Supposedly, they’re under way. Or not, depending on the credibility of major players: Senate Majority Leader Harry Reid (D, UT), Treasury Secretary Jack Lew, and President Barack Obama.
In testimony before the Senate Finance Committee, Lew had a number of things to say. Some might call them threats:
[H]e will be unable to guarantee payments to any group—whether Social Security recipients or US bondholders—unless Congress approves an increase in the federal debt limit.
But of course, he can. It’s his job, for one thing, to make exactly this kind of prioritizing decision. Further, Social Security payments have nothing to do with this. The Social Security Trust Fund is phat with Treasury Notes in IOU for the various Federal government borrowings that have raided the Trust Fund over the years. These can be sold on the open market to raise the necessary payment monies….
Moreover, the government’s revenue collections cover the scheduled debt payments by a factor of 10:1 or 11:1.
…in an unprecedented situation in which he would be relying entirely on the erratic flow of incoming revenue, the economy would suffer and there would not even be certainty that the government could make all interest payments.
Also not correct. As just noted, there’s plenty of money coming in to cover the payments, regardless of the cash flow from time to time. The uncertainty in the markets is almost entirely generated by misleading statements from government officials who surely know better. The rest of the uncertainty flows from the Democrats’ flat refusal to negotiate.
Lew also trotted out the usual excuses, including, for instance:
[T]he administration will face a series of difficult decisions even if Treasury can avoid what the credit-rating firms consider a default. In a scenario where federal spending will far exceed revenue, he…say[s] that the administration would have only imperfect options in deciding whom to pay. [He pushed] Republicans to decide whom they wouldn’t pay—Social Security recipients or veterans.
Far from the apocalypse that such cynically false choices imply, this rather puts a premium on bringing spending down to within existing revenues. We’ve seen, though, how anxious the Democrats are to bring spending under control. They’re addicted to it, and they demonstrate this with their omnipresent mantra of a “need” for continued high spending with its continued borrowing. Never mind that, were spending reduced below revenues, continued borrowing wouldn’t be necessary.
Finally, coming out of Thursday afternoon’s meeting between Obama, et al., and 18 senior members of the House Republican caucus concerning the possibility of an increase in the debt ceiling that would be good for six weeks more of borrowing, Obama indicated through his Press Secretary, Jay Carney, that he would sign such a bill and enter into negotiations over borrowing, spending, taxation, entitlement programs, and so on, even though the debt ceiling bill would not contain funding to reopen the government from the Democrats’ shutdown. Sounds like progress, yes?
Reid, coming out of the same meeting answered a reporter’s question on that: would the Senate pass the House bill and send it to the President, with its lack of funding for reopening the government, and the negotiation stipulation?
Not going to happen.
And there we are. The Democrats in the Senate won’t negotiate, and they’re willing to force a default on our debt if they can’t get their way. And they’ve overruled the President to get there.
Update: Now it appears that Obama has obeyed Reid’s instruction. Fox News is reporting this morning that Obama now is echoing Reid’s “Not going to happen” and is rejecting the kind of deal he’d said yesterday, through Carney, that he would accept.
The Democrats really are bent on keeping our government closed and on threatening the blowup of our credit rating and with it our economy if they can’t get everything they demand.