Posted on 10/07/2013 11:29:25 PM PDT by Cincinatus' Wife
My latest piece explains why the business world's expectations on the shutdown crisis -- that the backlash might make Republicans ready to deal on the debt limit -- was folly. Republicans believe that the sequestration fallout, and the shutdown fallout thus far, have been goosed by Barack Obama in an attempt to maximize the damage to their party. That makes them less likely, not more likely, to raise the debt limit in a hurry. The theory that the government could hit the limit then just prioritize spending on debt service, troops and entitlements is widely accepted, more than Democrats like to think.
[snip]
"You gotta take Jack Lew at his word, but from the standpoint of [whether] that puts us in default, technically, no," said North Carolina Sen. Richard Burr. "The federal government still has about 85 percent of the revenues we spend coming in, and all they have to do is prioritize that they're gonna pay debt service first. And that leaves some prioritization for federal programs. I'm not as concerned as the president is on the debt ceiling, because the only people buying our bonds right now is the Federal Reserve. So it's like scaring ourselves."
(Excerpt) Read more at slate.com ...
Don’t take my word for it: http://bipartisanpolicy.org/blog/2013/10/08/bpc%E2%80%99s-x-date-window-narrows-economic-risks-grow
There you go again. You are using the exact language obomber wants you to use.
Do you really not see the difference between default on the debt and default on obligations ?
No, there is no difference.
Don't shoot the messenger.
redeeming debt does not increase total debt, therefore, no debt limit problem. so, no, you've got it wrong.
There may not be a difference in your mind, but there is in the 14th amendment. Plus, you aren't being shot, just your ideas.
What you're saying is like this: I have balloon note of $10K due on my truck, but I will buy a new truck and owe $10K on that, so my total indebtedness will not rise. OK, but how do I pay off the the balloon note before I get my new truck without $10K?
Think cash flow, not total indebtedness: to get the cash to pay off the notes, the US would first _borrow_ the payoff amount, get it?
Try this analogy. You are buying a house. You get laid off, but get unemployment. You can no longer make your house payment and the electric bill. So, you pay the house payment, but n0t the electric bill. Did you default on the house loan ?
You are right. It was that grand Republican Nixon who brought the EPA into existence. It was the Bush family Republicans who spoke the glories of the ‘new world order’. It is the likes of McCain and Norquist that remove the ordinary citizen from a Republican republic of the Founders.
My understanding is that debt interest payments require about 9% of what the government actually collects in taxes. Assuming that is correct, my point was that the government should have enough money to make these payments without taking on additional debt. But because, as you point out, there is a gap - you put the monthly number at 60b — some otherwise required expenditures would have to be held up in order to prioritize the interest payments (and presumably other life or death necessary expenses such as Social Security and defense....). The issue is whether the President has the authority to prioritize payments as necessary to avoid default and make other critical payments as he deems necessary. I think he does have that authority and some people do not think he does (which would presumably mean that if the government falls even one penny short, it cannot pay anything to anyone). Does this make sense to you or are you saying something else?
I think we're have some fundamentally different assumptions about the process here: I know that tax revenues in this month are more than enough to pay off the interest due on the national debt this month.
But T-Bills come with maturity dates-- that means not only the interest but the principal is also due that month, and that (I think) is where the problem lies-- if we can't borrow more money to pay off the principal on the notes due when they are due the we are in default.
Now, that doesn't particularly bother me, because most of the 6 trillion borrowed in Obama's term went to his political supporters and through the Fed to the Wall Street banksters. So I don't see why I'm obligated to pay back money borrowed in my name as part of a fraudulent conveyance.
Its called float. Ever send out a check before the paycheck comes in? Businesses, individuals and governments do it.
Here is where our confusion lies: the interest payment that you refer to that is equal to 9% of revenues, is just that: interest only. On the principal side, you have redemptions of bonds and bills that fall due. These obligations must be replaced by an equivalent principal amount of new issuances, PLUS an extra $60 billion per month of new issuances to fund the ~$700 billion run rate on the current budget deficit. It is that additional $700B/year or $60B/month that cannot be issued unless the debt ceiling is increased. It's not like they can cut, say $10B/month. The Teasury cannot owe more than $15.* trillion under the current debt ceiling. Treasury indebtedness cannot legally exceed the debt ceiling by so much as one dollar.
A detailed, current explanation of this is located here
They only way they could do that is to get the Fed to buy the T-Bill held by someone else first and then buy another T-Bill from the US once the first is “paid-off” with newly printed dollars.
So a few billion in cost to fight this monstrosity? You bet! That's an easy decision.
Thank you, I will look at the linked information. Yes, I am saying that the President would have to prioritize payments to the tune of tens of billions of dollars each month until the debt ceiling is increased. And yes, that would presumably have a massive effect on the economy. I don’t think he would have any choice in the matter except to determine which otherwise required expenditures not to pay. I am not sure this is matter of confusion more than just different views about whether a) the President has such authority, and/or b) whether this is at all practical or whether the numbers are so high that this would be catastrophic for the economy. But I don’t think that failing to pay anything other than interest or maturing securities would be a “default”. How much of the budget beyond this is actual bills (for example, the government entered into a contract to pay someone a certain amount on a certain date) as opposed to other required expenditures, such as for entitlements or running the government or funding a program...? I don’t know the answer to that, and that could be a difficult distinction to draw in some cases, but I think that one of the disconnects in the media and among politicians in discussing this involves the meaning of “default”.
How does amending a document that is ignored help anything? A real new convention would try to dot all the eyes and cross all the teas and would look like the European "Constitution" with hundreds or thousands of pages.
The most important one restores a senate of the states, through repeal of the 17th Amendment.
His amendment proposals are structural. They cannot be gotten around through "living and breathing" nonsense.
Levin's Liberty Amendments, a Summary
Considering our government is renegade now, there is little to lose with a convention. Our framers gave us peaceful means to correct our mistakes, one that all the bare-knuckle, raw power of the consolidated government cannot stop.
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