The Debt Default

| May 24, 2023

We’ve been seeing it bandied about for weeks now – that the US may wind up in a position where it is unable to pay out what it needs to. The Republicans blame the Democrats for spending money like a horny frat boy who found a C-note on the sidewalk in front of a $50 hooker’s place. The Democrats are blaming the Republicans for not extending our national overdraft any further than it has been already 2,473,294 times, and are filling the airways with “You won’t get your VA money!” You won’t get Social Security!” It’s not really as cut and dried as all that.

First off, the widely quoted date is June 1. But…

As a result, no one is certain when the US will breach its debt ceiling. Yellen thinks it will be as early as June 1, as she wrote in a letter  to legislators yesterday (May 22). The Bipartisan Policy Center, a think-tank in Washington DC, predicts some date between June and August, with June 2-13 being a particularly fragile time for the Treasury.

So it’s wiser to say “soonish”. What will happen? Again, “that depends”:

The Treasury can postpone investment in a pension fund for retired and disabled federal employees; once the debt ceiling crisis has passed, these investments can resume. It’s a way of buying time to buy more time. If the Treasury manages to get the country past June 13, then an influx of quarterly tax revenue on June 14 may allow the US to make it until the end of the month, said Shai Akabas, executive director of BPC’s Economic Policy Program.

But what if Yellen exhausts every possible maneuver, Republicans refuse to budge unless Democrats gut the nation’s services, and president Joe Biden refuses to raise the ceiling unilaterally via the 14th Amendment? At that point, Yellen will have to direct the Treasury Department to prioritize certain debt payments over others.

Here’s where it gets fun. If Yellen directs Treasury to keep up payments on foreign debt, the taxpayers get screwed but hopefully we avoid the possibility of triggering a world recession. If she directs Treasury to take care of US payees first, you can bet foreign markets will not like us, our national credit rating will go down faster than Kamala in Willie Brown’s office  sorry, I meant Monica when Hillary was overseas – it would be rapid and brutal.  Quartz

Want to blame someone? Start with those TRILLION dollar programs passed in the last 10 years. Look at how much money we spend on folks who aren’t even legally here, are trying to spend on forgiving loans to folks old enough to enlist but unable to understand a payment plan, or are discussing spending on reparation for folks who were never slaves.

You can have your pick of scapegoats depending on your political persuasion, but remember: Congress controls spending. You probably re-elected your local Congresscritter because, well, he/she is OK even if the rest were batshit crazy. Man up, look in a mirror, and realize they ALL need to go away.

Category: "Teh Stoopid", "Your Tax Dollars At Work", Politics

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26Limabeans

“I’ll gladly pay you Tuesday for a hamburger today”

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5JC

The WSJ published a nice piece the other day about the b******* argument The Biden has been making, saying that the 14th amendment allows him to make his own budget to keep the country from going into default.

The 14th amendment doesn’t say that. It does say that we’re not allowed to default, but it doesn’t say we have to spend money on all the other b******* they spend it on. The US government takes in plenty of money to pay the bills but they spend it on other things. Kind of like that PFC who; after basic training that has to run down and finance a 10-year-old Camaro at 41% interest.

If the federal government defaults it really falls upon one person, The president and not the Congress because the Congress gave them enough money to keep from defaulting. They just chose unwisely, to spend it on other things. This is well supported by case law.

The 14th Amendment also guarantees military pensions. Failing to pay the military pensions would be a violation of civil rights, guaranteed by the Constitution.

Last edited 9 months ago by 5JC
11B-Mailclerk

How many cities extort tax increases by saying they will have to lay off cops and firemen, first, instead of mid level flunkies, elbow inspectors, supervisors, and assorted deadweight…

5JC

Most cities in the United States can default. The City of Detroit and Jefferson County Alabama were two of the more famous cases; but there have been lots of them. Both went through decades of completely corrupt and inept management for this to happen. The old Mayor of Detroit went to prison as well as most of the county commissioners for Jefferson County.

Even now, 10 years on both of them are still rated with their bonds in the junk bond category. Although Detroit has shown some major improvement in the last 10 years, they are still junk bonds. Jefferson County hasn’t shown much improvement.

Fjardeson

Cleveland, OH went dead in the water in the late seventies. That’s why I live in Houston now.

Old tanker

At this point I would be fine with defunding the fbi and homeland security.

5JC

The DNC can’t afford to lose them. They would prop them up out of their own pocket.

Besides, how are they going to conclude their investigation of the Hunter laptop by January of 2032 if someone cuts their budget?

Veritas Omnia Vincit

Several alphabet groups have no reason to exist ATF, NEA, etc….IRS….

We are long past the time when our government governs with our consent.

Fjardeson

Amen. It’s always police, firefighters, lifeguards at public pools, parks & rec, and librarians. Never deadweight bureaucrats, assistants, managers of management of managers, sons and cousins, etc.

