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by
Rick Moran

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October 6, 2013 - 9:20 am
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Judging by remarks made by Speaker of the House John Boehner on This Week, it appears we may find out what happens when a grown-up, adult, first-world country defaults on some of its obligations to creditors.

Boehner let it be known that he doesn’t have the votes to pass a “clean” debt limit bill. President Obama keeps insisting he won’t negotiate on the debt ceiling. This puts the government in exactly the same position it was in on September 30 leading up to the government shutdown: neither side will give.

Except this time, the stakes are much higher. The government had shut down several times previously, with manageable consequences. But Congress has never failed to raise the debt limit, thus assuring the full faith and credit of the U.S. government.

The administration’s problem about predicting catastrophe is that they’ve been crying wolf so often — first with the sequester and now with this latest government shutdown — that few are inclined to believe them. The fact is no one — not the administration, or economists, or experts — can predict with any certainty what is going to happen if we blow through the debt ceiling.

The only thing we’re sure of is that there are few scenarios that don’t predict severe consequences.

Bloomberg reports:

The U.S. will run out of borrowing authority on Oct. 17 and will have $30 billion in cash after that. The country would be unable to pay all of its bills, including benefits, salaries and interest, sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

“Congress is playing with fire,” Lew said on CNN’s “State of the Union” today. “If the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default, there is no option that prevents us from being in default if we don’t have enough cash to pay our bills.”

Unlike past fiscal feuds, this dispute is more about Obama’s signature health law and less about the amount of spending. The U.S. budget deficit in June was 4.3 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.

So far, the financial-market response to the political gridlock has been muted.

Give the shutdown and lack of progress on a debt limit bill another week and the markets will probably be singing a different tune. But many observers wonder if Boehner is bluffing. Obama thinks so.

Comments are closed.

Top Rated Comments   
You're right, the only reason for a default is that Comrade Obama chooses not to pay some bill. But, this is the guy who is Barrycading war memorials, so I have no doubt he will and Soros and the Resident's pals on Wall Street and with his sponsoring sovereign wealth funds are already taking short positions.
1 year ago
1 year ago Link To Comment
There is NO reason at all to "default." All we have to pay is the debt service - interest. Last year that was just under $400 billion and estimates show it could be under $300 billion for this year. Federal revenues are over $2.7 trillion.

Oh, there will be spending that can't be done, but there is no reason at all to default.
1 year ago
1 year ago Link To Comment
Maybe it will take a default for the federal government to learn that it can't keep spending without regard to reality? That the debt ceiling is there for a reason, not just to inconvenience the bureaucrats.

I hope not, nut if that's what it's going to take, so be it.
1 year ago
1 year ago Link To Comment
All Comments   (21)
All Comments   (21)
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The government WILL NOT default. They simply run out of borrowing authority on Oct 17. They are still taking in billions of dollars from taxpayers. Far more than enough to pay the interest on the debt. THEY want to continue to spend what they DO NOT have. Why is preventing that a "bad thing?"
1 year ago
1 year ago Link To Comment
The problem is that, as I understand it, the decision as to which bills to pay is up to Obama. I do not, for an instant, discount the possibility that he will decide to put all the "social" bills ahead of the interest due.
1 year ago
1 year ago Link To Comment
Hi Royal Highness could point to the 14th amendment and unilaterally raise the debt limit but I'm betting he won't. I'm betting he WANTS default. He seems to have really gotten in to 'punish you enemies' mood lately.
1 year ago
1 year ago Link To Comment
The 14th amendment requires the payment of all legal debts. Please explain how it authorizes the president to unilaterally raise the debt limit.
1 year ago
1 year ago Link To Comment
He could order the Treasury to issue more bonds. But the House could also pass a resolution declaring those bonds illegal and that the US has no obligation to pay them. If Barry could get less than double digit interest on them I'd be surprised.
1 year ago
1 year ago Link To Comment
Issuing Treasury bonds would be creating more debt. That's how they do it now. If the House refuses to raise the debt limit the only bonds that could be issued would be to replace other bonds which mature.
1 year ago
1 year ago Link To Comment
Ted Cruz:

"CRUZ: The House has passed eight other bills funding things like our veterans, funding things like the national parks, and Harry Reid has killed them. Now, let me be clear, because it's important to understand. These bills, none of them even mention Obamacare. They're programs completely unrelated to Obamacare."

Read more: http://newsbusters.org/blogs/noel-sheppard/2013/10/06/ted-cruz-smacks-down-candy-crowley-saying-its-blackmail-offer-separat#ixzz2gzMGbrtO

As they say, read the whole thing. It's short.

