# Think Tank > Political Philosophy & Government Policy >  Default = failure to meet financial obligations

## erowe1

It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling.

That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it.

But it's disappointing to see Rand and others on our side getting on that bandwagon, including a lot of people posting here.

The government has made promises to spend $3.8 Trillion. Their revenue is $2.9 Trillion.

How do people figure that they can meet their financial obligations without increasing the size of the debt?

Don't get me wrong, defaulting would be great. It's the only right course of action. But that is what our argument needs to be, that default is a good thing, not that it can somehow be avoided without increasing the debt.

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## erowe1

http://dictionary.reference.com/browse/default?s=t

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## malkusm

> It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling.
> 
> That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it.
> 
> But it's disappointing to see Rand and others on our side getting on that bandwagon, including a lot of people posting here.
> 
> The government has made promises to spend $3.8 Trillion. Their revenue is $2.9 Trillion.
> 
> How do people figure that they can meet their financial obligations without increasing the size of the debt?
> ...


That's not what is meant by default - default depends upon the ability to service the debt, not the ability to meet all potential obligations of government. Servicing the debt only requires us to make timely interest payments.

Further, as there have been no general appropriations passed by Congress, the $3.8 trillion you cite is actually something less. In order to operate government without raising the debt ceiling, all that would need to happen would be to appropriate no more than is projected in revenue - which is the basis on which nearly all state governments operate.

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## malkusm

Think of it another way - if a company takes out a business loan, and then a year later, has only enough revenue to repay the loan *OR* to pay its employees, would it be defaulting on the loan if it decided to lay off the employees and repay the loan? Clearly this would not be a default in the eyes of the lender.

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## erowe1

Right. But the federal government owes money to lots of parties, not just those who have loaned it money. But also everyone else it's made promises to, such as Social Security recipients. If it fails to keep any of those promises, it defaults.

This is why a lot of people reckon the real national debt at around $100 Trillion, because that's what it is when you include all of the unfunded mandates.

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## erowe1

Basically, what they're saying is, "No we will not default against this one particular creditor. Sure we'll default against some other creditor, but don't worry, it doesn't have to be that one."

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## malkusm

> Right. But the federal government owes money to lots of parties, not just those who have loaned it money. But also everyone else it's made promises to, such as Social Security recipients. *If it fails to keep any of those promises, it defaults.*


But it wouldn't be a default *on the debt*, which is what people are referring to when they discuss "default." (I don't actually see how it would be a default at all given that most government programs are not expressly guaranteed by any manner of law, and certainly not as some inherent right of the program; but I am willing to concede the point.)

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## malkusm

> Basically, what they're saying is, "No we will not default against this one particular creditor. Sure we'll default against some other creditor, but don't worry, it doesn't have to be that one."


No one loaned the government money for anything other than the debt itself. (I could only wish that my tax dollars were repaid to me with interest!) It's an entirely different arrangement which doesn't fit the financial definition of "default" in any sense.

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## erowe1

http://dictionary.reference.com/browse/debt?s=t

"something that is owed or that one is bound to pay to or perform for another"

If they don't pay money they owe to someone, then they default on some debt.

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## NorthCarolinaLiberty

> _How do people figure_ that they can meet their financial obligations without increasing the size of the debt?


The only figuring that Zero did was how many phones and laptops he had to give away for his re-election.

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## erowe1

Again, default = failure to meet financial obligations.
http://dictionary.reference.com/browse/default?s=t

And where do you get this claim, "most government programs are not expressly guaranteed by any manner of law"?

I'm pretty sure that, at least measured in numbers of dollars allocated, that isn't true.

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## malkusm

> http://dictionary.reference.com/browse/debt?s=t
> 
> "something that is owed or that one is bound to pay to or perform for another"
> 
> If they don't pay money they owe to someone, then they default on some debt.


Please explain to me how the government is "bound to pay" for any government program, absent an explicit appropriations bill for the program.

If there is not an appropriations bill, then government hasn't "bound to pay" anything to anyone. I guess you could argue that there is a "social contract" to fund the programs that were created by politicians who were duly elected, but social contract theory is not looked upon too highly here.

