US Hits Debt Ceiling - 3 Things That Could Happen

The US Government finally hit the debt ceiling everybody in Washington seemed to have been waiting for. Though this doesn’t spell disaster in the immediate future, it does spell opportunity for all those in Congress who can’t wait to get on their high horses and provide endless solution-less lectures on the nation’s credit card addiction. I suspect that after a little political posturing everybody will eventually get in line and raise the debt ceiling for one simple reason, we have no choice!

I was however still interested in what the various possible outcomes are, so I dug around a little and this is what I found:

1. The government selectively pays some of its bills. Congress basically has until August 2nd to raise the debt ceiling, or else it would force the Obama administration to choose between paying the nation’s creditors, or paying for the 2 wars we’re currently in, Social Security, Medicare and all other household bills.

2. Reduce spending drastically. Rebulicans want any debt ceiling increase directly linked to cuts in government spending of at least equal measure. The real kicker here is that they have ruled out any significant cuts in defense spending, or an increase in government revenue (i.e.) raising taxes.

3. U.S. defaults. Though unlikely, its entirely possible that everybody commits to a crazy game of chicken, and both the Obama administration and Congress fail to increase the debt ceiling, forcing a national default.

My only hope is that amidst all the hoopla going around, a serious look is taken at how to responsibly manage a government over the long haul that has very real obligations to its citizens, worldwide partners, and its future unborn generations.