Today I was reminded of something that has been lost in all the Democrats’ hype over the possibility of default after October 17: the US blew past the actual date its borrowing authority expired on May 13! So the Dept. of the Treasury has been juggling the bills for 5 months already, just like most American families have to do every month.
Supposedly there is just not anything else the Treasury Secretary can do after October 17. I have not heard why that date was chosen – the next legally obligated payment is due on October 23 (to the Social Security pension fund). But hear me clearly:
There is no automatic default on October 17, and there will not be in the days following either.
How can I say that with such assurance? First, because the government will still have revenue coming in, so specific legal obligations could be paid. According to Wikipedia, the US received $6 billion/day in 2007; the Heritage Foundation says $6.3 billion/day in 2011; and FoxNews claims $5 billion/day in 2012.
According to columnist George Will, the US takes in almost double the revenue compared to required spending. For 2012, those obligations were $2.5 billion/day for Social Security and $854 million/day for interest on the federal debt. (The biggest government expense – but not something that must be paid – is the $3 billion/day (2012) spent by the Dept. of Health & Human Services [even before Obamacare].)
The second reason I can speak with assurance is that the President has Constitutional authority to prioritize federal payments. Mr. Obama has said the government payment system is not designed to make decisions about who gets paid and who does not, that it would be chaos. But just because something is difficult does not mean it cannot be accomplished. There would likely be various problems. But the government would not default unless President Obama chooses to pay for other budget items before interest on the debt and entitlements.
To be clear, default is not having difficulty paying for federal expenses (wages, grants to the National Endowment for the Arts and others, highway repairs, foreign aid, etc.) Default is when a family, business or government cannot pay back the interest and/or principle on money they have borrowed. If I make my monthly credit card payment, but cannot afford a mocha latte or a new pair of jeans, I am not in default. If I choose to buy the latte and jeans and do not pay the amount due on my credit card, I am in default.
This is an important issue, but the rhetoric coming out if DC (and parroted by most of the news media ) is purposely worded to scare us.