Contrary to popular impression, going into default would not be just a matter of stiffing the autocrats in Beijing. Less than a third of the $14.3 trillion national debt is owed to foreigners — roughly 10 percent of the total to China. The biggest chunk, about 40 percent, is owed to U.S. individuals and institutions. Another 25 percent or so is owed to the Social Security trust fund, the U.S. Civil Service Retirement Fund and the U.S. Military Retirement Fund. In a sense, we would primarily be stiffing American retirees, including veterans.
In a larger sense, though, it doesn’t matter whom we owe. Choking off the government’s ability to borrow would cause an unimaginable cash-flow crisis — at least $306 billion in bills for August against just $172 billion in revenue.
The most hopeful sign is that some Republicans, at least, understand that their refusal to give an inch, even as Democrats show a willingness to compromise, means the GOP will be blamed if Social Security checks don’t go out on time. Senate Minority Leader Mitch McConnell warned that the party’s “brand” could be destroyed.
Indeed, a Quinnipiac University poll released Thursday bears McConnell out. The survey found that 48 percent of voters would blame the GOP in the event of default while 34 percent would hold the Obama administration responsible. Even 20 percent of Republicans would point the finger at their own party. The business community — both Wall Street and Main Street — is increasingly nervous.
What’s needed at this point is a way for House Republicans to climb down from the ledge on which they’ve marooned themselves. Obama has offered them a ladder — about $1.7 trillion in budget cuts with no offsetting revenue. All they have to do is approve a big enough increase in the debt ceiling to avoid having this same fight every few months. They refuse.
McConnell has offered a plan that would essentially let Obama raise the debt ceiling himself — taking the political heat — with no mandatory budget cuts. House Republicans say no.
It would be satisfying to stand back and watch Republicans take the plunge. This must have occurred to Obama as he told the smirking, eye-rolling Cantor to bring it on — but the president ended the meeting by telling congressional leaders he’d see them again Thursday.
Obama will continue to offer Republicans sensible ways to refrain from committing a shockingly unpatriotic act of economic vandalism. The unfortunate fact is that if they blow themselves up, they take the rest of us with them.
The final sentence says it all, when one is dealing w/ideologues (of whichever stripe. regardless of the cause, etc.). McConnell has read the political tea leaves and fully appreciates the message. Eric Cantor hasn’t learned to read, so we cannot expect anything from him but what his masters (who are likely not his constituents) instruct. Speaker Boehner is handcuffed in any attempt to compromise, which I believe may well be his instinct.
My guess is that the “last second” deal will be an increase in the debt ceiling with no deficit reduction, so both sides may live to fight another day.
Remember how the Cons are fond of saying, “where does the Constitution say anything about ______________” (insert program Con’s hate into the blank)?
For instance, when Libs argue that health care is right, the Cons shoot back with “where does the Constitution say anything about health care.” One can substitute social security or food stamps or any other social welfare program.
Looks to me like we can use that same argument against the debt ceiling.
“Where in the Constitution does it say anything about a debt ceiling?”
Answer: it doesn’t. In fact, it says that the gov’t must pay all the debts it owes.
I’m hearing silly things about the Congress allowing the president to raise the debt ceiling. Should we remind these silly people the Constitution requires the president to pay our nation’s bills? Even if we did attempt to remind them of the 14th amendment would they be like the elephants in the cartoon above who are so immersed in their ideology they can’t / won’t listen?
I know what fnord is discussing. The logical consequence to this is Congress approving no new future debt in a big showdown, creating a crisis of some real import.
What are your thoughts about the possible consequences of Rupert Murdoch and his phone hacking/bribing scandal now that it is the FBI’s hands to investigate?
This is at a good time politically for the entire world to find out just how ‘fair and balanced’ Rupert runs his so-called media news.
Will this be a factor in the 2012 election? And if the FBI does find that Rupert Murdoch did some phone hacking/bribing into the 9/11 victims – do you think any Republican presidential candidate will distance themselves from Rupert and/or Fox?
clarification – I did not mean to imply that Rupert Murdoch himself did not do any phone backing/bribing – but if his employees did, the buck should stop at his desk.