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## erowe1

Sorry, folks, something's wrong with my comp right now. That's why I'm not using the quote function.

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## erowe1

"Please explain to me how the government is "bound to pay" for any government program, absent an explicit appropriations bill for the program."

That's what entitlements are. That's why there's a whole category of spending they call "nondiscretionary."

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## erowe1

Previous Congresses and Presidents have passed and signed laws obligating the current Congress and President to fund things.

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## malkusm

> "Please explain to me how the government is "bound to pay" for any government program, absent an explicit appropriations bill for the program."
> 
> That's what entitlements are. That's why there's a whole category of spending they call "nondiscretionary."


Entitlement spending does not exceed federal revenue. If that were true, I can see how we would be "defaulting" on those obligations; it's not.

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## erowe1

Here's one explanation of the real debt. You can find lots of examples of people making this same point:
http://online.wsj.com/article/SB1000...039087636.html

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## malkusm

> Previous Congresses and Presidents have passed and signed laws obligating the current Congress and President to fund things.


They've created programs which, you could say, are intended to continue; but nothing obligates the current Congress to fund anything, as the present situation demonstrates.

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## erowe1

OK. So you think the government can avoid default without raising the debt ceiling. How? Please show the revised budget where that happens. Has anyone come up with one?

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## erowe1

Here. The annual deficit exceeds discretionary spending. It's mathematically impossible to fund all nondiscretionary obligations without increasing the debt.
http://en.wikipedia.org/wiki/File:U...._-_FY_2011.png

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## erowe1

But again, the point that needs to be made more forcefully, until it doesn't come across as fringe any more, is that we want and need the federal government to default, and the sooner it does the better.

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## erowe1

"They've created programs which, you could say, are intended to continue; but nothing obligates the current Congress to fund anything, as the present situation demonstrates. "

The present situation doesn't demonstrate that, because the law does obligate the current Congress to fund lots of things. And if they don't (as well they shouldn't), they default.

They will do one of two things. They will raise the debt ceiling, or they will default on some financial obligation. There is no middle way.

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## malkusm

> Here. The annual deficit exceeds discretionary spending. It's mathematically impossible to fund all nondiscretionary obligations without increasing the debt.
> http://en.wikipedia.org/wiki/File:U...._-_FY_2011.png


This is helpful. 

I'm not trying to be combative, it's just not my impression that "default" (in the political discourse) means what you are implying, or that October 17th is a real debt ceiling date since discretionary spending has been effectively zero since October 1st. However, given that it is, I do agree that failing to meet obligations that Congress has already appropriated funds for would constitute a form of default. My opinion would be that if we have to choose between defunding certain programs which were previously funded, or defaulting on the debt itself, the choice is very clear. That $670B defense budget or the $461B "other mandatory" spending could be trimmed down substantially, if it came down to it.

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## asurfaholic

You only default if you don't pay your OBLIGATIONS... 

I guess malkusm isn't making it clear enough.. So I'll try with my limited knowledge..

I have a mortgage on my house. Everything else is paid off. Cell phones are contract, but can be canceled with a fee. 

Everything else is non contract. 

So it turns out i am spending too much money, and racking up a credit card debt, so I decide to have a shutdown, and re examine my financial outlook.

I am trying to cut the spending so that I don't keep racking up credit card debt. So the debt is obligatory, but I can axe my cell phone, kill the TV, kill the Internet. Stop eating out, so on and on.

So there. I can now pay my obligations, and avoid default, simply because I earn enough to cover the obligations and interest, and have cut the non essential $#@! out. 

Is that clear enough for you?

Or do u just think every govt program is an obligation?

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## erowe1

"You only default if you don't pay your OBLIGATIONS... "

You seem to think that the only obligations the federal government has are interest payments on the debt. That's not true.

"Or do u just think every govt program is an obligation? "
No. Not all federal spending is an obligation. Only 83% of it is.

