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Originally Posted by Adak
Wrong. Both the Treasury dept and Moody's have stated that there will be NO default of any US debt.
Some programs will be cut back, but NOBODY will be defaulted on.
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From Jack Lew's testimony, if the funds cannot cover it, someone doesn't get paid. There is no 'cut back' on existing debt. This would be akin to telling the electric company that you will be paying them 90 cents on the dollar because you refuse to take out a loan. In reality, even that is not an option since there is no precedent. The Treasury would just pay all of the bills in no particular order until the money ran out.
It's really that simple. The Treasury has no authority to cut back funding on any programs. Their entire job is to pay all authorized bills, manage money, and secure funding where authorized. What part of 'full faith and credit' do you not understand?
From
Jack Lew's (Treasury Secretary) testimony on default.(Washington Post).
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In addition to the economic costs of the shutdown, the uncertainty around raising the debt limit is beginning to stress financial markets. At our auction of four-week Treasury bills on Tuesday, the interest rate nearly tripled relative to the prior week’s auction, and it reached the highest level since October 2008.
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Treasury continues to project that the extraordinary measures will be exhausted no later than October 17, 2013, at which point the federal government will have run out of borrowing authority. At that point, we will be left to meet our country’s commitments with only the cash on hand and any incoming revenues, placing our economy in a dangerous position.
If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations, including Social Security and Medicare benefits, payments to our military and veterans and contracts with private suppliers for the first time in our history.
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Full Faith and Credit
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Article IV, Section 1:
Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.[5]
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The short answer is that anywhere you go in the US, bills incurred by any state, or the US government, will be paid.
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