Palin: ‘Defaulting On Our National Debt Is An Impeachable Offense

2 Comments

Former Alaska Gov. Sarah Palin believes President Barack Obama should be impeached if he raises the debt ceiling without the backing of Congress.

In a Facebook post, Palin said Obama is “scaremongering the markets” on the prospect of default if the nation’s borrowing limit doesn’t rise by Oct. 17.

“Defaulting on our national debt is an impeachable offense, and any attempt by President Obama to unilaterally raise the debt limit without Congress is also an impeachable offense,” Palin said. “A default would also be a shameful lack of leadership, just as mindlessly increasing our debt without trying to rein in spending is a betrayal of our children and grandchildren who will be stuck with the bill.”

Palin: ‘Defaulting On Our National Debt Is An Impeachable Offense’ « CBS DC.

The Federal Government Can’t, and Won’t, Default on Its Debt Obligations

One remarkable aspect of the shutdown/debt limit battle is the irresponsibility (on the part of the Obama administration) and incompetence (on the part of the news media) concerning the claim that the federal government will default on its debt obligations if Congress fails to raise the debt limit. President Obama and his minions have clearly suggested that default is a real possibility:

“As reckless as a government shutdown is … an economic shutdown that results from default would be dramatically worse,” Obama said on Thursday. Clearly targeting Republicans, he said a default would be “the height of irresponsibility.”

Then, on the same day, Obama’s Treasury Department released a brutal statement that said a default would prove catastrophic, causing credit markets to freeze and leading to “a financial crisis and recession that could echo the events of 2008 or worse.”

Within the last few hours, Obama repeated that Congress must “remove the threat of default and vote to raise the debt ceiling.”

But there is no threat of default. Constitutionally, the federal government must pay its debts. The Fourteenth Amendment, Section 4, states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

I believe this provision is universally understood to mean that the federal government must pay its debt obligations, both principal and interest, even if that means prioritizing debt service over other government spending. So the question is, if Congress does not raise the current debt ceiling, will the federal government run out of money needed to pay its existing debts? The answer is clearly No. A reader supplies the math:

On average the federal government’s daily expenditures are about $16.7 billion; receipts are about $14 billion, implying an average daily borrowing requirement of about $2.7 billion. So the planned flow of revenues is now about $650 billion less than the planned flow of expenses…about $2.7 billion a [business] day, $650 billion annually.

So the “default” scenarios are bogus. Interest on the $16 trillion in debt is covered by a factor of about 10x by revenues! That puts the federal government deep into AAA land. Revenues would have to fall by a staggering 90% to jeopardize interest payments.

And, of course, retiring principal by “rolling over” maturing debt can never require an increase in the debt ceiling, since there is no net increase in the nation’s debt, even if the money used to repay the original principal is borrowed.

Continue reading here

Obama Continues To Use Nazi Germany As His Template For Socialist Victory In America

2 Comments

From Bloomberg: Reneging on its debt obligations would make the U.S. the first major Western government to default since Nazi Germany 80 years ago.

Germany unilaterally ceased payments on long-term borrowings on May 6, 1933, three months after Adolf Hitler was installed as Chancellor. The default helped cement Hitler’s power base following years of political instability as the Weimar Republic struggled with its crushing debts.

“These are generally catastrophic economic events,” said Professor Eugene N. White, an economics historian at Rutgers University in New Brunswick, New Jersey. “There is no happy ending.”

The debt reparations piled onto Germany, which in 1913 was the world’s third-biggest economy, sparked the hyperinflation, borrowings and political deadlock that brought the Nazis to power, and the default. It shows how excessive debt has capricious results, such as the civil war and despotism that ravaged Florence after England’s Edward III refused to pay his obligations from the city-state’s banks in 1339, and the Revolution of 1789 that followed the French Crown’s defaults in 1770 and 1788.

Failure by the world’s biggest economy to pay its debt in an interconnected, globalized world risks an array of devastating consequences that could lay waste to stock markets from Brazil to Zurich and bring the $5 trillion market in Treasury-backed loans to a halt. Borrowing costs would soar, the dollar’s role as the world’s reserve currency would be in doubt and the U.S. and world economies would risk plunging into recession — and potentially depression.

Obama Continues To Use Nazi Germany As His Template For Socialist Victory In America « Now The End Begins.

No Fast Track for Obama’s Next Power Grab

Comments Off on No Fast Track for Obama’s Next Power Grab

President Obama is seeking power the Constitution has assigned to Congress. Soon, he will formally ask Congress to surrender its constitutional authority and grant him “Fast Track” Trade Promotion Authority.

And House Republicans are inexplicably ready to give it to him.

Members of Congress who take our Constitution seriously will follow Nancy Reagan’s advice and Just Say No.

Article One, Section 8 of the Constitution assigns Congress the exclusive responsibility to set the terms of “commerce with foreign nations” — trade. The Founders established this clear check and balance to prevent the president from unilaterally negotiating deals that reward his supporters while harming opponents or the nation as a whole.

Under Fast Track, Obama would be able to sign commercial trade agreements before Congress votes on them. Congress would not even be able to amend the agreements in any way — it would only have an up-or-down vote when the president says so, before members could even read it.

