The US Government is currently in the position of constantly rolling over its debt into new forms of debt. Much akin to how a person can continuously roll over their credit into new credit cards.
So as long as the market continues to give the US 0% loans, I'm not _super_ worried about borrowing. But we seriously need to get our spending and revenue under control.
Furthermore, the only people who can give the US Government a "credit cap" is Congress itself. This whole situation is a self-imposed limit on spending and debt. There is no Bank in the world who is denying credit to the US right now.
In essence, we'd be like a significant other saying "We can't pay this month's bills with ANOTHER credit card. I'd rather not pay any bills rather than take more credit"... despite the fact that credit is still available. Clearly, we need to get spending under control... but until we do so, taking additional credit opportunities is the only thing that is preventing the US from defaulting.
This reflects a fundamental misunderstanding of finance and capital structure.
Anyone operating a business has to have assets. In order to fund those assets, you issue a claim to either equity holders (your "owners" in the traditional sense) or your lenders.
There's nothing stopping a business from simply using debt, rather than owned money (equity capital) to fund a business long-term. You just treat the interest as an ongoing cost of doing business and never really "pay back" the debt. The New York subway (MTA), for instance, is entirely financed through a huge amount of debt historically used to pay for cars, railways, signaling systems, and everything else used to make the system go. The taxpayers just pay the interest on an ongoing basis and don't really "own" anything.
It's a nice system because the government doesn't have to make giant speculative purchases of land, buildings, and other long-term assets -- they can just lease them -- and usually they can borrow quite cheaply, so it works out for everyone. Bottom line, there is no "paying off the debt" -- governments and corporations operate much differently than how households think about debt.
I'm sure everyone can think of examples of government spending they don't like, but I've yet to see anyone make a credible argument -- and few people even try to make any argument -- that the US would be better either with any combination of spending cuts, revenue increases (either by taxation or sale of sovereign assets) that would eliminate rolling over debt.
Why is it that choosing to roll over debt is a "bad situation".
Clearly, it is a bad situation. But they haven't technically defaulted until they miss a payment. Furthermore, the US Government is getting roughly 0% right now on said debt: http://www.wsj.com/articles/u-s-treasury-bonds-pull-back-144...
So as long as the market continues to give the US 0% loans, I'm not _super_ worried about borrowing. But we seriously need to get our spending and revenue under control.
Furthermore, the only people who can give the US Government a "credit cap" is Congress itself. This whole situation is a self-imposed limit on spending and debt. There is no Bank in the world who is denying credit to the US right now.
In essence, we'd be like a significant other saying "We can't pay this month's bills with ANOTHER credit card. I'd rather not pay any bills rather than take more credit"... despite the fact that credit is still available. Clearly, we need to get spending under control... but until we do so, taking additional credit opportunities is the only thing that is preventing the US from defaulting.