The Tea Party Says Nothing Will Happen If We Default

[IlarMeilyr]

I agree that they should start acting responsibly, Ilar, but causing a default is irresponsible at this juncture since it will do more harm than good.

What is needed is to take the findings from all of the bipartisan committees that have come and gone regarding spending cuts and increased taxation and to pass that ASAP. Both sides won't be happy with that compromise but it is the responsible thing to do for the good of the nation.

And yes, you are right that they are folding like a cheap suit. Like all politicians they are spineless liars who really only give a hoot about themselves.

There is no "causing a default."

It is a dishonest alarmist TACTIC and nothing more.

Without raising our irresponsible debt "ceiling" another irresponsible farthing, there is still not one honest or valid reason why we could not pay our debts on time as and when due.

How do you pay about 3.2 trillion of legitimate expenditures with only 2.5 trillion of income, Ilar?

And thanks for the OT

Show us the real numbers.

The debt consists of principle and interest payments. The principle is not fully due on any given month. The interest due on any given month is just a fractional number of a fractional number.

The "solution" is actually pretty straightforward and damn simple.

• PAY the interest due, as due, as the first order of business.
  
• NEXT, when possible, pay down the principle at least a tiny portion every time you make a payment.
  
• THEN, with what is left, attend to the other legitimate expenditures.
  
• In order to do the last part, one might have to start cutting spending.

I am gonna go WAY the fuck out on a limb here and suggest (with all due respect to the Congress-hacks) that there are innumerable areas of government that can and should be cut -- post haste. Like, to get things rolling: a federal department of education. Slash and burn it.

 

[Derideo_Te]

There is no "causing a default."

It is a dishonest alarmist TACTIC and nothing more.

Without raising our irresponsible debt "ceiling" another irresponsible farthing, there is still not one honest or valid reason why we could not pay our debts on time as and when due.

How do you pay about 3.2 trillion of legitimate expenditures with only 2.5 trillion of income, Ilar?

And thanks for the OT

Show us the real numbers.

The debt consists of principle and interest payments. The principle is not fully due on any given month. The interest due on any given month is just a fractional number of a fractional number.

The "solution" is actually pretty straightforward and damn simple.

• PAY the interest due, as due, as the first order of business.
  
• NEXT, when possible, pay down the principle at least a tiny portion every time you make a payment.
  
• THEN, with what is left, attend to the other legitimate expenditures.
  
• In order to do the last part, one might have to start cutting spending.

I am gonna go WAY the fuck out on a limb here and suggest (with all due respect to the Congress-hacks) that there are innumerable areas of government that can and should be cut -- post haste. Like, to get things rolling: a federal department of education. Slash and burn it.

Firstly let me clarify that my figures are only estimates because the 2013 budget shows 3.9 trillion in expenditures vs 2.9 trillion income. Deficit of 0.9 trillion. However that does not account for the sequester which cut spending by about 10% across the board.

Future spending can most definitely be cut and there is no argument there. The problem is the current spending already on the books for which the bills are due. Failure to pay when a legal amount owed is due meets the definition of default. If you had a business providing services to the government and they failed to pay you per the contracted due date they would legally be in default. Those dates cannot be moved. At some point there is simply no money to pay those bills and the nation goes into default.

 

[Lonestar_logic]

The GOP approval is down to 24% already. That is rock bottom. Wall St is threatening to pull funding from the RNC for the next election. Donors have already closed up their check books and said not a penny more until you rein in the Tea Party. The GOP knows that it needs to cut a deal now or face a major loss in 2014. So there is no need to project when the facts are all showing that Republicans are about to suffer a major setback one way or the other.

So? It's not like Congress has enjoyed high approval ratings in recent history.

All you have is speculation.

What I have are facts. This is the lowest ever recorded approval rating for the GOP. Wall St and the donor base pulling out are reported in the media. The latest offer of the CR without strings means that the Republicans are caving. They have a choice to make. They can take a humiliating defeat now on the government shutdown and default followed by a beating in 2014 by the voters or they can give in to the Dems now and try to salvage whatever they can for 2014.

Mere speculation.

 

[IlarMeilyr]

How do you pay about 3.2 trillion of legitimate expenditures with only 2.5 trillion of income, Ilar?

And thanks for the OT

Show us the real numbers.

