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To: Kennard

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?


30 posted on 10/08/2013 11:15:40 AM PDT by Stingray51
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To: Stingray51
Does this make sense to you or are you saying something else?

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

33 posted on 10/08/2013 11:40:15 AM PDT by Praxeologue
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