Quote:
Originally Posted by Tristan Lall
I'm not sure what you mean by this. Could you explain in more detail?
|
On October 17, the "extraordinary measures" (desperate intra-government money shifting) that the Treasury's been taking will likely run out*, leaving around $30 billion plus the incoming tax revenue to pay the bills. There are of course a bunch of bills to pay after that (Social Security, military pay, Medicaid, etc), some of which may bounce if the debt ceiling isn't raised. The interest-only argument is that we could prioritize interest payments and still be able to pay them with incoming tax dollars, but even if so (which of course depends on interest rates), we wouldn't have enough money to pay everything else including mandatory and other -"bought" bills. This is why Speaker Boehner agreed that this isn't enough, instead
pledging to raise the ceiling in order to avoid default.
There's some debate on how bad default would be, its association with the 14th Amendment, and if it's avoidable other ways, e.g. unilateral Presidential action, but basically all of the outcomes range really bad-->worst. There are a few "so what's", but given that a lot of it depends on market confidence, and the IMF is warning it'd threaten the global economy...
*As alluded, the debt/default topic of this post is not the same as the government shutdown, though their chronological colocation has tied them together in some potentially dangerous ways.