The debt consists of principle and interest payments. The principle is not fully due on any given month. The interest due on any given month is just a fractional number of a fractional number.

The "solution" is actually pretty straightforward and damn simple.

• PAY the interest due, as due, as the first order of business.
  
• NEXT, when possible, pay down the principle at least a tiny portion every time you make a payment.
  
• THEN, with what is left, attend to the other legitimate expenditures.
  
• In order to do the last part, one might have to start cutting spending.

I am gonna go WAY the fuck out on a limb here and suggest (with all due respect to the Congress-hacks) that there are innumerable areas of government that can and should be cut -- post haste. Like, to get things rolling: a federal department of education. Slash and burn it.

Firstly let me clarify that my figures are only estimates because the 2013 budget shows 3.9 trillion in expenditures vs 2.9 trillion income. Deficit of 0.9 trillion. However that does not account for the sequester which cut spending by about 10% across the board.

Future spending can most definitely be cut and there is no argument there. The problem is the current spending already on the books for which the bills are due. Failure to pay when a legal amount owed is due meets the definition of default. If you had a business providing services to the government and they failed to pay you per the contracted due date they would legally be in default. Those dates cannot be moved. At some point there is simply no money to pay those bills and the nation goes into default.

Fallacy number 1:

We have no budget.

Harry Reid hasn't permitted us to even HAVE a budget for years.

And I repeat:

SHOW me the figures. Links and e'ething.

 

[IlarMeilyr]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

 

[Lonestar_logic]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

I posted that very link and he ignored it.

 

[IlarMeilyr]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

I posted that very link and he ignored it.

Sorry I missed your post the first time.

I am interested in seeing some kind of validation for the alarmist chatter that a refusal to raise the debt ceiling somehow equates with "default."

It appears not to be at all true.

 

[Lonestar_logic]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

I posted that very link and he ignored it.

Sorry I missed your post the first time.

I am interested in seeing some kind of validation for the alarmist chatter that a refusal to raise the debt ceiling somehow equates with "default."

It appears not to be at all true.

That's what I've been saying from the start but de tiaria (sp) doesn't want to hear the truth.

He's comfortable repeating the same liberal lies.

 

[eflatminor]

The Tea Party Says Nothing Will Happen If We Default

Why in the world would we default when tax revenues are more than 10 times that which is necessary to make our interest payments on the federal debt?

 

[Derideo_Te]

Show us the real numbers.

The debt consists of principle and interest payments. The principle is not fully due on any given month. The interest due on any given month is just a fractional number of a fractional number.

The "solution" is actually pretty straightforward and damn simple.

• PAY the interest due, as due, as the first order of business.
  
• NEXT, when possible, pay down the principle at least a tiny portion every time you make a payment.
  
• THEN, with what is left, attend to the other legitimate expenditures.
  
• In order to do the last part, one might have to start cutting spending.

I am gonna go WAY the fuck out on a limb here and suggest (with all due respect to the Congress-hacks) that there are innumerable areas of government that can and should be cut -- post haste. Like, to get things rolling: a federal department of education. Slash and burn it.

Firstly let me clarify that my figures are only estimates because the 2013 budget shows 3.9 trillion in expenditures vs 2.9 trillion income. Deficit of 0.9 trillion. However that does not account for the sequester which cut spending by about 10% across the board.

Future spending can most definitely be cut and there is no argument there. The problem is the current spending already on the books for which the bills are due. Failure to pay when a legal amount owed is due meets the definition of default. If you had a business providing services to the government and they failed to pay you per the contracted due date they would legally be in default. Those dates cannot be moved. At some point there is simply no money to pay those bills and the nation goes into default.

Fallacy number 1:

We have no budget.

Harry Reid hasn't permitted us to even HAVE a budget for years.

And I repeat:

SHOW me the figures. Links and e'ething.

We do have a budget. A CR is simply a way of taking the exact same budget from the previous year and repeating it for the current year. We don't have a "new" budget but we most definitely have a budget.

