Strengthening Constitutional Self-Government

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Default Warnings Overblown

Obama Administration officials and Members of Congress continue to warn us that when we reach the debt ceiling on August 2nd, we will default on our debt obligations. Moody's Investors Service, one of these obnoxious credit ratings agencies that is given far more influence over world markets than it probably should have, announced that it has put the U.S. Treasury ratings on review for a downgrade in the wake of the government's continued failure to reach a deal. Things probably were not helped today when President Obama walked out of a negotiating meeting with Congressional leadership and Majority Leader Cantor said that all progress in negotiations had been completely erased.

To emphasize, reaching the debt limit does not mean we instantly default. We will still have the money to pay off what we owe. However, we will not have money to run most other things in government, so it would still be painful. If it came down to it, though, we can (and arguably by the 14th Amendment must) continue to meet our loan obligations. Default on our debt would be a purely political choice by the government, not an automatic one. Cries of default are just political scare tactics that are making the markets panic early.
Categories > Economy

Discussions - 3 Comments

Your point?

Steve, try Karl Rove on the topic:

He says that President Obama owns the issue.

"The Bipartisan Policy Center, a Washington think tank, projects that the government will receive $172 billion in revenues between Aug. 3 and Aug. 31, but it is on the hook to spend $306 billion, leaving a shortfall of $134 billion...

The $172 billion in revenues collected over the rest of the month can pay the $29 billion interest charges on the national debt, Social Security benefits ($49 billion), Medicaid and Medicare ($50 billion), active duty military pay ($2.9 billion), Department of Defense vendors ($31.7 billion), IRS refunds ($3.9 billion), and about a quarter of the $12.8 billion in unemployment checks due that month.

There will, however, be no cash for highway construction, no checks for federal workers or retirees, no agriculture payments, no open national parks."

Who is going to buy our debt if we insist on making it bigger and doing nothing to reduced our rate of spending? Richard Reeb offers a great list of suggestions for that in a comment below:

Our president refuses to do the hard work necessary to keep the nation running well. Blame that our debt is as massive as it is falls to him, given the stimulus, health care proposals and an insistence on spending more in order to save, which any housewife can tell you just does not work. Back to Karl Rove,

"Mr.Obama's "untouchable"list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals."

Who is not being the responsible adult? Terrifying seniors over Social Security checks or military wives over pay is vicious demagoguery. He has no solution, makes no solid proposals, was hoping to kick this can down the road one more time. How he can do that and be re-elected is beyond me, but if he plays the politics right and eats the rich or does other things that buy him time, especially through shifting blame, he might get by this crisis, but the rest of the nation won't.

The hope and change dude in the White House is nothing but a petulant child. Stanely Ann Dunham ought to be smack for raising such a little brat.

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