I get really sick of politicians including the POTUS spouting about how if we don't raise the debt ceiling that SS checks won't go out, our military won't get paid and we will default on our debt. BALONEY. I call BS on all of it and resent the insult to my intelligence.
First of all. Our debt is denominated in dollars and we can print money so if we needed to we could print money to pay our debtors/bond holders. Default therefore is technically off the table. However, it is more complicated than that. Consider the following.
1) The President and the Treasury Department decide what bills get paid. The Treasury Secy works at the will and pleasure of the President and has the responsibility to manage the countries finances. If the borrowing power is limited the Treasury Department would have to decide which bills to pay and in what priority. If the President said "Pay the troops, the SS checks and interest on the debt" then that would be what he would do.
2) In aggregate interest on the debt is 6% of the total budget, SS is 20% and Department of Defense payroll is 22%. So if push came to shove since we have only $.60 cash from receipts (we borrow the rest) we could easily pay these major obligations.
Based on this basic information, even if Congress refuses to raise the debt ceiling during the negotiations the government could pay the basic obligations of interest, SS and soldiers. To say otherwise is scare tactics plain and simple and is unbecoming of a President of the United States.
First of all. Our debt is denominated in dollars and we can print money so if we needed to we could print money to pay our debtors/bond holders. Default therefore is technically off the table. However, it is more complicated than that. Consider the following.
1) The President and the Treasury Department decide what bills get paid. The Treasury Secy works at the will and pleasure of the President and has the responsibility to manage the countries finances. If the borrowing power is limited the Treasury Department would have to decide which bills to pay and in what priority. If the President said "Pay the troops, the SS checks and interest on the debt" then that would be what he would do.
2) In aggregate interest on the debt is 6% of the total budget, SS is 20% and Department of Defense payroll is 22%. So if push came to shove since we have only $.60 cash from receipts (we borrow the rest) we could easily pay these major obligations.
Based on this basic information, even if Congress refuses to raise the debt ceiling during the negotiations the government could pay the basic obligations of interest, SS and soldiers. To say otherwise is scare tactics plain and simple and is unbecoming of a President of the United States.
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