Since Obama took office there have been repeated fights over raising the US Debt Ceiling. The Treasury Secretaries have said that for a short period of time they can 'juggle money around' to keep the US from default.

  • Do we immediately go into default if we cannot pay down the debt? (Where is the money coming from, or do they just stop pying their vendors?)

  • Is that its against the law to take money from Social Security or Medicare (not sure if this includes medicaid)?.

  • What is 'discretionary spending'?

For those that don't know, the debt ceiling limits how much debt the US government can take out. Since we run a budget deficit, the treasury has to issue bonds just to pay the interest on the national debt. The congress sets a 'debt ceiling' that says we cannot go more in debt and then when we reach the cap raises it. If we don't pay the interest we are in default.

  • This is a different question than what is the debt ceiling. Oct 3 '13 at 13:39

What money are the using to pay down the debt?

There's revenue coming to the government aside from new borrowing.

This is used for paying down the debt as well as other essential expenditures.

  • maybe you could expand this answer... explain where the money is coming from and how it is being handled at a high level Oct 2 '13 at 20:40

So do they basically stop paying their vendors such as the electric company or rent on buildings?

I think it's more along the lines of "This department still has money in its bank account, even though it's budgeted to spend it later this year. We'll use it to pay this other bill, and hope that the department isn't going to need it soon." You can continue that process for a while by "juggling" the money, but eventually there won't be enough cash left to keep filling the holes.

  • I think you are wrong about how the government does its expenditures. If you can you should find a reference to back up your claim. Oct 2 '13 at 20:39
  • @Chad - You're right, I should back it up. The way the government juggles money may not be related to how other entities do. I'll see what I can find.
    – Bobson
    Oct 2 '13 at 21:47

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