Hate_me

All I get from section 4 of the 14th is that we can’t invalidate those debts (save a few civil-war-specific exceptions).

Sovereign default is certainly bad, but it’s not the same as saying, “we no longer recognize our public debts.”

Standard & Poors will probably downgrade us again to AA whether we default or not at this point – but that’s nothing new for Biden.

Either way, the arguments for the 14th as an answer to the debt ceiling debate seem pretty weak. Especially as section 5 gives Congress – not the executive branch – the power of enforcement.

rgr769

That section was intended to authorize the federal government to refuse payment of Confederate debt obligations. That is why Confederate state issued currency became worthless.

Hate_me

It’s worth quite a bit, now.

Daisy Cutter

THE PLAYBOOK:

They will usually shut down the government if the deadline falls on a weekend. Doesn’t affect many. The media will show images of kids crying because they can’t get into a national park on a vacation that their parents planned for a year. Congress gets things resolved on Sunday night and it is signed by lawmakers on Monday afternoon. Because the signing is a formality, gov’ment workers are encouraged to show up for a full day on Monday.

MIRanger

What about the “free” vacation for federal employees that have to be “Layed off” temporarily?

5JC

By paying federal employees not to work the government is saving money.

Top W Kone

One short term fix would be for the treasury to revalue the 8,000+ tons of gold on the books from its current $42.50 an ounce to a more current $1,900.

This would give about $500 billion to spend with out creating debt to do it.

If they don’t want to, i am willing to buy it all for $50 an ounce.

Odie

I’ll go in half with you.

11B-Mailclerk

Assuming it wasn’t mostly sold/pledged previously.

Just the sort of thing one can expect to find when outside audits don’t happen.

MIRanger

I thought it was just the California’s that were considering Reparations for everyone who is not and never has been a slave except in their own mind?
Yeah the last President didn’t do anything to cut spending. While the one before that more than tripled the debt, he doubled what was handed to him…though he did enable the economy to pay most of it…until this guy took over!FJB

ANCRN

Both sides are full of shit. All the Republicans have to do is raise the debt limit, and then dont pass any more deficit spending. They control the House, therefore they control the spending. They were happy to spend money when their guy was in office, but now its a crisis? The Dems are just as bad, they all spend money they dont have.

Roh-Dog

IDGAFF.

Do it, pussies!

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5JC

For those in the “let’s light this candle and see how it burns” camp, If you thought inflation was bad last year, wait till you see what it looks like when the prime rate is 54%.

Roh-Dog

For those in the “let’s continue to give preferential rates to banks and corporations thereby eroding the value of currency-units amongst We, the People, with this corrupt system placing institutions, municipalities, and states –foreign and domestic– on the dole to an authoritarian centralized government who, at will, uses The Power of Lust For Money as a drug, making servile all before it” camp, I humbly ask: what is Freedom worth?

If you are not willing to suffer for a yoke-less future, you have no stake in America.

Let it be in my time…!

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Last edited 9 months ago by Roh-Dog
5JC

If only your fantasy vision of a free society were a true one. Man never has been nor ever will be truly free.

11B-Mailclerk

Which is still no reason to support proggy stupidity.

Roh-Dog

“More perfect” is alright by me, and this primrose path ain’t it.

The dollar has lost 97% of its value since 1913.

A dollar I earned in high school is worth 50¢ today.

To wit;

“…banking establishments are more dangerous than standing armies; & that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale” — Thomas Jefferson to John Taylor, 28 May 1816

Jefferson has much more to say…

This thing will stop one day and if we had honest brokers they’d do it now to save the future compounded pain.

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5JC

Class of 2000 eh? I figured you were older than that.

Roh-Dog

Close, I was using the CP(lie) Inflation Calculator for the summer of 1995, the year I reached eligibility for a ‘real’ job between freshman and junior year.

And what a summer that was! Worked my dick off.

Paid $500 cash for a Play Station, a couple of games, and accessories. I think the clerk thought I was a drug dealer whipping out hundrohs like that.

In retrospect, buying 1.3 ozt of gold would’ve been the smarter move.

Youth…wasted…young.

Edit: at $4.27/hour (had to look it up, thought is was $5.25) Now I have to see if I’ve kept one of those pay stubs!! Shoulda framed that bad larry.

Last edited 9 months ago by Roh-Dog
rgr769

In my first job in the summer between my junior and senior year, I made $ 1.25 per hour. It was 1963. In 1971, my father advised me to invest the money I saved in Vietnam in collectible gold coins. He had read a book that said gold would go up to $ 200 per ounce. I ignored his advice.

timactual

I think it’s mandatory, possibly genetic, that young males ignore their fathers’ advice.

Anonymous

Don’t forget the RINOs:
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Graybeard

I think there is a relevant passage or two in The Decline and Fall of the Roman Empire about the long-term impact of government handouts.

