Getting To The 'Truth' About Obama's Debt Limit 'Truth-twisting'

As the battle over raising the federal debt limit continues to rage, it just gets ever-more confusing to most Americans. And as Stephen B. Meister writes at the New York Post, it doesn't help matters that the Obama administration is "twisting the facts" (i.e. simply 'making stuff up') in its effort to try to get the public on its side against sensible, common-sense, budget cuts.

Fortunately, Meister has taken the time to refute some of Obama's and Treasury Secretary Tim Geithner's "truth-twisting", including their claim that "If the debt limit is not increased by May 16," Treasury will have to take "extraordinary measures . . . to temporarily postpone the date the United States would other wise default on its obligations."

Keep in mind what you and I have to do with our own budgets ... we can't spend more than we take in each month ... and if we do we go broke! Common sense and sound money management tells us that our government should be doing the same, right? Shouldn't our federal governments live within its means like the rest of us?

Clearly, Barack Obama and Timothy Geithner believe otherwise!
Meister writes:

Myth: America will "default" if the debt ceiling isn't raised. Truth: Treasury can still roll over debt as its bills and bonds come due -- and easily cover the interest out of its monthly receipts. It simply can't engage in new borrowing because that would raise the total amount of debt beyond the statutory limit.

Myth: The government will "shut down" if the debt ceiling is not raised.
Truth: The feds simply won't be able to spend in excess of what they take in. So they'll have to prioritize outlays -- a gov ernment cutback, not shutdown. They can delay paying some bills, or even furlough some nonessential federal employees.

The latter seems only fair -- as you may recall, US public-sector payrolls swelled by 500,000 during the Great Recession, even as the private sector suffered nearly 8 million in job losses.
(As time marches on, it's true the feds wouldn't be able to fully spend the agreed upon budget, but all that means is that the feds -- like the taxpayers -- would have to live within their means, at least for a while.)

Myth: Aug. 2 is a hard date.
Truth: The "extraordinary measures" Geithner can take, including not issuing more IOUs to Social Security and Medicare and state and local governments, will push the date out even further -- and that's just when Treasury needs to start its belt tightening. Indeed, Treasury has taken such measures time and again in past battles over raising the debt limit.

Read more.

As Meister goes on to astutely and correctly point out, Geithner's right about one thing; we're indeed headed for financial Armageddon. It's just that he got three things wrong: the cause, the cure and the timing. The US fiscal armageddon will come in a couple of years from too much debt, so spending what we take in and no more -- starting now -- is the prevention and the cure ... and that's precisely what not raising the debt ceiling would ensure.

Now, if only we can get the people in Congress (i.e. both parties) to understand that.