I do find it interesting that Rupert has backed off his bid on that big deal in the UK after all this hacking scandal hit the fan. And now that the woman editor has now resigned, even after Rupert defended her; is this Rupert’s way of trying to get this scandal behind him and his News Corp before it becomes a factor in the US 2012 election?
Agreed 100%. But wouldn’t superior morally people demand that Fox News be covering this whole phone hacking scandal?
Oh, what am I saying…..Far Right Wingers only to be morally superior whd\en it brings them votes or they talk about that ‘other guy’ over there who is ‘not one of us’.
I believe in karma and I suspect there is a big ol’ can of ass whooping due..
Looks like two Fox News entertainers do not like the real news coverage about Rupert Murdoch’s current scandal troubles.
1) It’s no big deal because we have serious problems and need to be focused on them.
2) Rupert Murdoch is now the victim.
Just imagine if this phone hacking allegation was being made against Obama and the DNC. I’m sure these very same Fox News entertainers would be joined by their colleagues in 24/7 coverage trying to stir up the Obama hatred pot.
And I am willing to bet that if it was Obama in Rupert’s shoes – it would then be a big deal.
When Rupert Murdoch closed down the NOTW paper so fast and he backed out of that big deal worth billions in the UK, that spoke volumes as to what is really going on in this scandal.
Let’s see who can the fox followers blame? Because you know they’ll have to have a fall guy. But then they may still be totally in the dark about the whole deal.
Abrupt cutoff of government spending would send economy into recession
That cash cushion has been melting away; it rose briefly in June as tax payments and other receipts exceeded outlays. But it’s on a downward track toward zero sometime in early August. The Treasury projects that it will be flat broke on August 2, with no way to raise enough cash to cover all the bills.
On or about that date, government officials have to begin making hard choices. For August, the Treasury projects it will take in roughly $172.4 billion to cover $306.7 billion worth of spending that, by law, it has to pay. To demonstrate what those choices might look like, Jerome Powell and his colleagues at the Bipartisan Policy Center took a look at how far the money would go.
They started with the widely held assumption that interest on the debt ($29 billion for August alone) would be paid first, thus avoiding the disastrous impact of a default.
The rest of the incoming cash would cover a month’s worth of Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), veterans affairs programs ($2.9 billion), education and tuition programs ($14 billion), housing assistance for the poor ($6.7 billion), food stamps ($9.3 billion), and unemployment insurance ($12.8 billion).
That’s where the cash runs out and the list of unfunded programs begin. There would be no money left for defense contracts ($31.7 billion) or military active duty pay ($2.9 billion).
The Department of Justice ($1.4 billion) would close, shutting down the federal court system and halting operations at the Federal Bureau of Investigation. So would the Department of Energy ($3.5 billion), including national nuclear energy programs.
The Transportation Department ($1.3 billion) would cease functioning, including the Federal Aviation Administration and air traffic control system. So would the Centers for Disease Control ($0.5 billion).
And there would be no money to cover tax refunds ($3.9 billion) from the IRS. Even if there were, there would be no federal workers ($14.2 billion in salaries and benefits) to mail the checks.
“You can move the chess pieces around, but you can’t win,” said Powell, a former Treasury undersecretary in the George H.W. Bush administration. “There is no way to do this without creating a massive public uproar. There just isn’t.”
The impending cash crunch has been compared to the government shutdown in late 1995, when federal workers were briefly furloughed after Congress and the Clinton White House couldn’t agree on a budget. Most government spending, however, continued at levels authorized under the previous budget.
In this case, though Congress has legally obligated the Treasury to pay for government programs and services, it has cut off the cash needed to do so.
“That’s put the executive branch in the situation of trying to decide which spending laws not to obey,” said Powell. “There is no precedent. There is no rule book.”