2013 United States federal budget - Wikipedia, the free encyclopedia

Total revenues and spending[edit]

The Obama administration's February 2012 budget request contained $2.902 trillion in receipts and $3.803 trillion in outlays, for a deficit of $901 billion.[38] The budget projects a reduction in the deficit to $575 billion by 2018 before rising to $704 billion by 2022.[39]
Total receipts (in billions of dollars)::
Item Requested[38]
Individual income tax 1,359
Social Security and other payroll tax 959
Corporate income tax 348
Excise tax 88
Customs duties 33
Estate and gift taxes 13
Deposits of earnings and Federal Reserve System 80
Other miscellaneous receipts 21
Total 2902
Total outlays by agency (in billions of dollars):
Agency Discretionary Mandatory Total
Department of Defense including Overseas Contingency Operations 666.2 6.7 672.9
Department of Health and Human Services including Medicare and Medicaid 80.6 860.3 940.9
Department of Education 67.7 4.2 71.9
Department of Veterans Affairs 60.4 79.4 139.7
Department of Housing and Urban Development 41.1 5.2 46.3
Department of State and Other International Programs 56.1 3.4 59.5
Department of Homeland Security 54.9 0.5 55.4
Department of Energy 35.6 –0.6 35.0
Department of Justice 23.9 12.7 36.5
Department of Agriculture 26.8 127.7 154.5
National Aeronautics and Space Administration 17.8 –0.02 17.8
National Intelligence Program 52.6 0 52.6
Department of Transportation 24.0 74.5 98.5
Department of the Treasury 14.1 96.2 110.3
Department of the Interior 12.3 1.2 13.5
Department of Labor 13.2 88.4 101.7
Social Security Administration 11.7 871.0 882.7
Department of Commerce 9.5 –0.5 9.0
Army Corps of Engineers Civil Works 8.2 –0.007 8.2
Environmental Protection Agency 9.2 –0.2 8.9
National Science Foundation 7.4 0.2 7.5
Small Business Administration 1.4 –0.006 1.4
Corporation for National and Community Service 1.1 0.007 1.1
Net interest 246 0 246
Disaster costs 2 0 2
Other spending 34.0- 61.7 29.5
Total 1,510 2,293 3,803

 

[Derideo_Te]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

 

[IlarMeilyr]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

What bills which are due and owing will be left unpaid? Be specific. Links required.

And which "bills" (other than debt servicing payments due) cannot be paid if we don't raise the debt ceiling limit?

And why would there not be other options available to us other than defaulting on such payments?

We can't cut whole departments and/or programs?

 

[Lonestar_logic]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

Inconvenient as they may be, some facts are in order. The fiscal 2013 debt service for the twelve months ending September 30 will be somewhere around $420 billion. (Per the Bureau of Fiscal Service the actual figure of 11 months through August was just under $396 billion). IRS revenues for the calendar 2012 tax year will probably be around $2.3 trillion. That equates to over a five and a half times debt service coverage. So having enough money is not even close to the issue. There has been some discussion of what some are naming “prioritization of payments”.

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

This entire thread was about defaulting on the debt. You made it into an entirely different argument that no one but you is making.

 

[Derideo_Te]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

What bills which are due and owing will be left unpaid? Be specific. Links required.

And which "bills" (other than debt servicing payments due) cannot be paid if we don't raise the debt ceiling limit?

And why would there not be other options available to us other than defaulting on such payments?

We can't cut whole departments and/or programs?

You can't refuse to pay your electricity bill after you have already used the electricity, Ilar. That service has already been rendered and you have a legal obligation to pay for what you received. If you don't pay it on time you are in default.

The same principle applies to 100% of all of the bills in the budget. They are legal obligations. Failure to pay a single one is a default. Which bills won't be paid is yet to be determined. The Treasury sends out millions of payments. Which ones won't be paid after the money runs out will depend upon the order in which they are processed but there is no way to selectively pay some and not others. The system isn't set up that way.

The other option would be to print money to pay the bills. That would cause Hyper Inflation and crash the currency markets. The savings of the elderly would be wiped out and consumers would lose their purchasing power as salaries failed to keep up with inflation. The economy would fall into a severe recession.

Yes, we can cut "whole departments and/or programs" but that is FUTURE spending. CURRENT spending is a legal obligation that must either be paid or the nation goes into default. There is no way around that as a "short term fix".

 

[Derideo_Te]

Now, I'll grant you, I am not an economist.

But many of the folks at FORBES are.

Let us see what they report:

EXCERPTED from:
The U.S. Debt Ceiling Fallacy: Agreement Or Not, There Will Be No Default - Forbes

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

This entire thread was about defaulting on the debt. You made it into an entirely different argument that no one but you is making.