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## erowe1

" My opinion would be that if we have to choose between defunding certain programs which were previously funded, or defaulting on the debt itself, the choice is very clear. That $670B defense budget or the $461B "other mandatory" spending could be trimmed down substantially, if it came down to it. "

I suppose that's true, if you have to pick only one good thing to do, and somehow imagine that doing lots of other good things at the same time is not an available option.

But the federal government really should default on each and every one of its obligations, not just the military ones. And the sooner the better.

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## asurfaholic

> "You only default if you don't pay your OBLIGATIONS... "
> 
> You seem to think that the only obligations the federal government has are interest payments on the debt. That's not true.
> 
> "Or do u just think every govt program is an obligation? "
> No. Not all federal spending is an obligation. Only 83% of it is.


Ill give you the benefit of a doubt here, I have not read the links you posted.

So what do you do if you have more obligations than you can afford with racking up more debt- and a bigger interest obligation?

There has to be a way to knock it back if you get in over your head.... Right?

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## malkusm

> " My opinion would be that if we have to choose between defunding certain programs which were previously funded, or defaulting on the debt itself, the choice is very clear. That $670B defense budget or the $461B "other mandatory" spending could be trimmed down substantially, if it came down to it. "
> 
> I suppose that's true, if you have to pick only one good thing to do, and somehow imagine that doing lots of other good things at the same time is not an available option.
> 
> But the federal government really should default on each and every one of its obligations, not just the military ones. And the sooner the better.


I disagree that we should default on our debt obligations to creditors - that would cause unnecessary pain. I think there is a middle ground where you could wind programs down without shutting all the lights off in one fell swoop - Ron Paul talked a lot about this in the presidential debates to assuage fears that he was "too extreme."

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## erowe1

"So what do you do if you have more obligations than you can afford with racking up more debt- and a bigger interest obligation?"

This isn't really about what you or I should do, but about what the federal government should do, which is not necessarily the same as you or me, because when you and I have make promises, we place the burden on ourselves to keep them. But when the federal government does, it places the burden on others, when it has no right to do that.

So what should the federal government do in this situation. It should default. The more obligations it defaults the better, and the sooner it does the better. Those politicians never had any right to promise anyone other people's money.

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## JCDenton0451

> It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling. That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it. But it's disappointing to see Rand and others on our side getting on that bandwagon, including a lot of people posting here. The government has made promises to spend $3.8 Trillion. Their revenue is $2.9 Trillion. How do people figure that they can meet their financial obligations without increasing the size of the debt?


This is all true, and this is why Republican debt ceiling threat isn't credible. The GOP simply doesn't have the balls to shoot this hostage.

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## angelatc

> It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling.
> 
> That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it.
> .


Speaking of talking points and minions - it's a talking point that was put out by Moodys, who issues the very credit ratings that Obama claimed would suffer.

Here's how Rand Paul explained it.  (Is he a minion too?)




> NBC: Very quickly before I let you go. As you well know, there is a debt ceiling vote on the horizon. Will Republicans let this country go into default?
> 
> SEN. PAUL: I think its irresponsible of the president and his men to even talk about default. There is no reason for us to default. We bring in $250 billion in taxes every month, our interest payment is $20 billion. Tell me why we would ever default. We have legislation called the full faith and credit act and it tells the president, you must pay the interest on the debt. So this is a game. This is kind of like closing the World War II memorial. They all get out on TV and they say, were going to default. Theyre the ones scaring the marketplace. We should never default.

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## angelatc

> This is all true, ....


Based on my recent Rep scores, we all seem to know when JCDenton says something is true, it isn't.

Appropriately, he added a photoshopped picture of a fictional characters in a make-believe scenario, while I added links to Moody's and a quote from Rand Paul.  Which one looks like a troll?

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## angelatc

> I disagree that we should default on our debt obligations to creditors - that would cause unnecessary pain. "


I believe it's unconstitutional, too.  

Section Four of the 14th Amendment - “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.”

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## Acala

> "Please explain to me how the government is "bound to pay" for any government program, absent an explicit appropriations bill for the program."
> 
> That's what entitlements are. That's why there's a whole category of spending they call "nondiscretionary."


