I’ve noticed many on the left repeating this talking point over the last couple days. Is this true? Is it even possible that they wouldn’t raise the debt ceiling? Does the government really need to borrow more money just to pay the interest on its current debt? Would it really be an automatic default, or would spending cuts, asset sales, renegotiation or other measures be on the table? What would be the consequences of default or a dinged credit rating? Could this possibly be a good thing that would stop government from continuing to drain the capital markets and waste money?
They probably are referring to the fact that mandatory spending (Social Security, Medicare, etc.) takes up almost all of the revenue. If we were not allowed to issue any new debt, and also were required by law to continue funding the madatory programs, there would only be something like $150-300 billion of money left. Since intrest payments are usually around $150-200+ billion a year, we’d have to basically eliminate all discretionary funding, which includes the entire defense budget, and more or less all the executive-branch departments.
Not that that would be a bad thing in the long run, but I’d bet you’d see the government default on the debt before they told the military to pack up and go home, or eliminate Medicare and throw millions of the elderly under the bus.