You inability to comprehend what default means is duly noted. Have a nice day.

 

[IlarMeilyr]

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

What bills which are due and owing will be left unpaid? Be specific. Links required.

And which "bills" (other than debt servicing payments due) cannot be paid if we don't raise the debt ceiling limit?

And why would there not be other options available to us other than defaulting on such payments?

We can't cut whole departments and/or programs?

You can't refuse to pay your electricity bill after you have already used the electricity, Ilar. That service has already been rendered and you have a legal obligation to pay for what you received. If you don't pay it on time you are in default.

The same principle applies to 100% of all of the bills in the budget. They are legal obligations. Failure to pay a single one is a default. Which bills won't be paid is yet to be determined. The Treasury sends out millions of payments. Which ones won't be paid after the money runs out will depend upon the order in which they are processed but there is no way to selectively pay some and not others. The system isn't set up that way.

The other option would be to print money to pay the bills. That would cause Hyper Inflation and crash the currency markets. The savings of the elderly would be wiped out and consumers would lose their purchasing power as salaries failed to keep up with inflation. The economy would fall into a severe recession.

Yes, we can cut "whole departments and/or programs" but that is FUTURE spending. CURRENT spending is a legal obligation that must either be paid or the nation goes into default. There is no way around that as a "short term fix".

Nobody is contending that we can refuse to pay our utility bills.

What I have repeatedly asked you is to back up what you are claiming.

There is no official US budget. (Fucking Reid.) So where do you get your figures?

Link us up.

I'd like it broken down a little tiny bit. Maybe two links: one for borrowing debts with principle and interest. And another for all the other obligations we owe on a monthly basis.

 

[Lonestar_logic]

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

This entire thread was about defaulting on the debt. You made it into an entirely different argument that no one but you is making.

You inability to comprehend what default means is duly noted. Have a nice day.

You've proven several pages back that you don't know the difference in defaulting on the debt and defaulting on the other BS you brought up. And you still haven't proved that we are going to or even would default on anything much less the debt.


All you have is speculative bullshit!!!


You're dismissed!

 

[IlarMeilyr]

Apples and oranges, Ilar. Furthermore LS failed to comprehend my response which is not the same thing as ignoring it. No one is arguing about the ability to pay the interest on the debt.

A default will occur if a single legitimate bill fails to be paid when due. In other words the CR that extended the budget into 2013 requires that all money in the budget must be paid in accordance with the due dates. Missing a single payment, no matter how small is a default. There is simply no way to get around the fact that the amounts that must be paid is for goods and services already provided to the US government.

The excerpt from Forbes is misleading because is only talks about the interest on the national debt. Even if that is paid in full it won't prevent the US from falling into default on the remaining legal obligations in the budget.

This entire thread was about defaulting on the debt. You made it into an entirely different argument that no one but you is making.

You inability to comprehend what default means is duly noted. Have a nice day.

That's not fair.

There are debts owed due to borrowing (requiring the payment of principal and interest) and other kinds of debts, such as the duty to pay pursuant to contractual obligations.

That bastion of subsidized modern American liberalism, National Public Radio (NPR) addresses the topic of "default" in a very specific way (along the lines of the doom-saying preached by the Obama Administration and the shrill liberal Democrats):

Here are questions and answers about the government's borrowing limit:

Q. What exactly is it?

A. The borrowing limit is a cap on how much debt the government can accumulate to pay its bills. The government borrows in most years because its spending has long exceeded its revenue. The first borrowing limit was enacted in 1917. Since 1962, Congress has raised the borrowing limit 77 times. It now stands at $16.7 trillion.

Q. When will we reach the limit?

A. The national debt actually reached the limit in May. Since then, Treasury Secretary Jacob Lew has made accounting moves to continue financing the government without further borrowing. But Lew says those measures will be exhausted by Thursday. The government will then have to pay its bills from its cash on hand — an estimated $30 billion — and tax revenue.

Q. So what happens after Thursday?

A. The government could pay its bills for a few days. But sometime between Oct. 22 and Oct. 31, the cash on hand and tax revenue wouldn't be sufficient, according to the Congressional Budget Office. The date isn't exact because it's impossible to foresee precisely how much revenue the government will receive and when.

