The Cycle of Debt
If Jane uses credit card B to pay off the balance on credit card A, then charges more on card A because Jane is still spending more than her income every month, we know that Jane will soon max out both credit cards, she will be broke and headed for Bankruptcy court.
“Jane” is the Federal government. For decades it has been borrowing new money to service old debt, plus borrowing a little more because it consistently spends more than it takes in. Back in May the government maxed out its credit cards, i.e., it hit the debt ceiling. Obama, Harry Reid and Nancy Pelosi are now demanding that their credit limit be increased so they can continue this march of folly. The credit card company, Speaker John Boehner and the House Republicans, are saying no to a permanent increase in the debt ceiling and will only grant a temporary increase if current spending is brought under control. The Democrats howl and cry fowl. The want to not only keep spending to their heart’s delight, they want a pay raise from taxpayers and they want to keep borrowing — so they can spend even more. The spending binge is just too much fun to let it ever stop. Even if Republicans are right that this can’t go on forever, Democrats are determined to keep it going until forever comes.
Slate has prepared two simple graphs to show what has happened.