Treasury says debt payments could be prioritized in default scenario

Comments (29)
tommelba wrote:

Interesting where we are headed. In the orginal proposal for a world banking system it was stated by the TriLateral that we must LOWER THE STANDARD OF LIVING IN THE UNITED STATES. That was the year immediately before we had the debt expand the next year. If you think you will not get a lower living you are wrong. ALL power is headed that way and those that say they are not are not telling the truth of their opinion.

May 09, 2014 4:33pm EDT  --  Report as abuse
4825 wrote:

You better watch out Jack Lew. The Democrats do not want the American public to know this. Remember how the liberal Democrats whined and cried about how the Republicans are going to cause us to default on the debt, boo-hoo. So don’t whisper too loud that the payments can be prioritized. You will be fired if you are not careful Jack.

The democrats have lied to the American public for too long now. Vote very democrat out of office every chance you get, I am.

May 09, 2014 5:46pm EDT  --  Report as abuse
moonhill wrote:

Oh, I thought Obama said if that happened, the military would not get paid and Social Security recipients would not get their checks. It was all just fear-mongering and lying by this poor excuse for a president.

May 09, 2014 5:52pm EDT  --  Report as abuse
ExDemocrat wrote:

The U.S. government needs a big dose of not spending. If it spent less, it would not need to have to be concerned about discussing things like prioritizing payments to its creditors and others to whom it has financial obligations. The federal government needs to be smaller, less expensive, and less of an encumbrance on the rest of the U.S. economy.

Where is Calvin Coolidge when we need him? Yes, the U.S. economy boomed for years while he reduced federal outlays and the relative size of the national government. No, the U.S. doesn’t have to have the federal government decide and do everything for everyone for it to be successful!

May 09, 2014 6:31pm EDT  --  Report as abuse
SaveRMiddle wrote:

@Monhill….My first thought as well. I so remember Obama terrifying the elders of this nation using the political lie of not receiving their SS checks. America can now officially add this to the ever growing list.

Impossible to imagine what we still don’t know.

May 09, 2014 6:38pm EDT  --  Report as abuse
xyz2055 wrote:

Section 4 of the 14th Amendment to the Constitution simply couldn’t be more clear. The Constitution, btw way that every congressman swears to uphold and defend.

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.”

Some of you didn’t really read the article. The only people that would get paid in this scenario would be the bond holders. The investors. Everyone else including Social Security recipients and the military wouldn’t get paid.

But it’s a moot point. Congress wrote the appropriation bills that authorized the expenditures and the debt it created. The 14th Amendment was written expressly so that political gamesmanship could not cause a default on the debt. All the obligations including Social Security are guaranteed by the Constitution. They are bound by the Constitution to honor and pay those debts period! When they start trying to circumvent the Constitution..where does it stop? Rather the do nothings in the House need to start working on cutting expenses across the board rather than cherry picking them and get spending under control.

May 09, 2014 6:47pm EDT  --  Report as abuse
xyz2055 wrote:

SaveRMiddle..do you ever actually read an article before you comment. The scenario says that the only ones who would get paid are the investors (Bond Holders)…no one else would including senior citizens on Social Security would get paid. They could pay the debt but none of the other obligations. No wonder this country is in trouble.

May 09, 2014 6:56pm EDT  --  Report as abuse
SaveRMiddle wrote:

@xyz2055

You’re right. I stand corrected. Thanks for the correction.

May 09, 2014 8:34pm EDT  --  Report as abuse

Once interest rates get back to normal there is no way the United States will be able to meet its foreign debt and interest payment obligations. And those owed the money know it and are gradually making preparations for the USA to default, meaning the American dollar is doomed not only as a domestic currency but certainly will not be, in future, recognized as the reserve currency.

May 09, 2014 12:45am EDT  --  Report as abuse

Once interest rates get back to normal there is no way the United States will be able to meet its foreign debt and interest payment obligations. And those owed the money know it and are gradually making preparations for the USA to default, meaning the American dollar is doomed not only as a domestic currency but certainly will not be, in future, recognized as the reserve currency.

