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Old 07-12-2011, 07:57 AM
 
19,198 posts, read 31,382,244 times
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Quote:
Originally Posted by pcgeller View Post
Couldn't it be a good thing, if we default, we just erase our debt? If we're out of debt then we won't need to borrow money for the interest payments.....
No, paying debts erases them. Not paying them does not erase them. You still owe them but are now in default since the legal promise to repay has not been met.

The bottom line re this thread is that no one actually knows yet what will happen if the debt celing isn't raised. There is a range of alternatives that would depend on Executive Branch decisions that would in turn be based on perceptions of any likelihood of Congress quickly getting the necessary debt ceiling increase passed. The range of alternatives runs from pretty much nothing would happen and it would be business as usual, to there would be a complete shutdown of everything and much wailing and gnashing of teeth from all over until Congress finally came to its senses.
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Old 07-12-2011, 08:05 AM
 
Location: Portland, OR
8,802 posts, read 8,864,925 times
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Quote:
Originally Posted by CAVA1990 View Post
Why do you live here if you don't like it?
This has nothing to do with this thread. Feel free to PM if you really care.
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Old 07-12-2011, 08:14 AM
 
105 posts, read 389,411 times
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Of course GOVT employees will get paid and contractors. The last thing the gov't would need is a bunch of shut down agencies.
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Old 07-12-2011, 08:16 AM
 
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Just to add to saganista's comment, which I think is pretty spot on. I think the exec. branch would end up exercising the "Constitutional Option" that Geithner has brought up.
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Old 07-12-2011, 08:50 AM
 
9,732 posts, read 9,686,594 times
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Quote:
Originally Posted by CAVA1990 View Post
With money that would have gone to the creditors. They'd be defaulting on the debt payments, not on the operatng budgets. Like they say, pay yourself first.


The US Constitution states in the 14th amendement that the "debts" of the United States must be paid FIRST. All other "social spending" would be cut.
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Old 07-12-2011, 09:03 AM
 
Location: Portland, OR
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What sort of impact does this have on federal employees/contractors then? Would you show up for work if you knew you weren't going to be paid?
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Old 07-12-2011, 09:04 AM
 
19,198 posts, read 31,382,244 times
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I could be wrong of course, but I don't personally think the 14th Amendment option is going to come into play. It's a tenuous case, and though it likely would be won in the end, it would still hand Republicans a blank check for claiming that the administration is just trampling all over the Constitution once again. The better plan would be to put all the onus and blame on the Republicans and these Tea Party backbenchers that Boehner seems to have no rein on or influence over. One way to do that is just say look, we're not going to play this nickel-and-dime prioritizing game just to die a slow death. The Republicans want to shut down the government, so as of today, it is shut down. We aren't paying anybody anything until Congress can learn to act like adults and live up to its responsibilities. A less drastic play would be to sign an Executive Order or two to do short-term rearranging of federal finances in order to barely forestall a shutdown/default scenario for a few days or a couple of weeks. This would just move the supposed August 2 deadline back a bit to create a new looming deadline that would then hang over Republican heads. Now, in fact, Obama could sign enough Executive Orders to run the government for as long as nine months without going over the existing debt limit, but for the moment at least, he has no incentive at all to do all that. More likely than either of these however is that the Republicans eventually cave and the mainstream Boehner wing votes with all the Democrats to raise the limit while the radical Cantor wing all votes against. Then we'll see if the Republican Party can avoid just bursting at the seams in the run-up to 2012.
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Old 07-12-2011, 09:17 AM
 
19,198 posts, read 31,382,244 times
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Quote:
Originally Posted by kevinm View Post
The US Constitution states in the 14th amendement that the "debts" of the United States must be paid FIRST. All other "social spending" would be cut.
No, it doesn't say that. What it says is...

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.

The argument is that any law making it impossible for the Executive Branch to service existing debt authorized by law DOES in fact bring the validity of US debt into question, and therefore while passing debt-limit legislation might be Constitutional, any attempt to enforce such a limit would NOT be.
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Old 07-12-2011, 09:23 AM
 
19,198 posts, read 31,382,244 times
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Quote:
Originally Posted by VTHokieFan View Post
What sort of impact does this have on federal employees/contractors then?
It depends. The government in fact takes in quite a lot of money each month. It would be enough to service the debt, and to make Social Security, Medicare, and unemployment benefits payments if those payments were given priority, but not a lot else. Absent other Executive action, some departments and agencies would simply be shut down. Some suppliers and contractors simply wouldn't be paid.

Quote:
Originally Posted by VTHokieFan View Post
Would you show up for work if you knew you weren't going to be paid?
No, that you can't do. You can't report for work in a federal position if you are not in a pay-status of some sort. You could not even do telework from home or a business center.
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Old 07-12-2011, 01:30 PM
 
130 posts, read 361,014 times
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No, that you can't do. You can't report for work in a federal position if you are not in a pay-status of some sort. You could not even do telework from home or a business center.[/quote]


Unless you're "emergency essential". I am, and was told (back in April, during the last shutdown crisis) that if there was a shutdown, I was to report, in a "non-pay status". Never did get clarification on that one.
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