It is CALLED nondiscretionary, but it is discretionary.  Here is the difference:

1. The US government has borrowed money from third parties and is contractually obligated to pay it back.  It cannot get out of those obligations unless it defaults on the binding contracts it entered into with third parties.

2. The US Government has enacted certain programs that will require money to continue.  However, the government is under no contractual obligation to continue to fund those programs.  Tomorrow morning the government could repeal Social Security and medicare and there would be no default because it was not bound in any way to continue those programs.    

That's the difference.  Repealing existing programs does not constitute default.  Not making scheduled payments on contractual obligations IS a default.

And this is not simply semantics.  A real default, as in not honoring treasury paper, will cause people and countries who formerly loaned us money to not loan us money anymore.  It will cause our credit rating to plummet.  Not necessarily a bad thing, in my opinion.  But a very different thing from imposing austerity measures by repealing programs.  Doing this would not only not hurt our credit rating, but would help it.

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## Acala

> Previous Congresses and Presidents have passed and signed laws obligating the current Congress and President to fund things.


Nope.  They have the power to repeal almost all of it.  The only thing they can't repeal is existing contracts.

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## angelatc

> It is CALLED nondiscretionary, but it is discretionary.  Here is the difference:
> 
> 1. The US government has borrowed money from third parties and is contractually obligated to pay it back.  It cannot get out of those obligations unless it default on the binding contracts it entered into with third parties.
> 
> 2. The US Government has enacted certain programs that will require money to continue.  However, the government is under no contractual obligation to continue to fund those programs.  Tomorrow morning the government could repeal Social Security and medicare and there would be no default because it was not bound in any way to continue those programs.    
> 
> That's the difference repealing existing programs does not constitute default.  Not making scheduled payments on contractual obligations IS a default.
> 
> And this is not simply semantics.  A real default, as in not honoring treasury paper, will cause people and countries who formerly loaned us money to not loan us money anymore.  It will cause our credit rating to plummet.  Not necessarily a bad thing, in my opinion.  But a very different thing from imposing austerity measures by repealing programs.  Doing this would not only not hurt our credit rating, but would help it.



This is exactly right.  SCOTUS has already ruled that entitlements are not contractually obligated.

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## aGameOfThrones

> This is exactly right.  SCOTUS has already ruled that entitlements are not contractually obligated.


Like this?

1960 Scotus case of Flemming v. Nestor.

It involved Bulgarian-born Ephram Nestor, who was deported in 1956, having been involved in Communist activity in the 1930s. The federal government denied him his Social Security benefits, citing 1954 amendments to the Social Security Act that denied payments to anyone deported for criminal activity after August of that year. Nestor Sued on the grounds that "throughout the history of the Social Security Act, old-age insurance benefits have been referred to as a right of the recipient which he has earned and paid for."

The federal government prepared a legal brief in defense of its position that Nestor was not entitled to his benefits. The brief explained that Social Security was in no sense a federally administered "insurance program" under which each worker pays premiums over the years and acquires at retirement an indefeasible right to receive for life a fixed monthly benefit,irrespective of the conditions which Congress has chosen to impose from time to time.... The "contribution" exacted under the social security plan from an employee...is a True Tax. It is not comparable to a premium under a policy of insurance promising the payment of an annuity commencing at a designated age.

From Thomas Woods JR. 33 questions about American History.


************************************************** **

*"To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands. It was doubtless out of an awareness of the need for such flexibility that Congress included in the original Act, and [363 U.S. 603, 611] has since retained, a clause expressly reserving to it "[t]he right to alter, amend, or repeal any provision" of the Act.
*
...

We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment. FLEMMING v. NESTOR, 363 U.S. 603 (1960)"

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## 69360

> It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling.
> 
> That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it.
> 
> But it's disappointing to see Rand and others on our side getting on that bandwagon, including a lot of people posting here.
> 
> The government has made promises to spend $3.8 Trillion. Their revenue is $2.9 Trillion.
> 
> How do people figure that they can meet their financial obligations without increasing the size of the debt?
> ...


