Senate majority leader Mitch McConnell says Congress will raise the debt limit allowing the government to borrow more money needed to pay its bills. That’s what people circling the drain into bankruptcy do when they’ve taken on prior debt they can’t repay. In the case of the government repayment is not contemplated to ever happen. The interest on the accumulated debt still has to be paid though.
The U.S. national debt almost doubled under Obama, from $10.6 trillion when he took office to $19.8 trillion when he left the presidency. George W. Bush was no better, raising the debt from $5.8 trillion to $10.6 trillion during his 8 years. Future historians will look at those two presidential terms as the greatest folly of a century. It’s hard to believe otherwise.
All this was done during a period of historically low interest rates. If interest rates rise to levels considered normal before the Federal Reserve started its constant tinkering with the economy and printing money to keep interest rates low, disaster will be the result. The interest on the Federal Debt will become the largest expenditure in the entire national budget.
Ignoring the inevitable brings a day of reckoning for individuals with maxed-out credit cards. There’s no reason to believe the Federal government is exempt. Like everyone else, it can’t spend all it wants by borrowing. It can’t just keep raising the debt limit ad infinitum. There is a limit to the debt limit that cannot be avoided. Something that cannot go on forever, won’t. The Federal government is not Chicago. Well, not yet at least.