Many people think that if the ceiling of the U.S. national debt is not raised, this will immediately lead to a default by the country, but in reality it is not. Even if Congress does not approve raising the country’s national debt ceiling, it will not necessarily lead immediately to the U.S. government’s default.
However, President Obama constantly spreads fear in this regard, talking about a possible breach during his speeches. Representatives of Democrats and Republicans are doing the same. U.S. Treasury Secretary Timati Geithner and Federal Reserve Chairman Ben Bernanke have created the impression in society that if the government’s debt bar is not raised, default will come automatically.
In fact, a default can only be declared when the United States is unable to pay interest on its national debt.
According to a study in a Washington Post article, as of August 2, 2011, the U.S. government will lack $ 134.3 billion to cover recurring costs. As a result, “the U.S. government will have to choose between $ 80 million in monthly payments and priority programs that should be funded and which should not.”