It's not a talking point and it's not bull$#@!. The US takes in like 250 billion in revenue a month and service of the debt is 20 billion. Default on the debt is just plain not going to happen. Some discretionary spending would have to be cut to ensure the mandatory spending. 

It wouldn't hurt much, remember the sequester and how the stupid box was screaming that it was the end of the world? It came and life went on. This will be the same if the GOP stays firm.

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## Acala

> OK. So you think the government can avoid default without raising the debt ceiling. How? Please show the revised budget where that happens. Has anyone come up with one?


I think I can do this off the top of my head.

Eliminate the following today:

Departments of education, energy, transportation, and agriculture

Eliminate:
EPA, TSA, NSA, CIA, FDA, DEA, Health and Human services, and a few others I can't think of right now

Eliminate all foreign aid, bring all the trops home, close all foreign military bases, bring home the navy (except the subs carrying ICBMs), keep enough troops to guard the borders and enough navy to guard the coasts and discharge everyone else and mothball or sell all surplus equipment.  Sell all foreign bases.

Eliminate the BLM and auction off all its land
Turn the national parks over to the States and eliminate the Park Service
Auction off National Forest land and eliminate the forest service

Eliminate Medicare part D and institute means testing for all other medicare/medicaid benefits.
Institute means testing for Social Security, eliminate all fringe benefits (tuition etc.), Throw out everyone under the age of forty.  Give everyone else the option of staying in or not with increased contributions from those who stay.      

I am pretty sure that generates enough savings to easily pay the service on the debt.

Ain't gonna happen.  But it certainly could be done without default.

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## erowe1

The Constitution is wrong. The federal government has no right to make promises on behalf of tax payers. Those debts are not valid.

It's true that the obligations the federal government has to Social Security recipients are also not valid. Both interest on the debt and social security are the same kind of obligations. They are invalid obligations based on laws passed by Congress.

Moody's is concerned about the rating of US Bonds. That only has to do with bonds. It doesn't have to do with all of the federal government's obligations.

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## erowe1

Acala, I agree that the federal government should do all of the things you list in post #39.

In addition to those things, they also should not pay the national debt.

However, all of those things are still default.

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## brandon

This explains it nicely:

http://consultingbyrpm.com/blog/2013...t-ceiling.html

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## erowe1

69360 said, "It's not a talking point and it's not bull$#@!. The US takes in like 250 billion in revenue a month and service of the debt is 20 billion. Default on the debt is just plain not going to happen. Some discretionary spending would have to be cut to ensure the mandatory spending."

Yes, discretionary spending will have to be cut, so will nondiscretionary spending.

Cutting nondiscretionary spending is defaulting.

And that's a good thing.

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## erowe1

Brandon, notice that your link says, " If the debt ceiling is not raised, the government by no means needs to default on its outstanding bonds. "

It says right there, "bonds."

Notice also that it goes on to say later that balancing the budget without raising taxes does require cuts in nondiscretionary spending.

This is all perfectly obvious from simple math.

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## 69360

> The Constitution is wrong. The federal government has no right to make promises on behalf of tax payers. Those debts are not valid.
> 
> It's true that the obligations the federal government has to Social Security recipients are also not valid. Both interest on the debt and social security are the same kind of obligations. They are invalid obligations based on laws passed by Congress.
> 
> Moody's is concerned about the rating of US Bonds. That only has to do with bonds. It doesn't have to do with all of the federal government's obligations.


Social Security never was constitutional. Socialist FDR created it out of thin air and it's been whored out by the democrats ever since.

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## brandon

Ok you have a different definition of defaulting than the rest of the English speaking world. You think deciding to order less tanks would put us in default?

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## 69360

> 69360 said, "It's not a talking point and it's not bull$#@!. The US takes in like 250 billion in revenue a month and service of the debt is 20 billion. Default on the debt is just plain not going to happen. Some discretionary spending would have to be cut to ensure the mandatory spending."
> 
> Yes, discretionary spending will have to be cut, so will nondiscretionary spending.
> 
> Cutting nondiscretionary spending is defaulting.
> 
> And that's a good thing.