May 09, 2014 12:45am EDT  --  Report as abuse
Bakhtin wrote:

moonhill wrote:
“Oh, I thought Obama said if that happened, the military would not get paid and Social Security recipients would not get their checks. It was all just fear-mongering and lying by this poor excuse for a president.”

From the article, in the small writing below the headline:

“If the debt limit were not raised, and assuming Treasury had sufficient cash on hand, the New York Fed’s systems would be technologically capable of continuing to make principal and interest payments while Treasury was not making other kinds of payments.”

What do you think those ‘other kinds of payments’ are if not military and welfare?

May 09, 2014 12:53am EDT  --  Report as abuse
Bakhtin wrote:

@4825

It says a lot about you and Republicans that you think the US government defaulting on every obligation except bond payments is not a problem.

Jack Lew did not say ” the payments can be prioritised”. That is just you inventing stuff and saying he said something that he didn’t – that is both very dishonest and a habit of yours.

What Treasury Assistant Secretary Alistair Fitzpayne, a senior aide to Treasury Secretary Jack Lew, said was:

“If the debt limit were not raised, and assuming Treasury had sufficient cash on hand, the New York Fed’s systems would be technologically capable of continuing to make principal and interest payments while Treasury was not making other kinds of payments.”

Simplified for you, that means the technology may be able to do it, but no-one has ever grid it and it would only last until the money ran out.

As well as getting the person making the statement wrong, you are also spinning a very big ‘maybe’ into a ‘can’.

May 10, 2014 1:02am EDT  --  Report as abuse
xyz2055 wrote:

Bakhtin..I don’t know why you waste your time with 4825. IT is a side show on the Reuters comment board. No critical analysis in any of IT’s comments. No history nor is IT subject to Abuse reports. It’s more like a billboard for the delusional extreme right that refuses to hold the Republicans accountable for anything.

May 10, 2014 2:53am EDT  --  Report as abuse
gordo53 wrote:

It is interesting to note that many if not most Americans think that the national debt is just some very large number that is essentially meaningless. As a nation we appear to be moving toward modern monetary theory (MMT). Of course, very few are calling it that because in economic circles it tends to have a negative connotation. We are, however, approaching the point when it will be counter productive if not outright dangerous to attempt to reduce even the rate at which we accumulate debt. In MMT, the government simply creates enough cash to do whatever it determines is necessary. The printing press replaces debt and the associated debt service payments. Taxation is the tool used to control inflation. As a practical matter, this is the mode we have been in for decades. Anyone who understands our economic system knows full well that we will NEVER reduce the national debt. It is a practical impossibility. So let’s just forget about all this debt level nonsense. Maybe, but not likely, the political class can find something meaningful to discuss. For better or worse, our economic fate lies in our ability to compete in the global marketplace. We shall see.

May 10, 2014 8:26am EDT  --  Report as abuse
4825 wrote:

Bakhtin- There you go again twisting words of another poster. I have never said “the US government defaulting on every obligation except bond payments is not a problem.”. That is right, never. What I have said is that the administration is fear mongering when they talk about default because we can prioritize payments. The democrats wanted to scare the public, using typical democrat lies, to do it. Now we have old Jack’s department saying otherwise. Bakhtin, stop being so star struck with liberalism that you can’t think straight. You remind me of a teenager in love.

May 10, 2014 9:57am EDT  --  Report as abuse
paintcan wrote:

No one would ask the question if it wasn’t being considered a possibility.

It is obvious that Lew’s assistant’s statement means the wealthy and the sovereign fund investors like Russia, China and Saudi Arabia would get paid off.

Congress has been borrowing against the SS trust fund for decades the Social Security trust fund should be considered a high priority investor and at a higher priority than other investors. It was supposed to be a separate fund and outside the normal budget process and for anyone to claim that SS payments could be halted means the wealthy could walk off with what’s left of the fund.

The seniors may not have much fight left in them but that probably won’t be the case of the ex-military.

May 10, 2014 11:54am EDT  --  Report as abuse
Davage wrote:

@4825:
“What I have said is that the administration is fear mongering when they talk about default because we can prioritize payments. The democrats wanted to scare the public, using typical democrat lies, to do it.”

