The USA has a congressionally mandated debt ceiling of $8.184 trillion.
According to the Treasury, as of Thursday, January 26, our debt stands at $8,190,567,748,779.48.
http://www.publicdebt.treas.gov/opd/opdpenny.htm
So now what?
In what way is this a default, technical or otherwise?
I think the OP means that technically, Congress won’t allow more debt than $8.184 trillion, which means that it’s implicitly refusing to pay any more than that. Thus, if the debt is now higher than that, it’s defaulting on the difference. Whether that’s true or not is obviously up for debate, but that’s the reasoning I see.
What happens now is what happens every single other year.
Congress will pass a new debt ceiling resolution.
What if they don’t?
They will.
No, really, what if they don’t?
They will.
You know what I mean.
Nothing will happen. At some point they will pass the resolution. Until that time, nobody except pundits and thumbsuckers will care or notice.
Perhaps the constitution gets repo’d.
Not quite true. The government still has wiggle room until sometime in March that it can shift funds arounds and keep paying its bills. (Congress will “borrow” from the federal employees pension funds <PDF Warning!>, for example as they did in 2004. ) However, if the debt ceiling is not raised in time, watch the government begin to default on its bills. It will only become critical if the Domino Theory kicks in and the bill defaults start to cascade into more visible areas of the economy. Still, I would not be concerned, unless the politicians start to play games with the entire debt ceiling issue. Then I would get really worried.
A similar thing takes place when Congress does not pass a budget on time. By law, without funding the agency in question has to shut down. Congress has more often than not passed continuing resolutions to avoid that but it does happen. It’s not a pretty sight when it does happen. At some scheduled time during the day, a supervisor walks in and tells everyone the budget limit has been reached and Congress has failed to act. So go home. Now. It can get really dicey with the public. I recall several times in the past having to enter the public area of the office and announce that, “I’m sorry folks but Congress has failed to pass the budget for this agency by <insert date>. Until Congress passes the budget, we are ordered by the Washington office that this office is now closed and everyone must leave.” I’ve had people get in my face spitting chips (and more!) when that has happened. Yes, I understand they just travelled 50 miles on foot, walking in the snow, uphill all the way, to get here. “I’m sorry ma’am | sir. You should contact your Member of Congress.”
If the debt ceiling is not raised in time and Congress starts to play games, I bet similar scenarios will take place. The impact won’t be much unless the political debate really gets heated about the debt ceiling. If that happens, expect to see the nuclear option threatened – stopping social security and medicare payments. A government shutdown similar to what occurred in 1995, is always a possibility.
Well, that’s simply untrue. Amendment XIV, Section 4, of the US Constitution provides that the validity of the public debt of the United States shall not be questioned. Congress has no choice but to honor the debt.
There is no default. Default on a debt means something; it’s not just a word. It means that the United States has refused to pay a debt it incurred. If anyone alleges that this has happened… then name it. What debt, specifically, has the US defaulted upon?
Nationalization of the economy. Against everything America stands for.
Print more money. Total runaway inflation.
I’m too depressed to go on. 
But the Constition is so pre 9/11. 
There seems to be some confusion in this thread. Reaching a debt ceiling doesn’t mean that you’ve defaulted, it means that you can’t borrow any more. An inability to borrow will eventually force the government to default on maturing debt, but it doesn’t happen the moment the limit is reached.
As noted, the Treasury will first take evasive action by moving money around, and they’d get a respite in April when income tax checks roll in. If Congress still won’t raise the debt limit (yeah, right), we’d probably go into shutdown of all non-essential services as in 1995. If that still doesn’t cut it, they’d delay sending out Social Security checks and paychecks to remaining government employees (believe me, that will get attention). As a last resort, with the world falling apart, they’d fall into arrears on interest payments on government bonds and/or default on maturing principal. At that point, the debt limit might be struck down as an unconstitutional breach of the Fourteenth Amendment. I make no predictions, because things will never get that far.
What he said.
I was being caustic, but what he said is the same as what I said, except more in keeping with GQ.
In short, Congress will pass a new resolution. It would take a special-effects-movie-level disaster before that will change, and then we won’t care much about the debt either.
I’m sorry. I’m clearly not as intimately familiar with the Constitution as you are.
Treasury bill #GS7-2-179-46-6606-1.
according to this web-page, the issue in that case was a clerical error by the Treasury officials in calculating a discount on the bill. The Treasury eventually paid the amount in question (albeit not with interest), once it was clear an error had been made.
That is not default on a debt - that is an error about the calcuation of money owing under one particular debt instrument. How is that in any way related to the US federal government bumping up against the debt limit, which is the topic of the OP?
getting back to the premise of the OP, think about it in terms of your Visa card. You may have a debt limit of $5,000 on the card. You hit that debt limit. That means that unless the good folks at Visa bump up your limit, you can’t borrow any more money from them to buy stuff.
But that does not mean that you’ve defaulted on your debt. If the good folks at Visa phone you, and ask if you’re planning to pay the bill, and you say, “Yup. I’m still employed and I’ll be making monthly payments in excess of my mandatory minimum payment,” then everything’s hunky-dory. They certainly could not start to sue you, because you’re not in default - you’re paying off the debt according to the terms of your contract with Visa.
Answered succinctly by the esteemed Northern Piper.
Funny, but not in keeping with GQ, David.
samclem GQ moderator
It’s not, it was mostly a joke reply to the request for specifics, which I didn’t make clear. Sorry about that.
However, I think the link (which is to an excerpt from Landsburg’s textbook) does show default. A trivial matter due to error, certainly, and one eventually fixed through political pressure - but if the situation was as descibed, default nonetheless.
Just to add one important data point: there is a difference between total debt outstanding and the debt which is subject to the debt limit. Suffice it to say that the total amount of debt reported in the OP is not the same as the debt that is subject to the limit.
This is a prime reason why a widespread economic collapse has not happened yet, in addition to the Secretary of the Treasury being able to shift numbers around to forestall any imminent fiscal tsunami, as Duckster stated.