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.”
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.
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