A primer for Tea Partyers who think the U.S. can get away without raising the debt limit
Let’s start with the basic numbers. According to the Bipartisan Policy Center, the U.S. Treasury will have about $172.4 billion in revenue in August that can be applied to $306.7 billion in outstanding bills. If the U.S. Treasury is forbidden from borrowing any additional funds, it will therefore have to cut total August spending by about $134 billion, or 44 percent.
Looks like some Republican members of Congress might have some ‘splaining to do. The Tea Party Patriots tell CNN that if GOP lawmakers vote to raise the debt ceiling, the political group will make “examples” of them. “We’re holding these freshmen accountable,” said co-founder Martin. Other members of the movement echoed Martin’s requests, and some of the members of Congress’ so-called Tea Party Coalition said they frequently receive emails from the group to remind them to vote against raising the debt ceiling. The Tea Party has also targeted GOP lawmakers such as Sens. Olympia Snowe and Orrin Hatch for not being conservative enough.
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The final sentence says it all, when one is dealing w/ideologues (of whichever stripe. regardless of the cause, etc.). McConnell has read the political tea leaves and fully appreciates the message. Eric Cantor hasn’t learned to read, so we cannot expect anything from him but what his masters (who are likely not his constituents) instruct. Speaker Boehner is handcuffed in any attempt to compromise, which I believe may well be his instinct.
My guess is that the “last second” deal will be an increase in the debt ceiling with no deficit reduction, so both sides may live to fight another day.
I agree – a last second deal will be made which will allow both sides to spin it politically.
But I like what Obama was reported to have said while Eric Cantor kept interrupting him three times and Obama finally told Cantor – Enough is enough.
It was also reported Obama said something to the effect that – Reagan did not have to go through this.
And therein lies the rub – politically, Republicans want to bring down Obama at all costs.
I just wonder at what cost to the country?
Remember how the Cons are fond of saying, “where does the Constitution say anything about ______________” (insert program Con’s hate into the blank)?
For instance, when Libs argue that health care is right, the Cons shoot back with “where does the Constitution say anything about health care.” One can substitute social security or food stamps or any other social welfare program.
Looks to me like we can use that same argument against the debt ceiling.
“Where in the Constitution does it say anything about a debt ceiling?”
Answer: it doesn’t. In fact, it says that the gov’t must pay all the debts it owes.
Hmmmm . . . .
I’m hearing silly things about the Congress allowing the president to raise the debt ceiling. Should we remind these silly people the Constitution requires the president to pay our nation’s bills? Even if we did attempt to remind them of the 14th amendment would they be like the elephants in the cartoon above who are so immersed in their ideology they can’t / won’t listen?
Or maybe they could just actually read that copy of the Constitution these Republicans all claim to carry in their pocket?
I find it more than laughable that these are the same people who wave their Bibles but yet do not seem to know what is is the Bible either.
what is ‘in’ the Bible either.
God – please help us from your rabid followers.
I know what fnord is discussing. The logical consequence to this is Congress approving no new future debt in a big showdown, creating a crisis of some real import.
What are your thoughts about the possible consequences of Rupert Murdoch and his phone hacking/bribing scandal now that it is the FBI’s hands to investigate?
This is at a good time politically for the entire world to find out just how ‘fair and balanced’ Rupert runs his so-called media news.
Will this be a factor in the 2012 election? And if the FBI does find that Rupert Murdoch did some phone hacking/bribing into the 9/11 victims – do you think any Republican presidential candidate will distance themselves from Rupert and/or Fox?
clarification – I did not mean to imply that Rupert Murdoch himself did not do any phone backing/bribing – but if his employees did, the buck should stop at his desk.
I do find it interesting that Rupert has backed off his bid on that big deal in the UK after all this hacking scandal hit the fan. And now that the woman editor has now resigned, even after Rupert defended her; is this Rupert’s way of trying to get this scandal behind him and his News Corp before it becomes a factor in the US 2012 election?
