borrow more money?
Is it true that the government has, as it’s first obligation, to make debt payments? If this is the case, then we shouldn’t go into default. Default is when we can’t make our debt payments. Default is not failure to pay entitlements, right?
So the question is this – if this is the case, then why is everyone talking about defaulting on our debt? Why are our politicians rousing fear?
If I’m understanding this correctly, an accurate analogy would be to imagine you are a couple who makes $100,000 a year, have various debts that add up to $100,000 and you are debating if you should open up another credit card account. Open another account would in essence be raising your own personal debt ceiling, wouldn’t it? You’re still paying on the existing debt, you just don’t take any more debt on when you decide against opening another account.
Maybe I’m totally misunderstanding the situation, in which case, I would appreciate correction.