Originally Posted by AustinChief
DAMN DUDE. Listen up. A technical default is on obligated payments. Period. We have enough money to pay them INDEFINITELY. But if we allow all payments to go out you are correct, we will default on debt and everything... but that is a CHOICE.
Not paying for Food Stamps or the FBI is NOT A DEFAULT. PERIOD. If you CHOSE to pay for them and then not have enough for OBLIGATED PAYMENTS, then sure you will default.
No deal does NOT mean a technical default unless we decide to make non obligated payments.
Let's be clear yet again. WE HAVE ENOUGH REVENUE TO SERVICE OUR DEBT AND MAKE ALL OBLIGATED PAYMENTS.
You can NOT stretch the term "default" to include non obligated payments on food stamps or education.
That's not my understand (in terms of being able to make obligated payments). My understanding is that the treasury will have about $30 billion cash on hand at midnight tonight, plus whatever tax revenues come in, to pay its obligations.
My understanding is that by NO LATER than November 1, it will be unable to meet its payment obligations. November 1 is a magic date because it includes Social Security, military pay, veteran's benefits, and interest on government obligations. Those alone total over $67 billion.
If the feds fail to pay its sovereign debt obligations, of course, then all bets are off. Mutual funds are not permitted to hold defaulted securities, which would mean the largest, fire sale of US bonds (or any bonds) ever seen would happen. US bonds are also often used as collateral for short term inter-bank loans etc., and underpin world financial markets.
Then you have the fact that many foreign holders (including sovereign funds) that hold U.S. bonds and roll them over whenever they come due may well not roll them over, and what you have is a unimaginable catastrophe that would result.
I guess you're saying we could opt not to pay the military in order to pay interest on our debt, so we aren't in payment default, but ....seriously...?