Q. When it runs out of cash, does the government default?

A. No, not right away. A default would occur if the government fails to make a principal or interest payment on any of its Treasurys. The first interest payment after Thursday's deadline is a $6 billion payment due Oct. 31.

Many experts think that to avoid a default, Treasury would make payments on the debt its top priority.

"We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact," says Moody's Investors Service, a credit rating agency.

But that is the subject of intense dispute in Washington. The House has approved a bill to require such "prioritization." The Senate hasn't passed it, though. And President Barack Obama has threatened to veto it.

Without an increase in the borrowing limit, the government couldn't pay other obligations on time, such as Social Security benefits, bills from government contractors and Medicare reimbursements. Those payments are also legal obligations, Lew argues, and failure to pay them would essentially be equivalent to a default.

In any case, making some payments and not others is harder than it might sound. Treasury makes roughly 100 million payments a month. Nearly all are automated. Lew says the Treasury's computer systems aren't equipped to choose some and not others among all those outgoing checks.

And without cash in reserve, any minor glitch could cause Treasury to miss a debt payment — and default.

"Treasury would do everything in their power to not miss a debt payment," says Donald Marron, an economist at the Urban Institute and a former economic adviser to President George W. Bush. "But when you're in untested waters under a great deal of stress, bad things happen."

Q. What other problems might be raised by prioritization?

A. Consider the legal and political obstacles. The government is legally obligated to pay its contractors. If not, the contractors could sue for non-payment. And how long would members of Congress stand by as Treasury holders in China and other nations were paid interest, while payments to U.S. veterans and Social Security recipients were delayed?

Q. How would investors react if the government made its interest payments but fell behind on other obligations?

A. Badly, most economists say. If the government couldn't pay veterans' benefits, federal employee salaries or other bills, investors would almost certainly demand higher interest rates at future Treasury auctions. That would drive up the cost to taxpayers of servicing the government's debt.

A failure to pay any obligation "would severely damage perceptions of our creditworthiness," says David Kelly, chief global strategist at JPMorgan Funds.

Q&A: What Happens If US Breaks Borrowing Limit? : NPR

^ NOTE: they do get around (eventually) to including the "other" obligations (like paying contractors), but they spent the lion's share of their time, up front, discussing the other kind of debt (borrowing and principal and interest). And they sure as heck DID focus primarily the borrowed kind of obligation. And they do make more than a passing mention of "prioritizing" the debt.

All in all, it makes for a compelling argument that the President should stop attempting to make a political game of this serious business. Of course, they would be the first to deny that implication.

 

[Derideo_Te]

What bills which are due and owing will be left unpaid? Be specific. Links required.

And which "bills" (other than debt servicing payments due) cannot be paid if we don't raise the debt ceiling limit?

And why would there not be other options available to us other than defaulting on such payments?

We can't cut whole departments and/or programs?

You can't refuse to pay your electricity bill after you have already used the electricity, Ilar. That service has already been rendered and you have a legal obligation to pay for what you received. If you don't pay it on time you are in default.

The same principle applies to 100% of all of the bills in the budget. They are legal obligations. Failure to pay a single one is a default. Which bills won't be paid is yet to be determined. The Treasury sends out millions of payments. Which ones won't be paid after the money runs out will depend upon the order in which they are processed but there is no way to selectively pay some and not others. The system isn't set up that way.

The other option would be to print money to pay the bills. That would cause Hyper Inflation and crash the currency markets. The savings of the elderly would be wiped out and consumers would lose their purchasing power as salaries failed to keep up with inflation. The economy would fall into a severe recession.

Yes, we can cut "whole departments and/or programs" but that is FUTURE spending. CURRENT spending is a legal obligation that must either be paid or the nation goes into default. There is no way around that as a "short term fix".

Nobody is contending that we can refuse to pay our utility bills.

What I have repeatedly asked you is to back up what you are claiming.

There is no official US budget. (Fucking Reid.) So where do you get your figures?

Link us up.

I'd like it broken down a little tiny bit. Maybe two links: one for borrowing debts with principle and interest. And another for all the other obligations we owe on a monthly basis.

I provided the budget link in post #210. It is broken down by income and expenditures. Line items for all agencies and the net interest on the debt.

FYI we don't pay down any principle on the debt.

 

[Derideo_Te]

This entire thread was about defaulting on the debt. You made it into an entirely different argument that no one but you is making.

