The most important story in today's Chicago Tribune

It might also might be the most informative, at least for me.

Listening to the boiling rhetoric about what would happen if the U.S. government would default on its bonds, I had assumed that if the debt ceiling is not extended, the bondholders (e.g. China) would not receive the interest they are due. Kind of like the default was on automatic.

Not so, according to Caroline Baum, a Bloomberg View columnist. Appearing in the Chicago Tribune's Perspective section, she wrote:

The U.S. government would have us believe that it has no ability to prioritize payments if Congress fails to raise the debt limit later this month.

But, she argued, the U.S. Treasury can, in fact, prioritize its payouts (amounting to about 100 million a month), making sure that the bondholders get first crack at the $225 billion in withheld income taxes that the government receives on average every month. She notes,

Yes, there would be an outcry if the Treasury made interest payments to the People's Bank of China and stiffed Gram and Gramps on their Social Security checks or withheld nutrition from starving infants. Obama could always blame Republicans for harming the neediest Americans, but he would be derelict in his duty not to make that choice (to prioritize).

So, this president, who believes that his power is limitless, has the power in fact to avoid a default even if those evil Republicans hold raising the debt ceiling hostage to defunding ObamaCare. Or refusing to continue spending money that we, and maybe our children, don't have.

The Treasury says, incredibly, that it cannot prioritize because its computers, automated and programed as they are, aren't flexible enough to allow humans to decide who should be paid first.

Read her response to that nonsense and the rest of this informative piece here.

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  • I always had a feeling this was true - great article - thanks for sharing it since I missed it this morning.

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