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Debt ceiling status quo does not equal default

January 31, 2011 | Modified: March 16, 2012 at 6:18 am
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Don't believe the myth that failing to raise the debt ceiling means America defaults on its debt. Erick Erickson over at Red State excerpts coverage that more accurately reflects the truth, such as that from Greg Ip at The Economist:

A default would result from failure to pay principal or interest. The debt ceiling doesn’t bar either. Treasury can roll over maturing issues so long as the overall stock of outstanding debt doesn’t rise. (A caveat: Treasury must invest surplus Social Security and Medicare taxes by issuing non-marketable debt to the plans’ trust funds, which erodes the remaining capacity for marketable debt.) As for interest, even in today’s straightened circumstances, revenue is more than enough to cover interest charges.

Failing to raise the debt ceiling is not a crisis.

From WeeklyStandard.com

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