The Debt Ceiling?

First of all, when does the U.S. government hit the debt ceiling?  Mr. Geithner, Treasury Secretary, doesn't seem to have a grasp on that, despite multiple (different) predictions. 

Of course, I don't entirely trust Mr. Geithner's judgment, since he had so much difficulty with the country's federal tax laws.

Yet the U.S. government will sometime soon hit its limit on debt, at an astounding all-time high of over $14 BILLION dollars.  That means No More Borrowing Money.

President Obama warns that not raising the debt limit "could unravel the entire financial system," while Secretary Geithner feels that the debt limit must be raised to avoid default on loans and "irrevocable damage" the economy.

According to a paper by Dr. J.D. Forster, Congress has three options: (1) Refuse to raise the debt ceiling, (2) Raise the debt limit and drastically cut spending (3) Raise the debt limit, cut spending, and legislate comprehensive, strict new budget rules.

First of all, Congress has time to consider its options.  Despite the insistence of Mr. Obama that Congress take immediate action, there's no need to rush into decisions.  The options need to be carefully considered.

Second, holding the debt ceiling will NOT mean that the federal government must default on its loans.  In fact, Congress can make sure that interest continue to be paid on loans to ensure that federal loans are NOT defaulted.  Essential spending (such as Social Security and Medicare) will continue to be funded.

Third, the amount of money that the federal government would be denied (by not raising the debt ceiling) is approximately equal to its discretionary spending.  Surely Congress can figure out how to do without its pork projects (AKA entitlements) and extras.

Finally, why would anyone give (essentially) another credit card to a chronically spending-addicted entity?

If you count the loans that the U.S. government has, NOT counting the loans against Social Security and other trust funds, the money owed has grown from $3.4 trillion dollars in 2001 to over $9 trillion dollars in 2010.

The debt is expected to grow to $23 trillion dollars by 2019 (if the economy turns around!)

The question everyone asks is how the world market would respond.  According to Dr. Forster, it would inevitably wobble a bit.  But as creditors get paid and the U.S. government gets its spending under control, the dollar would again become the basis of a stable world economy.