Why The Treasury Doesn’t Have To Default On 2 August


Kurt Brouwer lays it out in plain English (emphasis his)

The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, [BPC’s Jay] Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there’s enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion).

A default is when Treasury doesn’t pay interest on its debt (i.e. bonds). There will still be plenty of funds to pay that, and Social Security, despite the doomsday predictions from Obama, if–and I emphasize the IF–the Obama Administration decides to.

Brouwer also explains what they’re doing, and why:

I’m afraid Secretary Geithner and others in government are doing the moral equivalent of yelling “Fire!” in a crowded theater and they are doing so for political reasons rather than financial reasons.  They simply do not want any interruptions in the bloated spending underway in Washington and they want to scare Americans into thinking the end of the world is nigh unless the gravy train keeps chugging along.

Read the whole thing… really. He goes into far more detail than I can repost here.

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About Conservative Wanderer

Conservative Wanderer is currently Editor-in-Chief of That's Freedom You Hear! That means anything that goes wrong can be blamed on him. Previously he was a contributor to the PJ Tatler.
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