It's not defaulting on the debt. Laws can be changed to cut non-discretionary spending. The debt can't be legislated away. 

Besides, the non-discretionary spending could be funded well beyond the 17th, that is another lie the stupid box is feeding boobus.

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## erowe1

I agree that laws can be changed to cut nondiscretionary spending. And they should.

Laws should also be passed amending the Constitution and repudiating the debt.

Both of those would be defaults. And both would be good and necessary things to do.

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## brandon

The government could also sell off assets to avoid any spending cuts and still stay within the current debt limit.

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## Acala

> The Constitution is wrong. The federal government has no right to make promises on behalf of tax payers. Those debts are not valid.


The government, any government, even a government truly operating with full consent of the governed, must be able to enter into contracts.  Otherwise it could never construct a building or hire an employee.  The things it can do with that power should be strictly limited.  

But government contracts are not obligations of the taxpayers.  Nobody can ever come after you directly and sue you as a taxpayer because they have a contract with the government.

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## erowe1

Brandon, the definition of default I'm using is the one from dictionary.com.

Where does yours come from? Is it Limbaugh or Hannity?

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## brandon

You think closing a military base in Germany and bringing the troops home would be considered a default?

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## erowe1

Acala,

But we're not talking about contracts made with the consent of the governed. We're talking about contracts made without their consent. Thus, these contracts are invalid.

The obligation Congress has to keep its promises to bond holders is the same as the obligation it has to keep its promises to military veterans, which morally is no obligation at all, since Congress never had any right to make promises on behalf of other people without their consent.

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## brandon

The article I linked shows a deficit of 650 billion and discretionary spending of 1.2 trillion.

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## Acala

> I agree that laws can be changed to cut nondiscretionary spending. And they should.
> 
> Laws should also be passed amending the Constitution and repudiating the debt.
> 
> Both of those would be defaults. And both would be good and necessary things to do.


Cutting spending is not a default and does not hurt the credit rating.  It is legislation.  Not paying back money borrowed from third parties IS a default and trashes the credit rating.  This is the common understanding of the meaning of the word and is the way the word is being used in current public discussions, screwed up as they are.  

The more interesting question is would abolishing the Federal Reserve and repudiating the debt to it be a default?  I think the answer is no because the Fed is a creature of Federal statute and if Congress repeals it and makes it disappear as an entitiy, then the debt is extinguished.

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## Acala

> Acala,
> 
> But we're not talking about contracts made with the consent of the governed. We're talking about contracts made without their consent. Thus, these contracts are invalid.
> 
> The obligation Congress has to keep its promises to bond holders is the same as the obligation it has to keep its promises to military veterans, which morally is no obligation at all, since Congress never had any right to make promises on behalf of other people without their consent.


You can take the position that the government is an outlaw entity with no legal authority to enter into any agreement or obligation of any kind.  In that case there can be no default no matter what it does.

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## 69360

> Brandon, the definition of default I'm using is the one from dictionary.com.
> 
> Where does yours come from? Is it Limbaugh or Hannity?


The discussion the nation is having is about defaulting on debt. Defaulting on the foreign and privately held debt  is what would cause lack of confidence in the dollar as the world's reserve currency and result in global turmoil. 

A debt default is simply put not even a remote possibility, it's all lies. Monthly revenue exceeds debt service by like a 9 to 1 ratio.

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## erowe1

The government's credit rating is based on the collateral it has in your and my lives. Take away the illegitimate means it has of making good on its promises, and it has no credit rating because it has no assets, nor can it ever have any.

Acala, you say, "This is the common understanding of the meaning of the word and is the way the word is being used in current public discussions, screwed up as they are. "

But that's not true. That's the whole reason that the GOP side has this talking point. Everybody else keeps talking about default, and they're trying to use their own definition of default that only applies to paying interest on the debt and nothing else. The reason they get so argumentative about it is that they're the ones using the word differently than everyone else.

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## erowe1

69360, you say, "A debt default is simply put not even a remote possibility"

That's ridiculous. If something can't go on forever, then it won't.

