Republicans In crisis and a Nation and a Democracy on the Sacrificial Alter

Fitch has just placed The United States on credit watch negative. That is a big development. And it's about bloody time!

 

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They are in some ways similar but certainly not identical.

No, that's the standard definition. From Wikipedia:

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Default (finance)

In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt.
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Then you are using a different definition than everyone else.

To reiterate - we can avoid default as most people understand the term by not paying certain programs but still servicing the debt. That prevents a worldwide economic collapse and protects our ability to borrow in the future, but not paying other things (like medicare) is certainly bad.

 

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I agree with Joe here.
I'm not sure paying bond interest only, not senior citizen's S.S., etc. will salvage much - "full faith and credit" will be shattered, credit ratings down graded, interest rates will soar and then not even the bond interest on rolled bonds can be paid for long.

 

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No, they are in no way similar.

And again, you are using a very selective definition of the word. I previously cited the Webster’s’ definition of the word.
http://www.merriam-webster.com/dictionary/default

": failure to do something required by duty or law : neglect" - Webster's

LOL, no I am just not cherry picking as you are.

Unfortunately for you and your fellow Republicans the dictionary is pretty clear in its definition of the word. And you and your fellow Republicans are cherry picking in order to justify your unjustifiable ideological positions.

The law says, the US government owes, its employees their salaries, pensions and benefits. The law says the US government owes its contractors, nursing homes, physicians, hospitals, and Social Security recipients money which it will not be able to pay if the debt ceiling is not raised.

 

Are you not forgetting that the Social Security checks have totaled more than the SS tax revenue for a few years. The difference is paid by SS from the SS Trust fund. SS presents bonds to the treasury to be paid. The SS trust funds assets were LOANED to the federal government and spent long ago. By you own definition failure to pay maturing bonds in the SS trust fund is "default." Certainly those living on the SS checks will consider it a Default, if the full value of the check is not paid.

 

I'm not a republican. This might help clear things up for you:
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If we hit the debt ceiling, can Obama choose which bills to pay?
WaPo
By Brad Plumer, Published: October 7 at 3:13 pm

At some point after Oct. 17, the U.S. government won't have enough money to pay all its bills. And, if Congress fails to raise the debt ceiling, which still is a real possibility, the government won't be able to borrow more to meet those obligations.

That creates the risk that the United States could default on its debt — if, say, there's not enough cash on hand to pay bondholders when interest payments come due.

Both the Treasury Department and financial analysts agree this could lead to Armageddon. Large swaths of the global financial system are structured around the idea that U.S. debt is the safest in the world. If that assumption was ever called into question, chaos would ensue.

Some Republicans, however, are now downplaying this possibility: If the United States does breach its debt ceiling, they'll note, why can't President Obama just pick and choose which bills to pay? Surely he could just keep paying bondholders in order to avert a financial calamity while delaying payments for everyone else, right?

"There's always revenue coming into the Treasury, certainly enough revenue to pay interest," Rep. Justin Amash (R-Mich) told National Journal.

But there are a few big problems with this "prioritization" plan: For one, it could prove extremely difficult for the Treasury Department to prioritize payments in this way and avoid default. This is murky terrain, both logistically and legally. Second, even if the Obama administration could put bondholders first, breaching the debt ceiling would still cause massive disruptions elsewhere in the U.S. economy.

When everything is running smoothly, the Treasury Department typically receives around two million invoices a day from various agencies. The Department of Defense might send a notice that it owes a contractor $1 million for work on a weapons system. Treasury's computers make sure the figures are correct and then authorize the payment. This is all done automatically, dozens of times per second.

These payments all flow through the recently-formed Office of Fiscal Service. And there appear to be two broad systems here:

1) The Bureau of the Public Debt handles U.S. sovereign debt payments through a system called Fedwire.
2) The Financial Management Service handles all other payments to agencies and vendors, through the Automated Clearing House.

Again, that's how things work normally. Money comes in, money goes out, automatically, millions of times each day. The question is what happens if the United States breaches the debt ceiling and sufficient funds stop coming in because the government can't keep borrowing...

