We are being "threatened" again with scare tactics by telling us "The United States would immediately have its top-notch credit rating slashed to "selective default" if it misses a debt payment on August 4"
"If the U.S. government misses a payment, it goes to D," Chambers said. "That would happen right after August 4, when the bills mature, because they don't have a grace period."
But here's the problem -
Treasury has more than enough coming in from tax deposits to honor that thirty billion in rollover.
The government borrows about 40 cents of every dollar it spends at present. This means two things:
• There is more than enough money coming in to pay the debt and interest that matures. Therefore, a default would be an intentional act by Tim Geithner, much as it is when you decide not to pay your mortgage (despite having the money to do so.) Selective default is a choice, but it is a freely-entered into choice. What Geithner is doing is threatening an intentional, strategic default if he doesn't get his (and Obama's) way.
• If the government does not get its debt increase it must immediately balance the budget. This is good, not bad, in the intermediate and longer term.
The problem is that this situation also exposes the truth, which nobody wants to face in Congress: Whether you raise taxes or cut spending the economic impact is the same - 12% of GDP disappears.
Sorry folks, that's the arithmetic - fifth-grade arithmetic.
Don't Fall For It Congress
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