Raising the National Debt Limit

Obama wants to raise the national debt limit so that the government can pay its bills.

What he means is that he wants to borrow money so that the government can pay bills which are due for payment now. The advantage of this is that in paying bills presently due, such as Social Security payments, unemployment insurance, and Medicare, there will be no immediate default.

However, the disadvantage is that such borrowing is an additional bill, which ultimately has to be repaid. In addition, the amount of repayment (the bill) will be higher because of deficit budgeting and because of required interest on the new debt. In simpler terms, the government will be digging itself deeper into the financial hole in which it is now.