The Treasury Department maintains that it has no ability to pick and choose which bills to pay if it's short of cash. According to the agency's inspector general, its computer systems are designed to "make each payment in the order it comes due." Full stop.

Under this view, if Congress fails to lift the debt ceiling, the U.S. government will only have money to cover about 65 percent of its bills. Some payments will simply fail to clear. Perhaps a payment to a defense contractor comes up short. Maybe a Social Security check bounces. Maybe an interest payment to bondholders fails.

That last possibility is the most worrisome. If the U.S. government misses a payment to bondholders, the consequences could be severe. "A default would be unprecedented and has the potential to be catastrophic," warns Treasury. "Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse."

Other financial analysts agree. A missed debt payment could cause the entire financial system to seize up. "Let us be perfectly clear," warns a note from RBC Capital Markets, "crossing the debt ceiling would be catastrophic."

That's why some market analysts — and many Republicans — think there's no way the U.S. government would ever allow a debt default. Surely the Treasury Department will do everything in its power to avoid the apocalypse. That means paying bondholders first and delaying payments to everyone else if necessary.

A recent note from analysts at Credit Suisse (via Cardiff Garcia), for instance, argues that "if push comes to shove and Congress cannot strike a deal in time, the ability to pick and choose who gets paid does exist, if only on a broad basis."

One possible way this might work is that the Bureau of the Public Debt would keep making payments to bondholders through Fedwire, and Treasury would halt the computer systems that make payments to other government agencies and vendors. ("The way that [these systems] are set up, they can either be set to 'on' or 'off' – i.e., a system either makes all of its payments or it doesn’t make any at all," notes Credit Suisse.)

. . . .

So it's possible, though not certain, that the Obama administration could avert a default and complete meltdown of financial markets in the event of a debt-ceiling breach.
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Correct. Failure to pay bondholders is. Failure to pay SS benefits is not.

Of course. Anyone who loses money on this will consider it the worst thing since 9/11.

 

This notion that Republicans are trying to float that they can cause the government to default on some of its obligations but not all…then it really isn’t a default is just bizarre but no more bizarre than the rest of their ideological positions. And it ignores the core issue, confidence in the US government.

 

OK we agree the treasury must redeem the bonds the SS TRUST fund presents. That money is held in TRUST for payment of SS claims. It can't be used for anything else. So there is no reason not to pay it out in SS checks.* Likewise, the SS tax revenue must be paid out too, unless its total is greater than the total of the checks, which ceased to be the case about three years ago and with ~10,000 Baby Boomers retiring daily, the gap between SS revenues and required payment checks is rapidly growing.

SUMMARY: I don't see how government can not pay SS checks without violating TRUST laws.

* Especially as consumer buying will take a huge hit, even if it is. - There may be no way back out of this mess.

 

It can't. It can just avoid default. It's still a terrible idea to refuse to raise the debt ceiling.

 

Who Is Running the US House of Representatives?

It's damn scary. Earlier House Republicans torpedoed the Senate effort to save the nation from default when they announced they were going to pass a bill today to reopen the government and raise the debt ceiling. But then something amazing happened. A Republican special interest group comes out against the bill and suddenly the Republican House drops the bill...just like that!

"Fox News is told that a decision by the conservative group Heritage Action to come out against the emerging bill drove some Republicans to oppose the plan -- and helped sideline the proposal.

The group complained that the House plan would "do nothing" to stall "massive new entitlements" in ObamaCare.

The revised House plan was aimed at both ending the partial government shutdown and raising the debt ceiling, but also imposing one ObamaCare-related provision." - Fox News


http://www.foxnews.com/politics/201...bt-ceiling-government-funding-in-response-to/


Wow! Who is running the Republican House of Representatives? It obviously isn't the Republicans in the House. And it certainly isn't Speaker Boehner.

 

Mac Senate

Except for the extraordinary nature of the assertion, and the accompaniment burden of deriving extraordinary proof from such extraordinary excrement, one might be inclined to think this sort of exponential incompetence is actually scripted.

 

On Flying Cars and Governments Not Working

All eyes to the midterm.

