Obama will not reduce spending. If the
Congress cuts the budget, Obama will veto the cuts. Impeachment may be the only
option. See below - Norb Leahy
Taking default off the table?
By Robert Romano,
10/15/15, netrightdaily.com
On Sept. 10, the House
Ways and Means Committee marked up legislation by U.S. Rep. Tom McClintock
(R-Calif.), the Default Prevention Act, which seeks to prioritize payments of
principal and interest owed on the $18.1
trillion national debt in the event the
statutory debt limit is reached.
Conceptually this is a
really good idea. Every time the debt limit is reached, President Barack Obama
threatens default, because he can. Nothing in the law explicitly requires the
Treasury to make debt payments first before everything else in the budget.
The Obama Treasury goes
further, stating it lacks the statutory authority to prioritize payments at all, according
to a 2012 Treasury Inspector General’s report.
“While Congress enacted these expenditures, it did
not prioritize them, nor did it direct the President or the Treasury to pay some
expenses and not pay others,” the report states. “As a result, Treasury
officials determined that there is no fair or sensible way to pick and choose
among the many bills that come due every day. Furthermore, because Congress has
never provided guidance to the contrary, Treasury’s systems are designed to
make each payment in the order it comes due.”
All that, even though
there is more than enough revenue every year to pay interest owed on the debt.
Even if you count gross interest owed on the debt, which includes payments to
the Social Security, Medicare, and other government trust funds — something
public officials are in the habit of ignoring — those came in at $429 billion
in 2014. In the meantime, the federal government collected $3 trillion in taxes.
Existing debt could be
refinanced up to the limit. It is new debt that would not be able to be
contracted to finance the full budget, but default on the existing debt itself
would be unnecessary, and with a properly constructed debt payment prioritization
plan, impossible.
That would give credit
markets the confidence that whatever partisan differences occur around a debt
ceiling increase, existing debt will always be covered. So long, that is, as
the debt payment prioritization plan actually covers all of those
obligations.
Enter the House Ways and
Means Committee, chaired by U.S. Rep. Paul Ryan (R-Wis.). The last time this
legislation was marked up by the same committee, it was blasted by Democrats
because although it covered principal and interest owed on debt held by the
public, and in the Old-Age and Survivors Insurance Trust Fund and Disability
Insurance Trust Fund (i.e. Social Security), it left out the
$266.4 billion Medicare Hospital Insurance Trust Fund and the Supplemental
Insurance Trust Fund.
At the time, Democrats
on the committee wrote in the mark-up’s dissenting views, “This legislation would require the Department of the Treasury to pay Chinese and other foreign
bondholders first, before our troops in harm’s way if they are paid at all,
before the doctors and hospitals that care for our seniors on Medicare if they
are paid at all, before our veterans if they are paid, and before our American
small businesses if they are paid.”
That was in April 2013.
So, surely after more than two years, and with a new committee chairman in Paul
Ryan at the helm, Republicans fixed such a glaring omission, right?
In addition to debt
prioritization, to insulate Congress from the accusation it is ditching Grandma
and the troops, this legislation could have provided a wider range of prioritization,
including utilizing revenue to pay Social Security, Medicare, active duty
military payments, and veterans’ benefits.
But, no, instead, the
bill was marked up without amendment and sent on its merry way to the House
floor, where a vote could come as soon as next week, failing to protect members
of Congress from charges it is paying China before seniors.
Predictably,
Democrats in the committee’s dissenting views once again noted the omission, “We are further concerned that
the plan contained in the legislation would prioritize payment of debts to
bondholders, including those in China, Switzerland, and the Cayman Islands,
over our obligations to America’s veterans, seniors, students, and troops in
harm’s way.” Democrats added, “[We] urge our Republican colleagues to avoid
repeating their mistakes.”
It should have been
really easy to fix, since the Medicare portion of the debt only constitutes 1.4
percent of the total $18.1 trillion debt. And even after payments on interest
are made, there is still enough revenue to pay Social Security, and veterans’
benefits, plus defense.
Based on prior
experience, one might think Ryan would be careful to avoid the predictable
political theatrics of being perceived as pushing Grandma off the fiscal cliff.
Instead, because Ryan’s
Ways and Means Committee could not be bothered with ensuring that the entire
debt and essential obligations were covered by the legislation, including
Medicare, the Default Prevention Act sadly fails to live up to its name, which
is hard to say, because, again, prioritization of debt payments is a really
good idea.
Default should never be
an option for any president, especially when the debt limit is reached.
But in its current form,
even if the bill passed and by some miracle was signed into law, it would still
give the executive branch all the leverage it needs to force Congress to rubber
stamp increases and suspensions of the debt limit — because when push comes to
shove, Congress does not want to be held responsible for defaulting on debt
that helps pay for Medicare benefits.
Why would House
Republican leaders put their own members in front of such a political buzzsaw? By now, Paul Ryan should know better.
Robert Romano is the
senior editor of Americans for Limited Government.
http://netrightdaily.com/2015/10/taking-default-off-the-table/
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