Paul's Comments

Well, apparently if Congress doesn't get the debt ceiling raised by today we have a serious problem because the government borrows 40c on the dollar to pay for everything, and if it can't borrow more money then it has to do load shedding.

"Load shedding" is a term I borrowed from the electrical industry. When too many customers want power and they can't keep up with the demand, your typical public utility will first reduce voltage, then it will shut down customers who have agreed to have their electricity curtailed such as residential customers who will allow their air conditioning shut off for 15-30 minute stretches, then industrial customers who have interruptable service. Once you run out of the low hanging fruit, then you have no choice but to cut neighborhoods and areas for a while. This is "load shedding" and its not pretty.

If you are working and then become unemployed, if you're stupid you keep paying everything the same until you run out of money and then you really have painful choices to make about what you can pay. If you're smart, you decide as soon as your financial status changes what bills you have to pay, and what bills that you do not want to lose the product or service of that vendor. And you'd call your creditors - especially the ones you're not going to pay - and let them know. Either case, where you are forced to cut drastically because you stupidly pretended you weren't out of money, or you cut carefully because you start when you're aware you have reduced funds, is a form of load shedding. The "load" in this case is your debt load or the amount of expenditures you make.

Well, in the case of the United States Government, if the debt ceiling isn't raised by midnight tonight, load shedding has to start immediately because we waited too long. The debt ceiling was recognized as needing to be raised as far back as January but it was pushed off. This means the Department of the Treasury decides which 2/3 of the bills it can pay; the rest get delayed payment.

Treasury has been using various accounting tricks to avoid failing to pay things; this worked for a couple of months but if the debt ceiling fails to get raised, the real choices have to be made, and they won't be pretty.

I used to think Congress wasn't stupid enough to let the government run out of debt it could raise. I might be wrong. Some say that the Republicans won't let it happen because it gives Obama total authority to decide what bills get paid and which ones don't, and they don't want to give him that much power.

What has been most amusing in this whole debacle is that the Republicans - specifically Tea Party members - who've been going around saying we didn't need to raise the debt ceiling, and it wasn't going to be that bad if the government defaulted on paying its obligations, while the Democrats were the ones pointing out this was irresponsible. It's usually the Republicans who talk about fiscal responsibility and the Democrats who don't. This whole incident has turned everything around and changed how things normally are.