The Debt Ceiling and the Conservative Bubble

[bedstuy]

Again, why all this chat of default when a failure to raise the debt ceiling will cut spending by "only" 17%, with debt service being paid first, along with other mandatory expenditures, as required by law? Sure the failure to raise the debt ceiling will be economically disruptive, but there will be no debt default. Period.

I think you're wrong. 

As I understand it, the government makes 100 million payments per month and has no ability to neatly sort between "important" and "not important" payments.  There may not be the infrastructure in place to neatly sort through the bills and pay them on time.  Also, it's not necessarily legal to prioritize without congressional authority.

Plus, where is the 17% number coming from? 

I think it's fair to say that nobody knows what will happen if the debt ceiling doesn't get raised. 

[bedstuy]

Again, why all this chat of default when a failure to raise the debt ceiling will cut spending by "only" 17%, with debt service being paid first, along with other mandatory expenditures, as required by law? Sure the failure to raise the debt ceiling will be economically disruptive, but there will be no debt default. Period.

I think you're wrong. 

As I understand it, the government makes 100 million payments per month and has no ability to neatly sort between "important" and "not important" payments.  There may not be the infrastructure in place to neatly sort through the bills and pay them on time.  Also, it's not necessarily legal to prioritize without congressional authority.

Plus, where is the 17% number coming from? 

I think it's fair to say that nobody knows what will happen if the debt ceiling doesn't get raised. 

18.58% actually. I just calculated it. The 17% is a number Brian York obtained, but that on a closer reading relates to the percent of the US expenditures that need budget authorization, which is what his currently in play over the CR, rather than raising the debt ceiling it turns out.

The idea that the government does not have the software to make sure it meets its Treasury debt service obligations strikes me as ludicrous. If that is the case, it's pathetic, and something needs to be done ASAP. But I don't believe that for a moment. That is just spin. We shall see if we go there, which hopefully we won't.

The number you calculated looks like an entire year.  Your assumption is that each day Federal revenues and expenditures are 1/365 share of the yearly total.  I think that's ridiculous.

But, I looked up this issue a tiny bit.  Apparently, treasuries are handled by a separate computer system from other expenditures.  So, it might be possible to continue paying treasuries.  The strategy for other expenses would likely be to just not pay a certain days' expenses until there's enough cash.  So, until the debt limit was raised all federal payments would just have a longer and longer backlog.

[bedstuy]

Link you are getting unduly personal here. Anyway, Bedstuy just commented that there is a separate computer program for Treasuries, so Rachael Maddow was wrong at least as to that, putting aside what the US government can do to pick which bills it pays, and which not (aren't they paying right now the troops, while not other government workers (other than politicians) by the way as we speak?).

Sure Bedstuy, the 18.58% figure on a day by day basis will vary up and down, and is probably seasonal to boot. But the annual average is ballpark.

That's not exactly what I said.  There are three main payment systems in the Federal government; Defense; Fiscal Service and everything else.  Theoretically, it would be possible to shut one of those payment systems for a period of time.  The major problem would be legal authority and the dates where major payments are due. 

That's why the annual average is really misleading.  There are days when there are extremely large expenses, like the social security benefits for one month.  The government cuts those checks at the same time, so for example, because of entitlement programs there is a payment of $67 billion scheduled on November 1st.  That would have to be delayed in order to keep ourselves from a default.  The other problem I see is that there's no authority to forgo certain payments when there is adequate cash available to save up for large interest payments. 

[bedstuy]

I don't know if the government has software which can prioritize payments. Why should it? Why should someone assume that a certain political party will go insane and act like 5 year old children? I would be disappointed if the government did have software to prioritize payments since that would be a waste of money. The government should try to be efficient and reduce unnecessary spending. Don't you agree, Torie?

No, it is imprudent not to have the capability to pick and choose when things go awry. It should not cost that much money in the larger scheme of things. Think of it as a cost like, well, an insurance premium.   Anyway, we now know that the debt will be paid, and blaming software was BS, and for some reason the troops are being paid, without a software block, so I think much of it is hype. Both parties are in heavy spin mode now, and it is nausiating to me. Obama should be negotiating, and he can stand firm on Obamacare, but no, this is all about moving poll numbers because the Dems think this is a path to taking the House. They are very probably wrong, but they are going there.

Oh yes, the Pubs disgust me for not going to conference on the budget months ago. They didn't because they ran the risk that dissident Pubs might defect, since if the conference fails, after 20 days, stuff can be forced to the floor without a discharge petition, which is why Pelosi offered to give up that card in this context under the gun. But the Pubs are gutless in that if they cannot hold a majority on the merits, they should not be able to "win" based on procedural games.

But of course both parties have made procedural games into an art form. It is all about trying to move the polls now. And both parties on wrong in thinking all of this BS will move the polls much when push comes to shove in the next election. The Fruited Plain is that polarized. Where are the adults? Where are the politicians with guts who are more interested in good public policy than winning the next election?  The system is, if not broken, at a minimum not working on all cylinders. But in the end the public gets what they deserve. Both members of both parties should demand better, but they don't.

No... I think Democrats are acting like centrist adults, while Republicans are 100% at fault for this situation and are acting like petulant fanatics who hate this country so long as it is governed by Democrats. 

Why doesn't Obama just promise to veto the debt limit increase unless he gets cap and trade, a public option, a tax increase and a new infrastructure investment?  Then, if he compromised by accepting a Republican budget number, would that make him an adult?