Will the U.S. default if debt limit isn’t raised?

Lots of hysteria re: the debt limit.

Key question: will the U.S. really default on its debt obligations if the debt limit isn’t raised?

Answer: Only if that’s what the Treasury Department wants to do.

Basic facts:

The Treasury receives about $250 billion in tax receipts every month.

Interest on the debt is about $30 billion per month (@ an average interest rate of about 2%)

So, plenty of money to cover interest on the debt.

What’s the rub?

Some calamitists say: “No legal way to prioritize who gets paid.  Gotta pay all obligations.”

Easy answer: Cut the flow of obligations.

As the shutdown is showing, we can tell NASA, HUD, EPA, and Education to stay home for awhile and we won’t miss a beat.

Cut expenses, cut obligations. Easy as that.

But, Business Insider says that the government doesn’t have sophisticated enough computer systems to prioritize the cutting of checks.

If the ObamaCare exchanges are representative, they may be right on that one.

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Here’s a clip worth watching.

David Stockman – former OMB head – speaks to the issue … he says default won’t happen.

 

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