You inability to comprehend what default means is duly noted. Have a nice day.

That's not fair.

There are debts owed due to borrowing (requiring the payment of principal and interest) and other kinds of debts, such as the duty to pay pursuant to contractual obligations.

That bastion of subsidized modern American liberalism, National Public Radio (NPR) addresses the topic of "default" in a very specific way (along the lines of the doom-saying preached by the Obama Administration and the shrill liberal Democrats):

Here are questions and answers about the government's borrowing limit:

Q. What exactly is it?

A. The borrowing limit is a cap on how much debt the government can accumulate to pay its bills. The government borrows in most years because its spending has long exceeded its revenue. The first borrowing limit was enacted in 1917. Since 1962, Congress has raised the borrowing limit 77 times. It now stands at $16.7 trillion.

Q. When will we reach the limit?

A. The national debt actually reached the limit in May. Since then, Treasury Secretary Jacob Lew has made accounting moves to continue financing the government without further borrowing. But Lew says those measures will be exhausted by Thursday. The government will then have to pay its bills from its cash on hand — an estimated $30 billion — and tax revenue.

Q. So what happens after Thursday?

A. The government could pay its bills for a few days. But sometime between Oct. 22 and Oct. 31, the cash on hand and tax revenue wouldn't be sufficient, according to the Congressional Budget Office. The date isn't exact because it's impossible to foresee precisely how much revenue the government will receive and when.

Q. When it runs out of cash, does the government default?

A. No, not right away. A default would occur if the government fails to make a principal or interest payment on any of its Treasurys. The first interest payment after Thursday's deadline is a $6 billion payment due Oct. 31.

Many experts think that to avoid a default, Treasury would make payments on the debt its top priority.

"We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact," says Moody's Investors Service, a credit rating agency.

But that is the subject of intense dispute in Washington. The House has approved a bill to require such "prioritization." The Senate hasn't passed it, though. And President Barack Obama has threatened to veto it.

Without an increase in the borrowing limit, the government couldn't pay other obligations on time, such as Social Security benefits, bills from government contractors and Medicare reimbursements. Those payments are also legal obligations, Lew argues, and failure to pay them would essentially be equivalent to a default.

In any case, making some payments and not others is harder than it might sound. Treasury makes roughly 100 million payments a month. Nearly all are automated. Lew says the Treasury's computer systems aren't equipped to choose some and not others among all those outgoing checks.

And without cash in reserve, any minor glitch could cause Treasury to miss a debt payment — and default.

"Treasury would do everything in their power to not miss a debt payment," says Donald Marron, an economist at the Urban Institute and a former economic adviser to President George W. Bush. "But when you're in untested waters under a great deal of stress, bad things happen."

Q. What other problems might be raised by prioritization?

A. Consider the legal and political obstacles. The government is legally obligated to pay its contractors. If not, the contractors could sue for non-payment. And how long would members of Congress stand by as Treasury holders in China and other nations were paid interest, while payments to U.S. veterans and Social Security recipients were delayed?

Q. How would investors react if the government made its interest payments but fell behind on other obligations?

A. Badly, most economists say. If the government couldn't pay veterans' benefits, federal employee salaries or other bills, investors would almost certainly demand higher interest rates at future Treasury auctions. That would drive up the cost to taxpayers of servicing the government's debt.

A failure to pay any obligation "would severely damage perceptions of our creditworthiness," says David Kelly, chief global strategist at JPMorgan Funds.

Q&A: What Happens If US Breaks Borrowing Limit? : NPR

^ NOTE: they do get around (eventually) to including the "other" obligations (like paying contractors), but they spent the lion's share of their time, up front, discussing the other kind of debt (borrowing and principal and interest). And they sure as heck DID focus primarily the borrowed kind of obligation. And they do make more than a passing mention of "prioritizing" the debt.

All in all, it makes for a compelling argument that the President should stop attempting to make a political game of this serious business. Of course, they would be the first to deny that implication.

That comment was directed at LS, Ilar.

The NPR article points out the problems inherent in not paying 100% of all incurred debt obligations irrespective of their origin.

There is an alternative solution that no one is talking about. It will mean that there is no need to raise the debt ceiling by a single dollar.

It also has no negative repercussions like the other problems we have discussed.

Do you want to explore that avenue?