Going over the Cliff

[Logan Darklighter]

As for the US going into default, there is zero chance of that. 
A post at Powerline blog explains in detail why this is so. And actually has the math to back it up. 

But there is no threat of default. Constitutionally, the federal government must pay its debts. The Fourteenth Amendment, Section 4, states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

I believe this provision is universally understood to mean that the federal government must pay its debt obligations, both principal and interest, even if that means prioritizing debt service over other government spending. So the question is, if Congress does not raise the current debt ceiling, will the federal government run out of money needed to pay its existing debts? The answer is clearly No. A reader supplies the math:

On average the federal government’s daily expenditures are about $16.7 billion; receipts are about $14 billion, implying an average daily borrowing requirement of about $2.7 billion. So the planned flow of revenues is now about $650 billion less than the planned flow of expenses…about $2.7 billion a [business] day, $650 billion annually.
So the “default” scenarios are bogus. Interest on the $16 trillion in debt is covered by a factor of about 10x by revenues! That puts the federal government deep into AAA land. Revenues would have to fall by a staggering 90% to jeopardize interest payments.

And, of course, retiring principal by “rolling over” maturing debt can never require an increase in the debt ceiling, since there is no net increase in the nation’s debt, even if the money used to repay the original principal is borrowed.
So what will actually happen if Congress doesn’t increase the debt ceiling by approximately October 17? The government’s debt obligations will be paid, but reductions in other spending will start to become necessary. In effect, leaving the debt ceiling as is would function as a spending cut. This is why the Democrats hate the idea so much. They know there is zero chance of default, but they are horrified at the prospect that voters and taxpayers may find out that there is a relatively simple way to bring about spending reductions that would create, in effect, a balanced budget. Hence the hysteria.

Read the whole thing. It's worth it. Powerline is a right-wing blog, yes. But the guy who runs it is a lawyer and a really serious guy not prone to (or putting up with) conspiracy theories.