A debt default can and must and eventually will happen. I don't see why so many people even here want to keep kicking it down the road.

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## erowe1

Acala, you said:
"You can take the position that the government is an outlaw entity with no legal authority to enter into any agreement or obligation of any kind. In that case there can be no default no matter what it does. "

I agree completely.

Morally, there can be no default, no matter what they do. But legally, there is going to be. The government can't keep its promises, nor should anyone want it to. Nor should one group of invalid promises be bracketed off and treated like it's sacred, and these invalid promises are the ones the government really has to keep.

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## HOLLYWOOD

16th Amendment... Yet today, taxes and fees are imposed ddirectly on Americans with a simple majority.


Amazing how all this started about defunding ObamaCare and the 21 new or increased taxes and fees, yet now it's all about defaulting. TPTB are good at their shell game.

Clowns are coming to an agreeement to fund the budget through Nov-Dec... removing on tax, on medical devices, yet the tax on selling your private property remains.

It's the CON GAME of CONgress

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## 69360

> 69360, you say, "A debt default is simply put not even a remote possibility"
> 
> That's ridiculous. If something can't go on forever, then it won't.
> 
> A debt default can and must and eventually will happen. I don't see why so many people even here want to keep kicking it down the road.


Not true, the current spending is just not sustainable. That doesn't guarantee a default. Spending cuts reducing the deficit until the budget is balanced and eventually a surplus would stave off a default. It could be done EASILY in a generation. 

I haven't even hit on intragovernmental debt. Over a trillion of the US debt is intragovernmental, the US owes it to itself. This whole debt ceiling crisis could be averted by simply writing off the debt the US owes itself.

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## erowe1

To those who think I'm the one using the word "default" in some strange way, just watch and see what, not only the left, but also the right will say as it becomes more and more urgent for them to raise the debt ceiling. They will talk about all these things they think the government is obligated to pay. They will treat them as genuine obligations, no less than interest on the debt, and they will say that failing to pay any of them will be defaulting.

Here's what the answer to them has to be: "Fine! Default away!"

We need to cut through the spin and get down to this basic and important ethical point that keeps getting avoided in the media.

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## erowe1

69360, you just said, "It could be done EASILY in a generation."

A generation? But taking a generation means increasing the debt in the mean time. To do it immediately without increasing the debt requires cutting nondiscretionary spending.

And again, where's the outrage about the whole notion that any government spending at all is ever categorized as "nondiscretionary"? That's what the debate needs to focus on. Instead, it's just being taken for granted.

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## PaulConventionWV

> It's not surprising to hear Limbaugh and other partisan hacks talking about how the government won't default even if it doesn't raise the debt ceiling.
> 
> That's obviously a talking point that somebody in the establishment has put out there, and their minions are faithfully repeating it.
> 
> But it's disappointing to see Rand and others on our side getting on that bandwagon, including a lot of people posting here.
> 
> The government has made promises to spend $3.8 Trillion. Their revenue is $2.9 Trillion.
> 
> How do people figure that they can meet their financial obligations without increasing the size of the debt?
> ...


Of course, I'm sure you understand why Rand can't just say that.

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## erowe1

Oh yeah, I do understand that in the case of Rand.

I don't understand it as much for folks here though.

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## PaulConventionWV

> Again, default = failure to meet financial obligations.
> http://dictionary.reference.com/browse/default?s=t
> 
> And where do you get this claim, "most government programs are not expressly guaranteed by any manner of law"?
> 
> I'm pretty sure that, at least measured in numbers of dollars allocated, that isn't true.


I think the point is that your definition is not what other people mean when they say "default" so the point is moot.

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## brandon

Erowe why are you ignoring my two posts that pointed out the deficit is 650b and discretionary spending is 1.2t.  We dont have to break any promises or stiff anyone, so even with your definition of default we wont be defaulting.  Furthermore assets can be sold off to raise money. Pls respond

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## PaulConventionWV

> 69360, you say, "A debt default is simply put not even a remote possibility"
> 
> That's ridiculous. If something can't go on forever, then it won't.
> 
> A debt default can and must and eventually will happen. I don't see why so many people even here want to keep kicking it down the road.


