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Debt ceiling. What debt ceiling?

12 Jul

How could we make the budget debate more contentious?  Why, we could threaten that without a debt ceiling increase Social Security checks would not be sent out!  Brilliant!  Isn’t it amazing how this entire August 2nd deadline has been framed as a catastrophe?  Well it is a catastrophe, but only if we allow it to be used as a facilitator for further government expansion.  Do you know what happens if we reach the debt ceiling and don’t vote to increase it?  Here’s the Executive Summary from the Debt crisis of 1995-96 (with significant reach back to earlier debt crises):

“In 1985 the government experienced a debt ceiling crisis from September 3 through December 11. During that period, Treasury took several actions that were similar to those discussed in this report. For example, Treasury redeemed Treasury securities held by the Civil Service fund earlier than normal in order to borrow sufficient cash from the public to meet the fund’s benefit payments and did not invest some trust fund receipts.  In 1986 and 1987, following Treasury’s experiences during prior debt ceiling crises, the Congress provided to the Secretary of the Treasury statutory authority to use the Civil Service  fund and the G-Fund to assist Treasury in managing its financial operations during a debt ceiling crisis.”

So basically, if we don’t raise the debt ceiling then the government is required to reallocate funds internally and postpone some interest payments.  Gross oversimplification there perhaps, but if we let them make this out to be an unprecedented crisis they can pass whatever crap they want (see: TARP).  I seem to remember something about this government and not letting a crisis go to waste…

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2 Comments

Posted by on July 12, 2011 in Budget, Congress, Debt Crisis

 

2 responses to “Debt ceiling. What debt ceiling?

  1. Pedro

    July 12, 2011 at 4:42 pm

    This won’t get paid, that won’t get paid, you and I won’t get paid; what will get paid? Someone on a talk radio show recently suggested that the feds should tell us what will get paid so that we can see who the lucky winners would be. Would government subsidies to unions and groups like ACORN still get their stipends? The gov would still be spending I’m sure, but who would be the recipients?

     

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