While Congress has delegated authority to presidents in the past, it was based on the premise that the legislative branch could trust the executive branch to respect Congress’ constitutional role. This administration has breached that trust.

From the abuse of executive orders, to recess appointments, to the stonewalling of congressional oversight on Fast and Furious, Benghazi, NSA, IRS intimidation, and other scandals, this administration has shown contempt for the constitutionally mandated co-equal role of the Congress.

Given this record, Congress must not cede its constitutional authority and instead reject President Obama’s request for “Fast Track Trade Promotion Authority.”

No Fast Track for Obama’s Next Power Grab.

The Federal Government Can’t, and Won’t, Default on Its Debt Obligations

4 Comments

One remarkable aspect of the shutdown/debt limit battle is the irresponsibility (on the part of the Obama administration) and incompetence (on the part of the news media) concerning the claim that the federal government will default on its debt obligations if Congress fails to raise the debt limit. President Obama and his minions have clearly suggested that default is a real possibility:

“As reckless as a government shutdown is … an economic shutdown that results from default would be dramatically worse,” Obama said on Thursday. Clearly targeting Republicans, he said a default would be “the height of irresponsibility.”

Then, on the same day, Obama’s Treasury Department released a brutal statement that said a default would prove catastrophic, causing credit markets to freeze and leading to “a financial crisis and recession that could echo the events of 2008 or worse.”

Within the last few hours, Obama repeated that Congress must “remove the threat of default and vote to raise the debt ceiling.”

But there is no threat of default. Constitutionally, the federal government must pay its debts. The Fourteenth Amendment, Section 4, states:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

I believe this provision is universally understood to mean that the federal government must pay its debt obligations, both principal and interest, even if that means prioritizing debt service over other government spending. So the question is, if Congress does not raise the current debt ceiling, will the federal government run out of money needed to pay its existing debts? The answer is clearly No. A reader supplies the math:

On average the federal government’s daily expenditures are about $16.7 billion; receipts are about $14 billion, implying an average daily borrowing requirement of about $2.7 billion. So the planned flow of revenues is now about $650 billion less than the planned flow of expenses…about $2.7 billion a [business] day, $650 billion annually.

So the “default” scenarios are bogus. Interest on the $16 trillion in debt is covered by a factor of about 10x by revenues! That puts the federal government deep into AAA land. Revenues would have to fall by a staggering 90% to jeopardize interest payments.

The Federal Government Can’t, and Won’t, Default on Its Debt Obligations | Power Line.

Will Not Raising the Debt Ceiling Make the US Default

Comments Off on Will Not Raising the Debt Ceiling Make the US Default

I wrote here that no matter what happens with the debt limit, the federal government will not default on its debt obligations. I also noted here that Moody’s–which certainly ought to know–agrees that there is zero chance of default on Treasury bonds. In recent days, many more commentators have made the same point. The government is legally obligated to recognize its debt obligations, and the existing $17 trillion debt can be serviced on less than ten percent of federal revenue. So there simply can’t be a default.

But the Associated Press continues to carry water for the Democrats, conjuring up a catastrophe where none exists: “AS US DEFAULT NEARS, INVESTORS SHRUG OFF THREAT.” The AP never considers the possibility that investors are shrugging it off because they are smart enough to know it can’t happen.

Warren Buffett likens it to a nuclear attack. Economists warn that government spending on programs like Social Security would plunge. The Treasury says the economy would slide into a recession worse than the last.

Yet you wouldn’t know that a U.S. debt default could amount to a nightmare from the way many companies and investors are preparing for it: They aren’t.

Note how, from the beginning, the AP mixes up issues. Would a default on U.S. Treasury bonds be a disaster? Of course. No one denies that. But what does that have to do with spending on programs like Social Security? Social Security is not a debt obligation; and, in any event, it is discretionary spending that would be cut if the debt ceiling were reached, not entitlements.

Brian Doe, a wealth adviser at Gratus Capital Management in Atlanta, has 35 clients who’ve entrusted him with $50 million for safekeeping. He isn’t losing sleep over a potential default. Neither are his clients, apparently. Not one has called him about the issue, he said.

Might this not be a clue?

That worse case is inching closer. The Treasury says it will run out of money to pay its bills if Congress doesn’t increase its borrowing authority by Thursday. That includes paying interest and principal on already issued U.S. Treasurys, considered the most secure financial bet in the world.

The Treasury says that without the ability to borrow more than the $17 trillion we already owe, the federal government won’t be able to “pay its bills.” What they mean by that is that spending will be cut: henceforward, it will have to equal revenue, just as though a balanced budget amendment had been enacted. When Democrats talk about “paying our bills,” they mean maintaining spending at ever-growing levels. But the AP wasn’t satisfied with that; they gratuitously added that claim that “that includes paying interest and principal on already issued U.S. Treasurys.” It doesn’t. The federal government can service its existing debt–i.e., pay the interest–on less than 10% of revenues. And it can renew the principal amount of that debt, $17 trillion, forever, simply by rolling it over. When the government issues new bonds to pay the principal on old ones that mature, there is no net increase in federal debt. So the AP’s claim that bond principal payments are somehow endangered–i.e., that default could occur–is sheer ignorance.

The AP Misreports the Debt Ceiling | Power Line.