I don't think anyone WANTS to keep kicking it down the road.  We just recognize that the scare tactics being used by the Democrats do not reflect what is really going to happen.  It's a bluff, and it's going to be called.  We all know we are not going to direct the discussion toward actually defaulting anytime soon.  That's like expecting the federal reserve to suddenly dismantle itself.  It's just not going to happen.

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## DrHendricks

This quandary can be solved simply with arithmetic. The federal revenue is 2.5 trillion. Mandatory pre-authorized spending (debt interest, medicare, social security, veterans) is 2.0 trillion. Federal total expenditures is 3.5 trillion. So, we cut discretionary spending to under 500 billion and we start paying off debt.

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## surf

sell Amtrak

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## XNavyNuke

> Oh yeah, I do understand that in the case of Rand.
> 
> I don't understand it as much for folks here though.


How many times has the federal government continued to operate after hitting the ceiling and Congress refusing to raise it before the deadline? (Or, to put it in media talking points, how many times has the world economy imploded because of not raising the debt ceiling before the deadline?)

XNN

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## erowe1

> Erowe why are you ignoring my two posts that pointed out the deficit is 650b and discretionary spending is 1.2t.  We dont have to break any promises or stiff anyone, so even with your definition of default we wont be defaulting.  Furthermore assets can be sold off to raise money. Pls respond


Sure. According to your link, discretionary spending is 500 something billion and is less than the deficit. I didn't see where it said 1.2T. Maybe that's if they count the military as discretionary?

I also posted something from wikipedia, where the numbers weren't exactly the same as what you posted, but were similar.

ETA: That is what is was. Technically, military spending is still discretionary. But it's usually treated separately from other discretionary spending as if it's non discretionary. Both your link and wikipedia do that. And when you do count it as discretionary, then discretionary spending is greater than the deficit.

In this case, another retort to the left should be that, as long as they cut military spending, they can keep up all nondiscretionary spending, without any kind of default, and still not increase the debt limit. Then press them to say why they won't cut the military.

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## erowe1

> How many times has the federal government continued to operate after hitting the ceiling and Congress refusing to raise it before the deadline? (Or, to put it in media talking points, how many times has the world economy imploded because of not raising the debt ceiling before the deadline?)
> 
> XNN


I don't know. How many?

But more importantly, why do you seem to concede the point that if the federal government stopped operating that would be bad?

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## CPUd

Insolvency is when the SHTF.  That is the point when they will have a hard time borrowing.

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## Christian Liberty

Default would hurt me personally, but its still the right thing to do.

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## Occam's Banana

> To those who think I'm the one using the word "default" in some strange way, just watch and see what, not only the left, but also the right will say as it becomes more and more urgent for them to raise the debt ceiling. They will talk about all these things they think the government is obligated to pay. They will treat them as genuine obligations, no less than interest on the debt, and they will say that failing to pay any of them will be defaulting.
> 
> Here's what the answer to them has to be: "Fine! Default away!"
> 
> We need to cut through the spin and get down to this basic and important ethical point that keeps getting avoided in the media.


I don't disagree with anything you say here - but you are using the word "default" in a significantly different (and much more general and inclusive) way than Rand _et al._ are using it. Rand _et al._ are using the word "default" solely in the sense of "a failure to pay interest on borrowed money."

I have no doubt that you are absolutely correct that "they" will equivocate on their use of the word "default" in the future (by changing their use of it to denote not just debt-based interest, but so-called "non-discretionary" spending as well). Nevertheless, "default" (in the particular sense in which they are currently using the word) is NOT a necessary consequence of a failure to raise the "debt ceiling." Specifically: it is presently NOT necesary to raise the "debt ceiling" (in order to borrow more money) so that the government's current interest-payment obligations can be met. Any money needed for such payments can be taken from current revenues and/or acquired by cutting spending elsewhere.

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## heavenlyboy34

Didn't read the whole thread, but printing money is a type of default.  RP discusses it a bit in the vid here: http://www.cnbc.com/id/101103087

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