Obama’s Washington-knows-best attitude was on display Monday night when he said most Americans outside of Washington had probably never heard the term “debt ceiling” before.
The only way Americans could possibly be unfamiliar with the term is if they had tuned out the president for the last few weeks. The president and his Treasury secretary, Tim Geithner, have taken every opportunity to fan the default flames, even though such an outcome is highly unlikely.
The Treasury is not going to default in August, nor in subsequent months for that matter. An estimated $172.4 billion of tax revenue next month is more than enough to cover the $29 billion of August interest payments. For fiscal 2011, which ends Sept. 30, the Treasury is expected to take in revenue of $2.2 trillion, while only $214 billion is needed to service the debt.
And even if it lacks the authority for new borrowing, the Treasury can continue to roll over existing debt.
Instead of dangling the default threat every chance they get, Obama and Geithner should be telling the world that the U.S. has every intention, and the resources, to meet its debt obligations. They should shout it from the rooftops, put a banner on the Treasury Direct website, and use the Sunday talk shows to reassure investors, not frighten them.