While hopes of a government budget deal today flicker on and off, you surely heard the latest example yesterday of President Obama threatening a default:
Talking to reporters at an event in Washington D.C. Monday, President Obama said the U.S. faces “a good chance at defaulting.”
“This week if we don’t start making some real progress, both the House and the Senate, and if Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting. And defaulting could have a potentially have a devastating affect on our economy,” the president said.
Remember, default would be Obama’s choice because he has two Constitutional ways to avoid it:
- He could negotiate his differences with the GOP in good faith, like a leader.
- Failing that, he could prioritize debt service spending (the U.S. “minimum debt payment”) ahead of other government spending. Tax revenue alone is enough to cover it many times over. If there is a legal issue, he could ask Congress (Democrats) to help.
Thus, Obama talking about any serious possibility of default is Obama planning to default if he doesn’t get his way 100%. That is a very bad threat to be making; in no way fitting for a President of the United States.
In effect, Obama has put U.S. creditors on notice that he will prioritize them last in any real budget crisis. That means U.S. debt (the Treasury bond) is unsafe and unsound whether or not he defaults this time, and investors are fools to hold it (unhedged).
UPDATE via HotAir: Sen. Rand Paul agrees, and pushes the idea of a Full Faith And Credit Act to make prioritization explicit. And even liberal Cokie Roberts (NPR) admits that Obama has been trying to talk the stock market into crashing. “Thanks, Obama!”
UPDATE: Nice piece a couple of weeks ago from Jeffrey Dorfman at Forbes. Key idea: Not raising the debt ceiling means simply that the government must live within a balanced budget until these issues are worked out.
And that, to Democrats, is “a fate worse than default”. Literally. Democrats would literally rather choose default (which means, according to them, the collapse of our economy, the end of the world, yadda yadda) than a 20-25% net spending cutback to live within a balanced budget.
Rather than some creative prioritization to insure those payments are made, I fear that Pres. Obama will deliberately default on the US Bond interest-payments…just to score a political point.
I just do not understand how a man can have worked so-hard to become President of the United Sates…and hate his country that much deep down where it counts. Maybe Kim Philby could explain it, I just can’t.
Ted, agree. By talking about default so unnecessarily, Obama signals his willingness to default; or his plan to default, as I called it in the post.
It’s almost like Obama is holding a gun to America’s head and threatening to shoot if he doesn’t get his way.
More akin to the classic scene in Blazing Saddles were Cleavon Little pulls a gun and takes the new Sherriff hostage and threatens to shoot him…and none of the dim-witted citizens of Rock Ridge notice that he’s pointing the gun at his own head.
Obama says the same thing each night behind the door of his WH bathroom.
I’m getting the sense that the honeymoon is over (except, of course, for the moon bats). I can’t wait for the fatigue, then the soreness.
That is a very bad threat to be making; in no way fitting for a President of the United States. ILC, 10/15/2013
I just do not understand how a man can have worked so-hard to become President of the United Sates…and hate his country that much deep down where it counts. TED B. 10/15/2013
Sadly, you guys are looking at him/his actions from a common sense perspective. From a fair minded, decent human being outlook. From a logical analysis for ILC that takes in over 230+ years of the great American experiment & experience and for Ted B. from a perspective of the massive effort it must take to go through the process of running for President, and winning an election where over 100,000,000 fellow Americans vote.
Well, and obviously we can’t look at this vindictive, evil, spiteful man and his followers in those lights. He is really the President of the “I hate America” club, and the CEO of the “We’re Going to Make Them Pay” cabal. Only thing, that cabal is no longer the secret it was when he was running for state senator, U.S. Senator, or even for the U.S. Presidency.
But, I am really not saying anything new to most of the voices that speak on this blog. Sadly, I am sorry that you all have to be witness to the undoing of that Great American Experiment. We will get through this debt ceiling bull $hit, and all the other stuff as well, and the stock and bond markets will do what they always do – but the damage obama has & will inflict in his remaining years will be almost insurmountable for future generations.
Ted B., flat out loved that movie. Laughed so hard I almost peed in my pants. I can picture that scene like it was yesterday.
Fine let him default and have to live with the consequences of his actions. It won’t be Republican voters who get hurt the worst it will be the Urbanites people who are stuck in cities with out the basic resources necessary to survival. In other words the Democrat base.
Catseye, I am very much in the Let It Burn camp. I have enough food to get through the borning and I am working on storing enough ammo. The gene pool could really use the chlorine.
I have a post going up tomorrow on my site titled “Really, What Default?” that talks about this, too.
In a nutshell, there’s enough Federal revenue coming in to cover our regular debt payments, Social Security and Medicare payments, and Medicaid and CHIP transfers to the states, and have $840 billion left over for such incidentals as national defense, Federal payroll, Federal contractor payments, and so on.
A default, a decision to harm our seniors and/or poor (regardless of the efficacy of those “safety net” programs, which is another thread), is entirely Obama’s.
Eric Hines
Could you ever imagine the USA with such a weak leader at BHObama?
He just seems so disinterested in working and governing. Working at governing I guess. Is it too hard for him?
Any government needs leadership.
It seems that the govt shutdown has progressed pretty well. They have to work at being mean to show the PEOPLE we can’t do without them. Of course about 70-80% of the people have always known we can do without the govt.
If it was 2015 and Obamacare was fully implemented, and you had a govt shutdown, what would happen? Hospitals close too like the open air parks? Doctors offices close like the national forests? I think we should know the answer to that.
CLOSED DUE TO THE
GOVENMENT SHUTDOWN
So anybody else think that Saturdays EBT debacle might have been a dry run for something bigger:
http://www.zerohedge.com/news/2013-10-15/foodstamp-program-shutdown-imminent
Everyone, Eric Hines is correct. There was never going to be a default because there are sufficient receipts to pay interest on debt.
Barry is simply full of it….
We Australians got rid of our Marxist, what is taking the USA so long to get rid of theirs?