——-

Well, lets consider this. The Treasury now says it can be done, so lets say we get in another pickle where Congressional Conservatives refuse to pass another debt limit extension. Where do we prioritize the payments? Who DON’T we pay?

Investors?
Social Security?
Medicare and Medicaid?
The Military?
Federal agencies like NASA, the FBI/ATF/ICE/etc?

If payments are prioritized, SOMEONE isn’t going to get paid. The supporters of that someone are going to be VERY angry at Conservatives for cutting them out – RIGHT before an election.

Which constituency does your Congressman want to lose?

May 10, 2014 1:54pm EDT  --  Report as abuse
xyz2055 wrote:

Davage…this article and the comments here are simply speculation. The most important thing to remember here is that Congress would be in violation of section 4 of the 14th amendment. They wrote and passed the appropriation bills that are creating the deficit and thus the debt. As such they have already authorized payment. One would think this would be a no brainer if tested in the Supreme court. There was much speculation during the last debt ceiling crisis that the President (any President) could through executive order authorize the treasury to raise the money needed to pay all obligations should Congress fail to raise the debt ceiling.. While not specifically authorized in the Constitution, the basis for the action comes from the fact that it’s the Presidents (any President) job to uphold the Constitution. The President would simply hold up section 4 of the 14th Amendment to defend his actions.

Folks..it’s simple..there is no argument here. Every Congressman takes an oath to defend the Constitution. Any cockamamie scheme they come up with to try and pay only part of the obligations..is unconstitutional.

May 10, 2014 3:28pm EDT  --  Report as abuse
Davage wrote:

@xyz,

While interpretation of constitutional requirements is important, there are many other repercussions to consider. Voter satisfaction will be a HUGE one for any Congressman. Another will be effects on the US credit rating (and therefore how much the US pays on loans). Then there are questions of what happens to Seniors of SS doesn’t get paid, to service members if the military doesn’t get paid, to immigration if boarder security agencies don’t get paid, etc. etc. etc. etc. etc.

May 10, 2014 3:46pm EDT  --  Report as abuse
xyz2055 wrote:

Davage…exactly!!! Section 4 of the 14th Amendment was specifically written the way that it is so that certain members of Congress could not use the obligations of the federal government for political gain. Or for barter. Not paying the obligations that Congress has authorized would be devastating. That isn’t fear mongering. It’s a fact.

May 10, 2014 4:01pm EDT  --  Report as abuse
gordo53 wrote:

All this talk of default is utter nonsense. It won’t ever happen. It is political gamesmanship and nothing else. We are a nation in decline. Accordingly, the value of the dollar will, over time, decline proportionately. It is likely that within a decade the dollar will no longer be the world reserve currency. The federal government will continue to deficit spend and if necessary, the Fed will become the only consumer of US debt. Default is not an option.

May 10, 2014 8:07pm EDT  --  Report as abuse
carnivalchaos wrote:

Here’s the problem. The Republicans control the House, and they may very well control the Senate by next year. What’s to stop them from forcing us to default on our debt obligations? The Constitution is a document. It can’t force anyone to do anything. With oversight responsibilities resting with the House, who’s going to enforce section 4 of the 14th Amendment? I don’t believe the Republicans are stupid enough to force that on us, but stranger things have happened.

May 10, 2014 10:12pm EDT  --  Report as abuse
AZWarrior wrote:

Both sides are living in a dream world. The debt has already passed our ability to repay and soon will reach a point that we can’t afford to roll it over. What happens then is anyone’s guess. Personally, I hope we can keep the Ponzi scheme going until my wife and are dead. If not, well I have the skills to take what I need from those who don’t.

May 10, 2014 11:15pm EDT  --  Report as abuse
Bakhtin wrote:

@4825

You are contradicting yourself. You don’t seem to know what your opinion is supposed to be anymore.

Democrats said that government defaulting on obligations because of Republican refusal to raise the debt ceiling would be a disaster. You say that is lies and fearmongering wich means you don’t agree, which means you think it is not a problem.

… then in the next post you say you do agree that it would be a problem, followed by reiterating that what you just agreed with is a lie and fearmongering.

