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Old October 8th, 2013, 04:58 PM   #1
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Default To hell with the Democrats and Obama and their default scare tactics.

THE FEDERAL GOVERNMENT CAN’T, AND WON’T, DEFAULT ON ITS DEBT OBLIGATIONS
One remarkable aspect of the shutdown/debt limit battle is the irresponsibility (on the part of the Obama administration) and incompetence (on the part of the news media) concerning the claim that the federal government will default on its debt obligations if Congress fails to raise the debt limit. President Obama and his minions have clearly suggested that default is a real possibility:

“As reckless as a government shutdown is … an economic shutdown that results from default would be tically worse,” Obama said on Thursday. Clearly targeting Republicans, he said a default would be “the height of irresponsibility.”

Then, on the same day, Obama’s Treasury Department released a brutal statement that said a default would prove catastrophic, causing credit markets to freeze and leading to “a financial crisis and recession that could echo the events of 2008 or worse.”

Within the last few hours, Obama repeated that Congress must “remove the threat of default and vote to raise the debt ceiling.”

But there is no threat of default. Constitutionally, the federal government must pay its debts. The Fourteenth Amendment, Section 4, states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

I believe this provision is universally understood to mean that the federal government must pay its debt obligations, both principal and interest, even if that means prioritizing debt service over other government spending. So the question is, if Congress does not raise the current debt ceiling, will the federal government run out of money needed to pay its existing debts? The answer is clearly No. A reader supplies the math:

On average the federal government’s daily expenditures are about $16.7 billion; receipts are about $14 billion, implying an average daily borrowing requirement of about $2.7 billion. So the planned flow of revenues is now about $650 billion less than the planned flow of expenses…about $2.7 billion a [business] day, $650 billion annually.

So the “default” scenarios are bogus. Interest on the $16 trillion in debt is covered by a factor of about 10x by revenues! That puts the federal government deep into AAA land. Revenues would have to fall by a staggering 90% to jeopardize interest payments.

And, of course, retiring principal by “rolling over” maturing debt can never require an increase in the debt ceiling, since there is no net increase in the nation’s debt, even if the money used to repay the original principal is borrowed.

So what will actually happen if Congress doesn’t increase the debt ceiling by approximately October 17? The government’s debt obligations will be paid, but reductions in other spending will start to become necessary. In effect, leaving the debt ceiling as is would function as a spending cut. This is why the Democrats hate the idea so much. They know there is zero chance of default, but they are horrified at the prospect that voters and taxpayers may find out that there is a relatively simple way to bring about spending reductions that would create, in effect, a balanced budget. Hence the hysteria.

To be fair, some Republicans, including John Boehner, have also made public statements that support the plausibility of the default threat. Don’t ask me why. Others, like Rand Paul on yesterday’s Meet the Press, have tried to set the record straight:

NBC: Very quickly before I let you go. As you well know, there is a debt ceiling vote on the horizon. Will Republicans let this country go into default?

SEN. PAUL: I think it’s irresponsible of the president and his men to even talk about default. There is no reason for us to default. We bring in $250 billion in taxes every month, our interest payment is $20 billion. Tell me why we would ever default. We have legislation called the full faith and credit act and it tells the president, you must pay the interest on the debt. So this is a game. This is kind of like closing the World War II memorial. They all get out on TV and they say, we’re going to default. They’re the ones scaring the marketplace. We should never default.

The NBC reporter, Savannah Guthrie, apparently knew all along that talk about default is nonsense, because she immediately came back with this:


NBC: Let’s say you pay the interest on the debt and you don’t have a technical default. Wouldn’t there be tic consequences on the economy, anyway, the spirit of it?

There is only one kind of default: the “technical” kind. Cutting spending is not some other, “non-technical” type of default. And as for the impact on the economy, many economists believe that getting government spending under control is the best thing we can do to boost economic growth.

So next time you hear hysterical talk about default on the news, remember that those who raise the default specter either have no idea what they are talking about, or are trying to fool the uninformed.





To sum it up... If we hit the debt ceiling it will do nothing but FORCE Congress and the Administration to start making much needed cuts in spending and to operate on a balanced budget. No more deficit spending.

It needs to happen NOW.
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Old October 8th, 2013, 05:03 PM   #2
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If this shit continues, votes will start being made with bullets. 1776 all over again.
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Old October 8th, 2013, 05:28 PM   #3
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If this shit continues, votes will start being made with bullets. 1776 all over again.
I hope so. This country needs a little violence to put it all in perspective again.
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Old October 8th, 2013, 05:29 PM   #4
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I still love America.
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Old October 8th, 2013, 05:38 PM   #5
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Shut-down my ass.

I still have to go to work.
I've been told I have no paycheck as long as the Gov't is shut down.
IRS says they will not issue refunds during the shut-down, but they will collect taxes.
They are still collecting taxes.
And they are making me go to work or get fired.
But they have told me to not expect a paycheck.

Soon enough, I won't have any gas money to get to work to earn my non-existent paycheck.
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Old October 8th, 2013, 05:46 PM   #6
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Shut-down my ass.

I still have to go to work.
I've been told I have no paycheck as long as the Gov't is shut down.
IRS says they will not issue refunds during the shut-down, but they will collect taxes.
They are still collecting taxes.
And they are making me go to work or get fired.
But they have told me to not expect a paycheck.

