Our government doesn’t budget the way you or we do, or the way most businesses do, or the way any normal organization or institution that wants to survive does. Normally, people or institutions budget by balancing their realistically anticipated expenditures with their realistically anticipated income. There is really no justification for any other budgeting rationale. Sometimes we budget some debt to cover those needed expenses that may exceed our anticipated income for some period of time. The amount of debt we budget in always limited by our understanding that, sooner or later, we must be able to pay back what we borrow as well as the interest our creditors will require to lend us the money we need. The government doesn’t have to think this way (it should, but it doesn’t have to) because it, and it alone, can simply print any money it needs to pay its current bills and to pay its creditors. It can do this indefinitely as long as creditors are willing to lend it money. And therein lies the rub. Creditors may not be willing to lend indefinitely should they perceive that we could not pay them back, or only pay them back by devaluing the money (printing more of it) we use to retire our debt. We can have a party (a treasury auction) to which no lenders come, at least not at a price we can afford.
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