May 10, 2014 12:29am EDT  --  Report as abuse
CountryPride wrote:

This article is pure uneducated garbage and nothing more! It is sickening how low the government elite and their lapdog media think of us. But it is saddening that the majority of Americans will simply buy into the we can’t allow a default we have to raise our debt lie. The problem with this article right away is that they are saying if we don’t raise our debt ceiling we will default. That is like saying if you have a credit card with a $10k limit and you have reached your $10k limit that if you don’t raise the borrowing limit to $20k you default. NO! You tell the idiot to stop spending money on nonsense and use that money to start paying off that debt. This is the problem, the corrupt government wants to continue to increase spending your money all around the world in every way imaginable and cry wolf saying if you don’t allow them to spend more the country falls. We takes in Trillions of dollars a year to run this country, the debt is what we spend over that. The solution is to reign in this corrupt government and it’s out of control spending policies and not only would this allow us to not have to raise the debt ceiling but we could pay off some of our national debt and get back to a healthy spend only as you take in policy. They intentionally want to bankrupt this country and destroy Americans.

May 11, 2014 1:58am EDT  --  Report as abuse
xyz2055 wrote:

Bakhtin..you are learning. 4825 invariably contradicts itself. Once you start trying to nail IT down yo specifics, when it has no rebuttal to your challenge…IT will attempt to change the argument. With no history and not held to the same rules of this comment board as you…4825 may be more than one person. Who knows, but one thing is for sure…Reuters has given that handle an exemption from the rules. The only logical solution is not to play. Let it rant all it wants and simply don’t respond. Because it’s a waste of time.

May 11, 2014 8:15am EDT  --  Report as abuse
Bakhtin wrote:

CountryPride wrote:
“But it is saddening that the majority of Americans will simply buy into the we can’t allow a default we have to raise our debt lie”

Okay – now is your big chance to convince everybody. Tell us all – with specifics and figures – how the US government not being able to pay its bills is not a problem, and if possible give us real-world examples of governments running out of money without bad consequences.

I understand that most US Republicans are ideologically opposed to paying their way – they dot want to pay their tax, they don’t want to pay for healthcare, they don’t want the government to pay its bills, etc – I would really like to see how you rationalise it.

CountryPride wrote:
“That is like saying if you have a credit card with a $10k limit and you have reached your $10k limit that if you don’t raise the borrowing limit to $20k you default.”

It may seem like that to the US right-wing, who as a group don’t have a clue about economics (Which is why they trashed the US economy. That was not a display of expertise – it was a display of ignorance and nothing has changed.), but for the rest of us that do have a clue, comparing a sovereign currency to a credit card just makes us laugh.

Make us laugh some more – tell us which credit company the USA has an account with (say China… please…). Tell us what the terms of this credit line is. Tell us which bailiffs are going to come round and start repossessing bits of the USA, and tell us who gives them the authority to do that.

CountryPride wrote:
“the corrupt government wants to continue to increase spending your money all around the world in every way imaginable and cry wolf saying if you don’t allow them to spend more the country falls.”

Time for this European to teach another US Republican world, with a lesson on cause and effect thrown in for free.

Here, CountryPride, is how your country spends money.

1) Somebody presents a bill to one of the houses of congress.

2) Representatives vote on it – and remember that the House has a Republican majority.

3) If it is passed, and the spending approved (usually by the Republican majority), the debt limit (should) be raised to cover the approved spending.

Now, CountryPride, tell us all:

First, how a republican majority approving spending is Democrats fault.

Second, how the last step in the spending process – raising the debt ceiling to cover approved spending – can be the cause of the spending.

May 11, 2014 9:45am EDT  --  Report as abuse
Davage wrote:

@CountryPride:
“NO! You tell the idiot to stop spending money on nonsense and use that money to start paying off that debt.”

What would you, as the US government, stop spending money on? Please list programs and amount of money until you have a roughly balanced budget.

May 11, 2014 11:03am EDT  --  Report as abuse
PhilipMatlage wrote:

The National Debt is not owed to the dwindling middle class and burgeoning underclass (working poor,just plain poor), it is owed to the top 5% and foreign interests(Governments,Foreign Banks). Let those who have wealth and the foreign interests just hold their breath and wait for payments.

May 11, 2014 1:33pm EDT  --  Report as abuse
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