Our Salutary Debt-Ceiling Scare

[Geee]

Human Events:

As the sun rises in the east, the debt ceiling will be raised. Getting there, however, will be harrowing. Which is a good thing.

Treasury Secretary Tim Geithner warns that failure to raise the limit would be disastrous. In that he is correct. But he is disingenuous when he suggests that we must do so by Aug. 2 or the sky falls.

There is no drop-dead date. There is no overnight default. Debt service amounts to about 6 percent of the federal budget and only about 10 percent of federal revenues. This means that for every $1 of interest payments, there are roughly $9 of revenue the government spends elsewhere.

Move money around -- and you've covered the debt service. Cover the debt service -- and there is no default. What scares Geithner is not that we won't be able to pay our creditors but that his Treasury won't be able to continue spending the obscene amounts of money (about $120 billion a month) it doesn't have and will (temporarily) be unable to borrow.

Good. The government will (temporarily) be forced to establish priorities. A salutary exercise.

Equally salutary is the air of crisis that will be generated by the fear of default. We shall have a preview of what happens when we hit the real debt ceiling several years from now, i.e., face real default. That's our current fiscal trajectory. Under President Obama's budgets, debt service, now $214 billion a year, climbs to $931 billion in a decade.

The current debt-ceiling showdown, therefore, is an instructive dry run of an actual Greek-like default, which awaits if we don't solve our debt problem.