This Chart Destroys The 'Fox News' View Of The Debt Ceiling

A common view we’ve heard on Fox News is that breaching the debt ceiling wouldn’t mean a default, because the US has more tax revenue coming in every day than it has to pay in interest payments. So as long as you prioritised interest payments first, you should be fine not defaulting on the debt. Fox News political analyst Brit Hume was making this point on Twitter, as well.

There are three problems with this view.

One is that it’s of a legally dubious nature. It’s unclear what law enables Treasury to prioritise debt payments over any other payments it needs to make (military, Social Security, etc.).

Two is that it technically may impossible. People who know how the Treasury payment system works argue that there’s no way to just turn off other payments and prioritise interest payments.

And three, although it’s true that on the whole Treasury has more money coming into it than it does in interest payments it needs to pay out, that’s not true every day.

There’s a lumpiness to tax revenues and interest payments, and as this chart from Goldman Sachs shows, by the middle of November, we’ll have a day when interest payments exceed the government’s revenue.

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