As the debate intensifies between Democrats and Republicans on Capitol Hill over the debt ceiling, plenty of arguments are being made about what would happen if the two sides don’t reach an agreement by August 2nd.

President Obama even told CBS News on Tuesday (July 12), “I cannot guarantee that [Social Security] checks go out on August 3rd if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.” Treasury Secretary Tim Geithner has made similar warnings, saying that without a resolution the US sends a message that it might not meet its debt obligations.

But a number of Republicans say that doom and gloom warnings are overblown. Rep. Ron Paul (R-Texas), for example, has been calling for Congress to find a way, month by month, to spend only what the Treasury raises in revenue.

So without a solution in sight, what would happen if the August 2nd deadline passes? Would we have financial Armageddon? Would Grandma not get her Social Security check? Would cats start living with dogs?

Well, Kurt Brouwer, a financial advisor and business writer at marketwatch.com says this:

Despite all the rhetoric and posturing we see in the media and in Washington D.C., it is safe to say categorically that the U.S. Treasury will not default on its debt after August 2nd, even if the debt ceiling is not raised. Not only will the Treasury be able to pay interest on U.S. debt obligations, but there is money for other essential programs as well. However, there will be some serious cutting that has to happen because spending clearly exceeds revenues.

Brouwer goes on to tackle a number of questions about the debt ceiling debate with direct answers that — unlike most discussions on economics — will not make your eyes glaze over:

If we do not raise the debt ceiling by August 2nd, we will not default on Treasury obligations. Nor, will we have trouble making Social Security payments. However, there would be a big drop — roughly 44% — in government spending because that percentage represents the difference between government revenues which would be about $200 billion for the full month of August and $172 billion for August if we start counting after the first week when the deadline hits. Spending is slated to be over $300 billion that month.

As the old economist used to say, there is no such thing as a free lunch.

You can read Brouwer’s entire column by clicking here. There’s also some healthy debate over his opinions in the comments section.

And speaking of the deficit and what Congress can (and must) do about it, billionaire Warren Buffett made a good suggestion on CNBC last week:

I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3 percent of GDP, all sitting members of congress are ineligible for reelection.

You can click here for the entire CNBC interview with Buffett.

Finally, here’s a comment President Obama made the other day that somehow got past a number of reporters:

I don’t think the President did himself any favors with that soundbite. “Re-elect me so I can jack up your taxes in a year and a half!”

I’ve got a feeling that soundbite will end up in a GOP political ad between now and November of 2012.