LBJ and the (D)emon-rats have led the way, and spineless (and/or corrupt) (R)e-publicans and (R)inos have collaborated with them to destroy the USA.

5JC

Was there anything in that book about the collapse of border security and people from other countries invading and taking over? What about the native Romans engaging in weird sexual perversions and being lost in their cups?

I mean, I’m no scholar but there could be a casual relationship.

11B-Mailclerk

General corruption of virtue.

And concurrent transfer of primary loyalty from Rome to kin.

Result: ruin.

ninja

As a reminder.

A Waste Of Taxpayer Money All To Appease A Few Woke Folks Who Have Nothing Better To Do Than Divide Our Nation.

“The Cost To Rename 9 Confederacy-Honoring Army Bases Has Doubled”

https://www.militarytimes.com/news/your-military/2023/03/24/the-cost-to-rename-9-confederacy-honoring-army-bases-has-doubled/#:~:text=The%20Army%20expects%20to%20pay,rename%20the%20nine%20Army%20installations.

11B-Mailclerk

I shall be very much surprised if the final bade rename cost is less than 10x the original estimate.

ninja

As A Reminder.

This Needs To Stop.

“How Much Aid Has the U.S. Sent Ukraine? Here Are Six Charts.”

https://www.cfr.org/article/how-much-aid-has-us-sent-ukraine-here-are-six-charts

ANCRN

I may be showing my age, being Cold War surplus, but I fully support killing Russians by means of a proxi war. Better than spilling our own boys blood.

AW1Ed

I grinned when the Ukes sank Russia’s Slava CG Moskva. Was trained for that very mission the minute the P-3 got its AGM-84 Harpoon cert.

ninja

ANCRN wrote:

“Better than spilling our own boys blood.”

That is next. You just watch.

History Repeats Itself. We Never Learn.

11B-Mailclerk

Given how freely Russia spends to help folks kill our servicepeeps, got zero sympathy for Putin’s current quagmire blues.

Why should that shit be one way only?

They might do it to us? Already done. For almost a century.

Might start a war? Bye bye Russia. Yeah, costs. We win. They lose. Bigly, stinking, they lose.

They know it, too.

Fjardeson

.0032 % of our GDP, 76.8 billion dollars. Drop in the bucket. Well worth the damage inflicted on R***ia. Not to mention the example being set that stealing land by force is an idea past its time.

AW1Ed

Having been an essential government employee, all I can say is let the fucker crash.

Then we can find out who REALLY needs to get paid.

AW1Ed

Madison had it right- spending only as measured against an enumerated power.

rgr769

Yes, he did so. TR wanted to end the spoils system of hiring gov’t employees. So, he instituted the merit system of federal employment.

Fjardeson

Elon Musk also found out the whole 20% of your employees do 80% of the work… 🙂

timactual

First of all, the “debt limit” does NOT prohibit or prevent repayment of debt; it prohibits BORROWING, the creation of new debt.
Second, there is a thing called discretionary spending, which is OPTIONAL spending; want to spend rather than have to spend. Hiring consultants to teach federal employees and military personnel to use the proper pronouns is an example. There is more than enough discretionary spending to cut that will cover all debt service (interest and retirement) payments.

The problem is that Democrats are dishonestly claiming we will be forced to default on our debt obligations and Republicans are too stupid and too cowardly to oppose them. And the media, of course, is too dishonest, stupid, and downright ignorant to state the truth.

Roh-Dog

Good points.

rgr769

Also, the 14th Amendment has nothing to do with authority for the federal government to borrow money to fund the spending of the federal government.

timactual

True. But who are we to argue with a famous and distinguished Harvard law professor (Tribe)? Unsophisticated peasants like us mistakenly rely on what is actually written in the Constitution, as if we could actually understand the English language.

rgr769

Tribe totally sold out to the left long ago.

Forest Bondurant

Yellen needs to show her work, otherwise it’s all bullshit.

KoB

Odd how the American Taxpayer is told constantly that SS and essential services $s are running out, but we never run short of foreign aid or welfare $s.

Anybody know a pissed off JAL Widebody Driver?

Roh-Dog

Now that you say it, tis odd! /small s

No need to get all kinetic, jus’havta starve the beast of tax revenue.

Make Harbours Tea-Favoured Again

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USAFRetired

Term limits

USAFRetired

Lets see, I have a couple US Savings Bonds that mature and stop earning interest on 1 June. I think I’ll try to cash them when the banks open next Thursday.

timactual

I will save you some time—banks don’t cash Savings Bonds anymore.

https://www.treasurydirect.gov/savings-bonds/cashing-a-bond/

USAFRetired

My credit union still does I’ve been making a monthly trip there since 2001 except when deployed to cash them. I used to buy new bonds with the principal and reinvest the interest elsewhere or use it for other purposes. I stopped doing that in 2008 when I couldn’t get a physical bond in return.

My most recent redemption was 2 May of this year.

USAFRetired

Typo 2010