The U.S. Does NOT Have to Default
In a piece on Fox Business, Prof. Peter Morici has adequately debunked a destabilizing and dangerous myth perpetrated by the left and Treasury Secretary Tim Geithner. In the event the debt ceiling is not raised on August 2, the U.S. will not default on its debt.
In fact, the government can – and should – manage incoming funds so as to pay interest on our debt, send out Social Security and Medicare checks, and pay our troops. But doing that would cost Democrats their trump card. Spreading mistruths and scare tactics are far easier than doing what it takes to save the economy. From the article:
“If budget negotiators can’t focus on those facts before August, the U.S. government is facing a shutdown — something it has endured in the past — but it does not have to default on the national debt.
“Default is a reckless threat.
“The U.S. government will still be collecting taxes equaling about 55% of expenses — and interest on the debt could easily be paid; social security and Medicare checks could go out, and the military adequately funded. Other functions would have to be greatly scaled back. This has been endured before and is not pretty, but make no mistake about it, we have plenty of money on hand to pay $18 billion each month in interest on the debt. With a sound plan to manage the crisis, bonds coming due could be rolled over.
“Secretary Geithner, whose primary skills are bureaucratic and not economic, appears intent on forcing a crisis rather than making plans to keep the country going. That would likely include phasing down some operations the last weeks of July as the early August deadline draws closer.
“That would take away the President and Democratic leaders club in the debt-ceiling negotiations, and their strategy to continually paint Republicans as spendthrifts.
“Sadly, the Republicans as inept as ever, don’t have the sense to debunk Democratic rhetoric with hard facts.
“Leadership failure by both parties — an inability to face facts — is why the U.S. government is facing default. Avoiding default does not require more taxes, and default doesn’t have to happen if Democrats won’t accept a deal without higher taxes.”
Read the full article here.