The Senate is the technical detail.

Give the House an excuse, they'll draft articles, but Republicans need the Senate.

In either case, yes, they can at least muster a pretense for demanding impeachment; either he acts unilaterally and manages the country's finances, demanding a constitutional standoff, or the nation defaults, and Republicans roar for someone's head.

The thing is that, technically, the whole mess plays to conservative interests, sort of. The whole thing about government not working? Well, that's an iffy thing. Some would suggest we've seen this tenuous marriage before, between financial interests and moral passions, and no, that does not likewise suggest a similar fate for the GOP. But it does point toward a certain theme; the financial interests are capable of manipulating the moral passions, but only to a certain point. All that talk about government not working has its fervent believers, but the markets are trying their hardest to pretend they're not terrified. And here, I'd say, work with me.

That is to say, you're familiar with my occasional waxing anything but poetic about the Cold War days, when Red was liberal and Blue was waspish blue-blood old-money conservative. Well, remember the underlying theme: Conservatives and Capitalism.

Whatever the truth, more important is what people believe true. And whatever we might call American capitalism, we see a similar cycle in Republican avarice. They have raised a bloc they cannot control.

Whatever we might call American capitalism, there is a difference between what the actuaries, economists, and executives see. The result is about what you'd expect; executives make the decisions lacking any sense of middle or long terms.

Similarly, Republicans. After whipping up the evangelical conservatives in 1980, the GOP has leaned steadily and heavily on the bloc as a cornerstone, making promises any pragmatist could tell you they couldn't deliver.

Now these stupid people they've conned are really, really pissed off. The joke for my father's generation of American is, "Where's my flying car!"

The social conservative blocs of the right wing? They're not getting rid of gay marriage. They're not getting rid of abortion. They're not getting rid of Sharia law—they can't automatically refuse to recognize those marriages, &c....

The economic fanatics? They were marks in the first place. And while there is a certain gravity of schadenfreude, it's the gravity that is important.
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Notes:

Kornacki, Steve. "Fractured coalition puts GOP at crossroads". The Rachel Maddow Show. October 15, 2013. Video.MSBNC.MSN.com. October 16, 2013. http://video.msnbc.msn.com/rachel-maddow/53292217/#53292217

 

You know newspapers often set type for both alternatives. One famous case even got printed with head line "Dewey Wins" (but Truman had).

Well here are the two now set in headline type:

"Crux Missile sinks Ship of State"
"US dodges debt bullet, for now"

Crux can use Senate rules to block any vote for at least a day, if he chose to. (At this point in time, "unanimous consent" is required to speed procedures.)

 

Scripted, but by whom? Who is writing the script? It certainly isn't Boehner or elected Republicans.

 

That is true; there are two potential obstacles to any deal in the Senate. Canadian Ted and his sidekick could drag it out using procedural delay tactics and Boehner could refuse to bring it for a vote. If Boehner brings the Senate agreement forward for a vote, my guess is it passes in the House. If the Senate votes first, the possibility Cruz invokes procedure to stall the bill is significant. If the bill is approved by the House first, Canadian Ted will be less inclined to invoke Senate procedures to delay a vote.

 

The Koch Brothers, Tea Party leaders and (to a lesser degree) Boehner. There's apparently no coordination whatsoever - which is why this is such a mess.

 

Deal!

Good News, Senate Republicans and Democrats have come to an agreement to raise the debt ceiling and fund the government for a few months. And Cruz has declined stall the vote. So this afternoon the Senate bill will be tossed over to the House. The question is as it has always been, will Boehner put it for a vote in the House - something he has steadfastly refused to do thus far? My guess is he will. If that happens, American democracy wins another round.

 

Probably he won't as said so, but I don't trust him. It could be a trick - get the Senate to go first and then House Republicans stall as they lack the votes to block. As I understand it, if the house goes first, officially it will be an earlier bill returning (but completely changed to be essentially the same as Senate's just made deal). I.e. still carrying the old bill's number and "returning" the Senate. Returning bills have much less time (30 minute max, I think) for speakers to discuss.