When one’s credit card limit is reached, one can no longer charge and credit score compromised unless one can show additional stream of income and excellent payment history. One can then apply for a higher credit limit and can again spend. Similarly, governments operate on revenue and debt and when limit or ceiling is reached, it can no longer spend unless it can tax, borrow, or cut obligations to continue operating. Governments are also subject to credit ratings depending on their ability to generate revenue and to borrow. States and municipalities have actually lost their credit rating and became insolvent or had to make drastic spending cuts to continue to operate.
The federal government is subject to the same scenario except for one exception: It sets its own debt limit and has, in theory, an unlimited line of credit because of its unlimited taxing authority on the largest domestic economy and a currency that is the standard of the world economy. U.S. treasury is considered the safest investment to any lender and it is for this same reason that the federal government can, in theory, possibly mint a trillion dollar platinum coin to pay for its obligations.
The problem is that there is no such thing as unlimited line of credit. The line in the sand of the political divide is between those who believe in a smaller government and those who believe in an active government to promote general welfare. It is between those who believe in low taxes yet have pet expenditures like military buildup and those who believe the government with its vast resources should focus on justice and equality with common defense a lower priority.
Whatever one’s political proclivity, one should only look at one’s credit card situation and contact one’s legislator and insist that the only way to maintain a good credit score i.e. credit rating, is a combination of additional revenue and reduced spending. Debt is not unlimited and priorities must be set and agreed to - justice, domestic tranquility, common defense, and general welfare, not necessarily in that order.
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