Rep. McClintock (R-CA) breaks down the debt crisis

The debt limit exists for a simple reason: to assure that public debt isn’t recklessly piled up without Congress periodically acknowledging it and addressing the spending patterns that are causing it. If a debt limit increase is supposed to be automatic, as the President suggests, there really is no purpose to it.

A new dimension has now appeared in this discussion. Unlike every one of his predecessors, this President has vowed that unless Congress unconditionally raises the debt limit, the United States will default on its sovereign debt.

But a failure to raise the debt limit would not by itself cause the nation to default. The Government Accountability Office has consistently held that the Treasury Secretary has “the authority to choose the order in which to pay obligations of the United States” to protect the nation’s credit. Such authority is inherent in the 1789 act that established the Treasury Department and entrusted it with the “management of the revenue” and the “support of public credit.” The affirmative duty of the Treasury Department to do so is underscored by the 14th Amendment.

Our revenues are more than ten times our debt payments, so paying the debt first to prevent a sovereign default is well within the financial ability of the federal government – and indeed, it is a fiscal imperative.

Earlier this year, the House passed HR 807, which not only explicitly requires the payment of the national debt in the case of an impasse over the debt limit, but even allows the President to exceed the debt limit itself in order to protect the nation’s credit.

Protecting the sovereign credit by prioritizing payments would mean delaying paying other bills – which is untenable, unthinkable and something much to be avoided. But it would not imperil the nation’s sovereign credit. Only the President can do that.

The House leadership met with the President last week and offered to extend the debt limit until November 22nd with no strings attached. The President refused. Senate Republicans offered a six month extension, but the Senate Democratic leader refused.

What the President threatens to do would be catastrophic and unprecedented. The full faith and credit of the United States is what gives markets the confidence to loan money to the federal government. Even a credible threat of default – exactly the kind the President is now making — could have dire consequences to a nation that now owes more than its entire economy produces in a year.

Republicans have miscalculated on two key assumptions: First, that the Democrats would negotiate the issues that divide the country; they have not. Second, that Democrats would seek to minimize the suffering caused by the impasse; they have not.

Given the ruthless and vindictive way the shutdown has been handled, I now believe that this President would willfully act to destroy the full faith and credit of the United States unless the Congress acquiesces to all of his demands, at least as long as he sees political advantage in doing so. His every statement and action is consistent with this conclusion.

If the Republicans acquiesce, the immediate crisis will quickly vanish, credit markets will calm and public life will return to other matters.

But a fundamental element of our Constitution will have been destroyed. The power of the purse will have shifted from the representatives of the people to the executive. The executive bureaucracies will be freed to churn out ever more outlandish regulations with no effective Congressional review or check through the purse. A perilous era will have begun, in which the President sets spending levels and vetoes any bill falling short of his demands. Whenever a deadline approaches, one house can simply refuse to negotiate with the other until Congress is faced with the Hobson’s choice of a shut-down or a default.

The nation’s spending will again dangerously accelerate, the deficit will again rapidly widen, and the economic prosperity of the nation will continue to slowly bleed away.

This impasse may have started as a dispute over a collapsing health program but it has now taken on the dimensions of a Constitutional crisis.

Yesterday in Washington, a group of America’s veterans rose up to take a stand against these constitutional usurpations. I believe the salvation of our nation now depends on the American people joining them.

This is the guy who should have been governor of CA instead of Arnie.

If not for the actions of the NRC, he would have been.

Indeed, many folks around these parts sided with The Taxinator claiming that Tom McClintock was unelectable in the face of his Democrat challenger.

These folks, and the NRC got what they wanted --A RINO at the helm of California instead of a fiscal and social conservative.

Of course, many of these same folks were quick to criticize the actions of the man they'd previously supported for Governator.

The rest, as they say, is history.

Tom does a good job as usual. Here is another look at the realities of the Debt limit:

The reality of a real debt limit:

http://www.freerepublic.com/focus/news/3076090/posts?page=1

The Debt Ceiling is the Law of the Land
redstate.com ^ | 10/6/13 | Daniel Horowitz
Posted on Monday, October 07, 2013 6:07:28 PM by cotton1706

Over the past few weeks, Democrats have indicated that they have no intention of negotiating over Obamacare, opting instead to shut down the government. They are justifying their obstinacy by asserting that Obamacare is the law of the land. Well, if that is the game they want to play, we should return the favor with the debt ceiling. The debt ceiling, pursuant to the Second Liberty Bond Act of 1917, is the law of the land. And it has been so for far longer than Obamacare.

Throughout this debate over funding Obamacare in the budget bill, House GOP leaders have stressed how the debt ceiling was the more appropriate means of fighting Obamacare. After all, it was “the next fight.” But as if on cue, some Republicans are already using the same Democrat talking points about the risk of default.

We are going to hear this erroneous talking point propagated by both parties over the next few weeks, so let’s put the myth to rest. The only way we default on the debt is if we fail to pay the interest on the public debt. According to the updated budget projection from the CBO, interest on the debt will be roughly $237 billion for 2014. Thanks to the short-term revenue benefits of the fiscal cliff and Obamacare tax hikes, the federal government is expected to rake in a record $3.042 trillion from the private economy this year.

Let’s engage in a simple math exercise. $3.042 trillion – $237 billion = $2.805 trillion. As long as the Treasury pays the first $237 billion in revenue to the shareholders of our debt, there will be no default, and we will have $2.805 trillion left to spend. Again, default is taken off the table. Discussion over.

What do you do with the remaining funds? You start funding core functions of government and those programs that people are already dependent on.

Social Security (retirement and disability) – $848 billion
Medicare – $505 billion
Medicaid – $298 billion
Defense – $582 billion
Veterans – $83 billion

Those expenditures account for roughly $2.3 trillion. The remaining half trillion can be prioritized as needed for other functions related to homeland security, national parks, or any other limited function.

Hence, the debt ceiling is a built-in balanced budget mechanism. If Democrats want to fund other functions of government, they need to commit to a balanced budget. If they want to fund the HHS and the IRS, they need to get rid of Obamacare. If they want to fund the EPA, they need to get rid of the war on coal.

The power of the purse manifest in the House of Representatives, in conjunction with the debt ceiling law, reflects democracy at work, especially with divided government. It’s time we stop peddling the myth of default, and start using our leverage to restore constitutional government and bring relief to those who are losing jobs and suffering from the high cost of living engendered by the harmful activities of the unconstitutional aspects of government.

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