Let the chips fall where they may…
http://www.huffingtonpost.com/2011/07/15/eric-holder-fbi-news-corp-investigation_n_899665.html
Fox News has been next to silent on the whole sleazy affair, bwahahaha.
Couldn’t happen to a nicer bunch . . . .
Agreed 100%. But wouldn’t superior morally people demand that Fox News be covering this whole phone hacking scandal?
Oh, what am I saying…..Far Right Wingers only to be morally superior whd\en it brings them votes or they talk about that ‘other guy’ over there who is ‘not one of us’.
I believe in karma and I suspect there is a big ol’ can of ass whooping due..
Anybody else going to the Move.On house parties this Sunday?
Rebuilding the middle class . . .
Here’s what I found on house parties in the Wichita vicinity —
http://civic.moveon.org/event/events/index.html?action_id=245&id=&search_distance=30&search_zip=67212&submit=Search
Thanks for posting that. I’m going to one in Bel Aire . . . hope to cross paths with some other PPPers . . .
Evil > Stupid
Atrios likes to say that the eternal question, as you look at absurd policy debates, is whether these people are evil or stupid.
http://krugman.blogs.nytimes.com/2011/07/15/evil-stupid/
I suspect the evil have learned how to manipulate the stupid.
Looks like two Fox News entertainers do not like the real news coverage about Rupert Murdoch’s current scandal troubles.
1) It’s no big deal because we have serious problems and need to be focused on them.
2) Rupert Murdoch is now the victim.
Just imagine if this phone hacking allegation was being made against Obama and the DNC. I’m sure these very same Fox News entertainers would be joined by their colleagues in 24/7 coverage trying to stir up the Obama hatred pot.
And I am willing to bet that if it was Obama in Rupert’s shoes – it would then be a big deal.
http://www.huffingtonpost.com/2011/07/15/fox-and-friends-defends-n_n_899934.html
And that playing the victim card by these CONS is the cherry on top of this hypocrisy sundae.
When Rupert Murdoch closed down the NOTW paper so fast and he backed out of that big deal worth billions in the UK, that spoke volumes as to what is really going on in this scandal.
It tells me Rupert knows when to fold em’…
Wow -for not being such a big deal, why did the WSJ top guy just resign due to the phone hacking scandal?
http://www.huffingtonpost.com/2011/07/15/les-hinton-resigns-wall-street-journal-murdoch_n_900187.html
Must be a little bit of a big deal. 🙂
Let’s see who can the fox followers blame? Because you know they’ll have to have a fall guy. But then they may still be totally in the dark about the whole deal.
The MSM, of course. You’re overthinking this, fnord.
Would that more accurately be the lamestream media?
http://www.msnbc.msn.com/id/43769894/ns/business-eye_on_the_economy/
What happens if the debt ceiling bomb explodes?
A primer for Tea Partyers who think the U.S. can get away without raising the debt limit
Let’s start with the basic numbers. According to the Bipartisan Policy Center, the U.S. Treasury will have about $172.4 billion in revenue in August that can be applied to $306.7 billion in outstanding bills. If the U.S. Treasury is forbidden from borrowing any additional funds, it will therefore have to cut total August spending by about $134 billion, or 44 percent.
http://www.salon.com/technology/how_the_world_works/2011/07/15/what_happens_if_the_debt_ceiling_bomb_explodes
Couldn’t resist:
http://www.datamation.com/news/tech-comics-geeks-and-the-manual-1.html
Looks like some Republican members of Congress might have some ‘splaining to do. The Tea Party Patriots tell CNN that if GOP lawmakers vote to raise the debt ceiling, the political group will make “examples” of them. “We’re holding these freshmen accountable,” said co-founder Martin. Other members of the movement echoed Martin’s requests, and some of the members of Congress’ so-called Tea Party Coalition said they frequently receive emails from the group to remind them to vote against raising the debt ceiling. The Tea Party has also targeted GOP lawmakers such as Sens. Olympia Snowe and Orrin Hatch for not being conservative enough.
Tea party to GOP: We could make ‘examples’ of you over debt ceiling