Failure to raise the debt limit does not equate to a default on our debt at all[.]The story continues directly, supposing Toomey's semi-doomsday scenario plays out:
Toomey suggests that even if the government couldn't pay all of its bills this summer, it could avoid a default by making sure what limited money is available goes to pay bondholders first. It's sort of like skimping on groceries in order to cover the mortgage. In a speech to the American Enterprise Institute, Toomey acknowledged that would create some hardships for those who don't get paid — think Social Security recipients or members of the armed forces. But, Toomey said, it wouldn't be a financial disaster.Yes, we are in the middle of a foreign war, a huge occupation, so by all means let us reach the point where even creative accounting no longer hides the fact that, with no legal authority to borrow more money, the US simply stops paying everyone military personnel, but pays bond holders.
And these people claim to care about the military?
How, pray tell, will the US pay these bond holders - largely foreign countries, particularly China, who hold US paper in copious amounts - if it doesn't have the cash to do so? Toomey doesn't say.
As an aside, may I just say that one of the biggest frustrations I have, listening to House Republicans talking about this matter, is they seem to insist that the Executive has the power of the public purse, when in fact, not a single dime of public money leaves the Treasury without it first being appropriated by . . . the House of Representatives, where all such bills, by Constitutional mandate, originate.
If the Republicans really cared about the deficit, rather than put their mugs before cameras, carrying on about Presidential irresponsibility, they would have crafted, months ago, an alternate budget that dealt with high unemployment, low demand, and the skittishness banks have in loaning out money. All this could have a huge impact on the operational deficit, by, over a relatively short period of time, increasing employment and thus increasing revenue.
Since the deficit is not about taxing or spending, but a nearly three-year-old economic slump, one would think the obvious answer is to deal with that slump. By playing chicken with the debt ceiling, the Republicans are proving almost institutionally incapable of holding any office of public responsibility and trust. One would have thought that the 12 years from 1994-2006 in which Republicans squandered what little trust the public had for public officials in general would have given their leadership (at any rate) some sense of responsibility.
Should the US renege on its sovereign debt over the summer, the Republicans would have proven to the country, and the world, they are not to be trusted with any office of public trust, at least until they show they no longer believe that destroying everything is a live option.