How long can the government pay all its bills without selling any additional Treasury bills, notes or bonds? The answer is really about only 22 days.
The suggestion that the answer is indefinitely is completely wrong. The Sean Hannitys of the world who otherwise protest incessantly that we borrow 40 cents of every dollar that we spend are in denial about this.
Consider revenues in the last fiscal year: $2.712 trillion, or $226 billion per month.
Then consider outlays in the last fiscal year: $3.6849 trillion, or $307 billion per month, or $10.233 billion per day. So revenues will last about only 22 days, after which we'll need to find another $81 billion somewhere, or not pay some bills.
The monthly shortfall of $81 billion adds up to $972 billion over a year, or 26.4% of all outlays in the last fiscal year.
Discretionary spending in the Obama 2012 budget request was $1.510 trillion. Slashing that $972 billion across the board represents a 64.4% cut to discretionary spending.
By agency that means, for example, defense spending would have to be cut by $429 billion and Homeland Security by $35 billion, and the EPA by $5.9 billion and Agriculture by $17 billion.
That's why just about everyone in both parties wants to see the debt limit increased: no one can stand it that they'd have to take such a huge hit to live within our means. It's really all about that, not about "default" per se. Interest on the debt runs to only $34 billion to $35 billion per month. There's plenty of income to allocate to that. So we won't default, but spending cuts would of necessity be nothing short of draconian.
The squealing of the pigs continues.
