[tminus t=”03-08-2011 00:00:01″ style=”carbonite” before=”

Time until (alleged) Aug 3, 2011 deadline

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That’s it

If the Aug 2 deadline was real, time’s up[/tminus]

Please note that the real deadline is likely something between Aug. 8 and Aug. 15.

Also, please note that if and when the US hits the debt ceiling we will not have a “default”. Nor will the nation lack the fundamental capacity to pay its bills — as of this writing T-bill interest rates are low (i.e. prices are high, and rising). Rather, due to an utterly artificial block by the Congress, the US will not have the cash on hand to pay all its obligations. As a result some obligations such as monies due by contract or monies due by legislation, but almost certainly not bond debt, will not be paid on schedule. It’s as if you maxed out a low-interest credit card because you were not willing to pick up the phone and ask for a credit increase from a lender ready willing and able to give it. And you need the credit because you won’t do any of the obvious things that would raise the money you have already promised to spend.

Finally, note that there is a pretty persuasive argument that the structure of the Social Security trust fund allows an easy work-around the debt ceiling so that Social Security beneficiaries (unlike Veterans, Medicare, Medicaid, and others) can continue to be paid regularly an in full via a procedure that is not subject to the debt limit. (To make a long story short the SSA Trustees redeem their special Treasury bonds, which are counted in the debt limit, thus lowering the nation’s indebtedness. This allows Treasury to sell more bonds to the public, getting cash to make the Social Security payments.)

I imagine that in the run-up to World War I, many sensible people in the mobilizing countries fully expected that rationality would prevail and there would not be actual shooting.

Here’s a great infographic on the debt.

I also recommend the Cumulative Debt in % of GDP chart for recent administrations. Bush beats Obama and Reagan, although I think Obama would probably be larger if one were to normalize for the length of his term. Clinton is a negative number as he was retiring debt — things would be so much better right now if GW hadn’t gone and squandered our money. And started a war of choice. And tortured people. (None of which excuses Obama’s Hooveristic tendency on the economy, the extension of the wars plus the start of a new one, the drone-murder of US citizens abroad, and the rather muted end of torture.)

Source: Econbrowser: Graphic of the Day: Who Borrowed? Who Loaned? via Coral Gables Watch, US Govt Borrowing–Guess Who Borrowed The Most??