Soon enough, I won't have any gas money to get to work to earn my non-existent paycheck.
Work slave! How dare you question them!
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Old October 8th, 2013, 05:53 PM   #7
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I hope so. This country needs a little violence to put it all in perspective again.
I know you're being facetious, and I honestly hope it never comes to that. Maybe I'm hyper-sensitive to all this stuff, but it certainly seems like we'll see a revolution in our lifetime.
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Old October 8th, 2013, 06:28 PM   #8
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Probably true as far as it goes. If you maxed out your credit cards you wouldn't automatically be in default unless you quit making the payment.

But we'd have to stop paying something... payroll? Social security? Other obligations? Some of those could be considered a "default".

I do wonder though... The sequester came and we survived. The government shut down and had little effect on most of us...
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Old October 8th, 2013, 06:31 PM   #9
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Probably true as far as it goes. If you maxed out your credit cards you wouldn't automatically be in default unless you quit making the payment.

But we'd have to stop paying something... payroll? Social security? Other obligations? Some of those could be considered a "default".

I do wonder though... The sequester came and we survived. The government shut down and had little effect on most of us...
Exactly.

That thought right there is what all of Congress and the Obama Administration is so deathly afraid of... The people realizing that they don't NEED this massive government machine.
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Old October 8th, 2013, 06:35 PM   #10
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Originally Posted by tsaguy View Post
Shut-down my ass.

I still have to go to work.
I've been told I have no paycheck as long as the Gov't is shut down.
IRS says they will not issue refunds during the shut-down, but they will collect taxes.
They are still collecting taxes.
And they are making me go to work or get fired.
But they have told me to not expect a paycheck.

Soon enough, I won't have any gas money to get to work to earn my non-existent paycheck.
Didn't you make a thread saying that you already got the boot?
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Old October 8th, 2013, 06:51 PM   #11
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Probably true as far as it goes. If you maxed out your credit cards you wouldn't automatically be in default unless you quit making the payment.

But we'd have to stop paying something... payroll? Social security? Other obligations? Some of those could be considered a "default".

I do wonder though... The sequester came and we survived. The government shut down and had little effect on most of us...
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Old October 8th, 2013, 07:11 PM   #12
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There is no chance of default. One of the big credit rating agencies sustained AAA rating saying this is less severe than the financial crisis and raises no chance of default.
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Old October 9th, 2013, 09:00 PM   #13
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Didn't you make a thread saying that you already got the boot?
I was given three options, quit, step down to standard officer, or transfer to Detroit. All my options were suspended due to the shut-down, because with the shut-down, there is no one in HQ to process my paperwork.
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Old October 9th, 2013, 09:16 PM   #14
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I do wonder though... The sequester came and we survived. The government shut down and had little effect on most of us...
The Government has essentially shut down about 15% of normal operations.

Not much of a shutdown. Seems the only things they could find to close are things they would have to spend money on to close. Things that otherwise cost next to nothing to keep open.
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Old October 9th, 2013, 10:24 PM   #15
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I was given three options, quit, step down to standard officer, or transfer to Detroit. All my options were suspended due to the shut-down, because with the shut-down, there is no one in HQ to process my paperwork.
You can always start another job (ie quit) since it is a "at will" state.

Related to your prior post, I spoke today to someone working in DC for the National Institute of Health (NIH) and he said they were told on Day 1 of the govt shutdown to come in to the office, set up an "out of office" email response, and shut down their computers. They have been told not to return until the shutdown is over. It is odd that your position requires you to work without pay.
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Old October 9th, 2013, 10:33 PM   #16
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The Government has essentially shut down about 15% of normal operations.

Not much of a shutdown. Seems the only things they could find to close are things they would have to spend money on to close. Things that otherwise cost next to nothing to keep open.
Yes, I started to suspect as much when the October 17th date that we are supposed to run out of money didn't change when supposedly the government was "shut down" because they were not authorized to spend money.

Just more political theater.
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Old October 9th, 2013, 10:52 PM   #17
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Watch: GOP Congressman Destroys MSNBC's Andrea Mitchell; Slams 'Pathetic News Reporting'

http://www.ijreview.com/2013/10/85779-ddddddd/
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Old October 9th, 2013, 11:05 PM   #18
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Congress is just as much at fault as obama.

http://m.comedycentral.com/colbertna...ary%2f&cid=300

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Old October 16th, 2013, 06:10 PM   #19
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You can always start another job (ie quit) since it is a "at will" state.

Related to your prior post, I spoke today to someone working in DC for the National Institute of Health (NIH) and he said they were told on Day 1 of the govt shutdown to come in to the office, set up an "out of office" email response, and shut down their computers. They have been told not to return until the shutdown is over. It is odd that your position requires you to work without pay.
It's because TSA is considered 'essential' for daily operations. If we don't show up for work, then no one can touch your weiner before you get on the plane. If no one gets on planes, everyone gets pissed.

I don't really wish to leave my federal employment, I've too many years vested in retirement and such.
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Old October 16th, 2013, 08:10 PM   #20
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I don't really wish to leave my federal employment, I've too many years vested in retirement and such.
Wait. What? Someone still get's retirement in 2013. No wonder they can't stay in budget.
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