If you are still trying to understand what the debt ceiling debate is all about I completely understand. Unless you have a degree in Economics its just not an issue most Americans are familiar with. The chart above however puts it in terms that everybody who has a checking account can understand. If the debt ceiling isn't raised by August 2nd the U.S. Treasury runs out of money. Without the ability to take on more debt we will be unable to pay our bills. The military won't be getting paid, government employees won't be getting paid, social security checks will stop going out, medicare will be suspended, and our credit rating will be downgraded making our bonds useless. Simply put mass chaos would ensue.
If a deal is not done there are a couple of things that might save us from armageddon. First off, its hard for me to believe that the debt rating service Moody's would downgrade our debt, knowing full well that such a move would send world markets into free fall. I doubt they have the balls to do that. Secondly, I still hold out hope that Obama will invoke the 14th amendment and service our debt regardless of the debt ceiling. The reason he hasn't committed to it yet is because he doesn't want to undermine negotiations. It would be irresponsible of him to send this country into a depression when he had a tool at his disposal to prevent it and chose not use it. Bill Clinton has already come out in favor of such a move. I still hold out an irrational hope that one side will give in, at this point I don't care which side it is, as long as it gets done.
There was an article I read about why he WON'T go the 14th Amendment route, because it would go to the Supreme Court, etc. I will try to find it for you.
ReplyDeleteApparently the 14th amendment only gives Congress the power to service debt. Not the President. If that's the case we're screwed. I say he use it anyways, there's enough of a gray area there to provide him cover. A legal challenge would likely take months. If the choice is between default and legal challenges I take the later. Of course the right would label him as an autocrat, but that would be nothing new.
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