The Debt Ceiling Explained. Once More, With Feeling…
What The New York Times doesn't know might hit you in the wallet. By James K. Galbraith January 19, 2023
It is in the nature of articles about the debt ceiling that no matter how often one tries to set the record straight, nothing ever gets through. Noting this after reading my most recent effort, a physicist friend chided me for using "facts and logic" against "what everyone knows." This states the problem precisely. So here I go again, once more, with feeling.
In The New York Times of January 17, 2023, Alan Rappeport offers an excellent account of what everyone knows. It is suitable for a technique I learned in high school in France, explication de texte. The method involves line-by-line quotation and analysis. Herewith:
The United States borrows huge sums of money by selling Treasury bonds to investors across the globe and uses those funds to pay existing financial obligations, including military salaries, safety net benefits and interest on the national debt.
No. The United States does not borrow in order to have funds to pay its obligations. It pays its obligations by check (or electronic transfer) as specified by law. It then issues bonds so that "investors across the globe" can save a safe US dollar-denominated asset, the Treasury bond, that pays interest, as cash and bank deposits do not. Cash and bank deposits are not "debt subject to limit" under the law. You can review a full list of what is subject to limit here. Cash and bank deposits are not on that list. It is possible to look these things up.
But eventually, the United States will need to either borrow more money to pay its bills or stop making good on its financial obligations, including possibly defaulting on its debt.
No. The financial obligations of the United States government are, in fact, obligations. This is a legal term. The debt ceiling statute does not authorize the breach of any obligation.....
See also his The Debt Ceiling Is a Red Herring
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