So unbeknownst to most of the general public, at least that’s my assumption, the Federal Government can’t actually just keep taking on debt willy nilly. In fact there is a limit on how much the government can borrow from private investors and other governments. That limit is set at roughly 14.2 Trillion dollars. Not much of a debt ceiling I know, but the sad truth is that we’ve already hit the ceiling. That’s right, our government is already 14.2 trillion dollars in debt and we need to borrow more.
In order to pay government employees, who make up close to half the damn workforce these days, the federal government will need to borrow more money this year. However, since we’ve hit the ceiling, we can’t, at least not until congress gets together and raises the ceiling. In the mean time, which is until August, the Treasury department gets to “play with the numbers” so to speak. Basically it will be taking money from retired government worker’s pension plans, leaving I.O.U’s in place, and using that money to pay current government workers. So that’s what we’ll be doing till August, taking money from retiree’s and using it to pay current workers.
What happens after August? Well if the debt ceiling doesn’t raise we’ll have to make some rather massive government cutbacks, and not the fun-discretionary spending kind. No no, we’re taking – get rid of Medicaid and Medicare, plus a drastic reduction in the military just to cover our debts. Personally I think it’s due. We need to stop spending so much damn money and if it takes a slap in the face then it takes a slap in the face. That’s not realistic though, the reality of the situation is that sometime in August, in a dark room around 11:00 pm or so a deal will be made between some hacked off Republicans and some short sighted Democrats and the debt ceiling will rise and we’ll keep spending ourselves into oblivion.
So just a heads up out there. Expect to seem some interesting deals running through Congress over the summer. I know I’ll be watching.
