T Nation

Debt Limit - Simple Explanation

Found this video through a friend, real simple satirical short video of how our government thinks.

Whenever I hear somebody talk about the debt ceiling, I immediately tune out because I know it is going to be a stupid conversation. All it is is an agreement to fund the obligations incurred through the budget process. You want to limit the national debt? Then pass a budget that does so. Do not risk the credit rating of the United States by limiting what you can borrow if you need more than that amount to fund your budget.

In recent years all the debt ceiling has done is provide talking points (like the idiotic video above) and hammered our credit rating. It provides very little use (other than a possible backstop to the budget) which is why nobody else has one.

[quote]VTBalla34 wrote:
Whenever I hear somebody talk about the debt ceiling, I immediately tune out because I know it is going to be a stupid conversation. All it is is an agreement to fund the obligations incurred through the budget process. You want to limit the national debt? Then pass a budget that does so. Do not risk the credit rating of the United States by limiting what you can borrow if you need more than that amount to fund your budget.

In recent years all the debt ceiling has done is provide talking points (like the idiotic video above) and hammered our credit rating. It provides very little use (other than a possible backstop to the budget) which is why nobody else has one.[/quote]

Thank you.

The debt limit affects the government’s ability to pay down obligations already incurred–that is all. It does not affect the government’s ability to incur new obligations.

The problems need to be fixed during the budget process. Holding the country’s credit rating hostage (McConnell: “It was a hostage worth taking”) resulted in a bonfire of capital in 2011 and it was only made possible by the fact that the American people don’t understand the issue.