The 113th Congress will certainly go down as the worst in the history of the Republic. If they don’t do another thing this year, that dubious title is safe. Like a coach who runs up the score in a football game, this Congress shows no signs of ending the craziness.
What sets this Congress apart is the way it deals with big and difficult issues. It simply denies them. Rather than pass legislation dealing with climate change, most Republicans simply deny it is happening-- including the Chairman and most Republicans on the Science and Environment Committee in the House.
Now that we are facing the first default in our history, the Republican response is to simply deny it. A majority of Republicans in both Houses of Congress are saying that even though the government runs out of money in three days, “we will not default.” Rand Paul sums up their position saying that not raising the debt ceiling is “not a default, it is balancing the budget.”
Denial may calm the fears of the uninformed, but it is a lie. Telling the truth, however, has not been a Republican strong suit.
Here are facts about default
The Republican claim that we will not default is like the hypothesis behind fairy tales. It is possible that Cinderella could have worn glass slippers and managed to walk without shattering them and cutting her feet. It is plausible but impossible.
Republicans claim we have enough tax revenue to pay our debt, but the truth is without borrowing, we can only pay 70% of what Congress appropriated. They are referring specifically to paying interest on U.S. Bonds held my many American investors like pension funds, and foreign governments like Japan and China. Nearly every bank in the U.S. holds U.S. Treasury bonds as do foreign banks and governments.
Interest on these bonds comes due nearly every day of the month, and bonds mature every month meaning the principal needs to be paid to avoid default. Right now there is $30 billion in the bank. Tax revenues come in every week, but most tax revenue comes in during March and April because that is when most people file their taxes. Many small businesses tender payroll tax quarterly, the rest in the first ten days of the month.
Government bills, however, come due every day during the month, and need to be paid when due. Perhaps for a while the U.S. could pay interest on bonds from cash flow, but it won’t also be able to pay its other debts. These other debts are obligations backed by the full faith and credit of the United States just as U.S. Treasury Bonds are- even if Republicans deny it.
What are these other debts? They are Social Security checks, military paychecks, Medicare payments to doctors and hospitals, tax refunds, Veterans checks, medical payments to Veterans, proceeds due banks for student loans, pay checks to federal employees (who have an agreement passed by Congress to pay them), medical insurance premiums for federal employees, payments due to federal contractors who have legal and binding contracts with the government—and these include contractors performing vital services for our national defense and security.
There are more “debts” we will default on: food stamp payments, money due to state and local governments for schools, payments to doctors and hospitals that rendered services for under Medicaid, payments promised by FEMA for disaster victims, and on and on. You can bet Congress will make sure it is paid, however.
All of the above are debts and legal obligations of the United States. On an annual basis, if the debt ceiling is not raised, we would default on 30% of all these debts. However, on a weekly cash flow basis, we will defeat on more than 30%. It might take months before some of the non-interest debts could be paid. In the meantime Courts would be flooded with law suits while their staff isn't being paid.
So when you hear Republicans say “we won’t default on our debt if we do not raise the debt ceiling,” you now know they are telling a boldfaced lie. They are going to destroy this country just to “stick it” to Barack Obama.
Is that what voters thought they were getting when they voted for these clowns masquerading as members of Congress?