Huh? (Hint: it's poor form to disparage something as a Repub talking point and then recite a Dem talking point without providing any support. The fact that we're dueling with talking points doesn't make both of them false - evidence does.)
Every creditor I've encountered says "don't pay them/buy food/go on vacation/buy a new car, pay me".
Why would US' creditors be any different? Put it another way - do you really think "we're going to keep spending way beyond our revenues" is something that the US creditors view as a good thing? (It's not like we're spending on things that will produce future tax revenue.)
The "debt ceiling" is a self-imposed line of credit. How does increasing it make the US a better credit risk?
I ask because the lenders that I've dealt with looked at available credit and refused to loan if there was too much. Why? Because you might borrow and then be unable to repay their loans.
Again - why would US creditors be any different?
I'm not re-stating a talking point. Moody's has already threatened a downgrade of US Treasuries based on the talk of a default: http://www.independent.co.uk/news/business/moodys-ponders-us...
"The "debt ceiling" is a self-imposed line of credit. How does increasing it make the US a better credit risk?"
You (and the Republican party) are setting up a false dichotomy. The decision at hand is not "should we raise the debt limit today, or should we reduce the deficit?" We need to raise the debt limit in the short term, while also reducing the deficit in the long term, in a responsible way. Nobody is threatening to downgrade US debt tomorrow if we raise the debt ceiling, but there's a serious risk of it happening if we choose not to raise the limit.
Certain conservative politicians want to frame the debate as an immediate crisis because it's convenient for their political aspirations, not because refusing to raise the debt ceiling is an intelligent thing to do.
Actually, you were. (The credit rating agencies have govt monopolies. They're not disinterested parties. It also doesn't matter what they think because they're not lenders.)
> You (and the Republican party) are setting up a false dichotomy.
I'm not setting up a dichotomy at all. I asked a simple question, namely, how does increasing the US' line of credit make the US a better credit risk? I asked that question because that's your claim. I said nothing about the deficit.
As reducing the deficit "in a responsible way", which lender is saying "I won't loan money to the US govt because it's reducing its social security/military/medicare/medicaid spending?"
Seriously - I want names. Will China reduce its lending? How about you (assuming that you've been buying treasuries).
Yes, lenders care if you skip on repayments, but your argument assumes that they want to continue other spending. Some supporting evidence would be nice.
You seem to have trouble making an argument without using political references....
[1]Current 10-year T-bill rates around 3% per year mean that not borrowing as much as possible now seems downright stupid.
The fed is buying most of them now. The fed can keep doing that "forever", but that doesn't mean that our trading partners will keep selling us stuff cheap.
Yes, the US is doing better than many countries, but that's not the same as good.
> not borrowing as much as possible now seems downright stupid.
It depends on what you do with the money you borrow. Spending it on beer and skittles is different than investing it in something that will give a decent return, or even saving it as part of an interest rate prediction.
And yes, I objected when Bush pushed through his $1T prescription drug monstrosity and other things. That said, the last yearly deficit with a Repub congress was about the same as the current monthly deficit. Starting from Bush's hole, it seems silly to dig faster.
It may certainly be the case that our creditors would not take kindly to us ramming into the debt ceiling and hard-cutting off services. But if you fall into the "default/not-default" "bad thingy.../not bad thingy..." semantic trap, you're not looking at the real situation. Our creditors may not take kindly to us simply raising the debt ceiling indefinitely, either. Resist the false dilemma the politicians are trying to offer us by collapsing the domain of discourse like that; there's much more than just "raise it" and "not raise it".
That's a Republican party talking point, not a fact.
Everyone knows that debt service has priority. They also know that it's non-trivial to just stop paying for other services, and that even if it were easy to do, it would be seen as a serious lapse of judgment by our creditors. You don't have to default to get hammered by rising interest rates on your debt; you merely have to look irresponsible enough to be a bad risk.