Why can't anyone else say so clearly what is going on?
1 year ago
1 year ago Link To Comment
the most powerful, successful country has in 5 years gone from a rich super power to a bastion of commie ideals with a mountain of debt and few prospects for a better world tomorrow. all it took was electing a ?? from ?? and excusing his every screw-up and illegal act as if he was sent from above.

I guess we now have that change everybody wanted so bad. all he wants now to make our gov. work again is a blank check and total power over everything we say and do.

gosh, how proud our forefathers would be.
1 year ago
1 year ago Link To Comment
The only reason to default would be to cause more pain to the icky little people who voted for the mean old wrong people who won't give Obama everything he desires as soon as he desires it.

Otherwise, we take in enough in revenue to pay all the debt bills.
1 year ago
1 year ago Link To Comment
There is NO reason at all to "default." All we have to pay is the debt service - interest. Last year that was just under $400 billion and estimates show it could be under $300 billion for this year. Federal revenues are over $2.7 trillion.

Oh, there will be spending that can't be done, but there is no reason at all to default.
1 year ago
1 year ago Link To Comment
You're right, the only reason for a default is that Comrade Obama chooses not to pay some bill. But, this is the guy who is Barrycading war memorials, so I have no doubt he will and Soros and the Resident's pals on Wall Street and with his sponsoring sovereign wealth funds are already taking short positions.
1 year ago
1 year ago Link To Comment
Many of us know this but the choice of defaulting or shutting down golf courses is too difficult.
1 year ago
1 year ago Link To Comment
Defaulting now is the same as playing the continuing resolution game that will also result in eventual default. If we face it now, at least there are a few adults left who realize the insanity of the situation and might garner enough votes to bring the same level of fiscal responsibility that we all strive to live under.

I'd really like to see all talk of a CR stop and require Congress to pass and the President to sign a real budget that we haven't had in years. The President continually states Obamacare is the law and should be funded. Perhaps he should then enforce the laws on the books right now regarding illegal immigration, crimes committed with guns, special treatment for minorities, and a host of others he flagrantly ignores and breaks if he is that concerned about our laws. If we want to keep the government running, we need a budget.
1 year ago
1 year ago Link To Comment
That's why I think all the "Tough new measures" found in the proposed immigration law are a farce. You can talk big all you want, but will you follow through? Judging by the present government, No.
1 year ago
1 year ago Link To Comment
Maybe it will take a default for the federal government to learn that it can't keep spending without regard to reality? That the debt ceiling is there for a reason, not just to inconvenience the bureaucrats.

I hope not, nut if that's what it's going to take, so be it.
1 year ago
1 year ago Link To Comment
Why do we even bother with the façade of a "debt ceiling" if we are going to move it every month? I took the time and hard work to get debt-free. I have friends at work who wonder why I, with good pay, have always seemed broke the last few years. Why? I was paying off debt—as much as I could afford. Our country ought to be doing the same. These financial games need to stop.

If going over the precipice is what it take to start reining in spending, so be it. We have some sense and a bit of education. We know when Congress is playing games and we are tired of it. Play by the same rules we do when we have to talk to bankers, creditors and lenders. I wish I could borrow a few million and then print worthless money to pay back the loan.
1 year ago
1 year ago Link To Comment
Yes it will, it certainly will, and there's no time like the present, the cost of default (figuratively and literally) only grows with the passage of time.
1 year ago
1 year ago Link To Comment
Eliminate the debt ceiling and fund Obamacare - Let the Sky Be the Limit. Let us boldly go where no other nation has ever gone, but with class and in style. No one really knows how far the rest of the world will permit our debt to rise, but let us test the limits - for what have we to lose?

We have nothing to lose, because we have already lost that sense of responsibility and foresight that was the hallmark of our nation until the rise of the progressives with their adolescent emotive usurpation of utilitarian government.

Once we got on this path of irresponsibility with no sincere opposition, we were doomed to decline. There is no turning back short of outright revolution; there is no reform save revolution. But the country has become so diversified and culturally compromised that a sure base for such a revolution is not there.

Republicans and conservatives are simply fighting a rearguard action, now.
1 year ago
1 year ago Link To Comment
1. Lay off all federal 'contract' individuals. That was/ is the purpose exposed by Al Gore when, during the Clinton administration, many government jobs, deemed less than essential, were converted.
2. Cease, immediately, all construction that is not health and safety related.
3. Close down really non-essential expenditures...UN, NPR, NEA, Foreign Aid, All so-called jobs programs.
4. Create PRAC commissions in each fed Cabinet Department. Similar to BRAC. (Program Realignment and Closer Commissions)

SHUT.IT.DOWN.

DEFAULT AIN'T BAD

PS I am retired, living on military pension and SS. I will suffer some as well, but we need to do it now.
1 year ago
1 year ago Link To Comment
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