Why The U.S. Won't Default On August 2

Time:

The only thing that matters for global markets over the coming days is whether a deal can be struck in Washington over the debt ceiling. That said, there is one major misconception – fostered by politicians – about what the stakes actually are. On August 2, the U.S. government will reach the limit of its statutory borrowing authority as determined by the Treasury Department. It will not, however, default on its debts even if a deal isn’t reached.

Read the whole story: Time

Comments

[Howard Scott Pearlman 20]

02:58 PM on 07/27/2011

The US could save about $460 Billion each year if we simply stopped letting 37 states get more back from Washington then they Pay in Federal Taxes !

http://www.thedailybeast.com/galleries/2011/04/04/state-finances.html

[Howard Scott Pearlman 20]

02:49 PM on 07/27/2011

There are 37 US States that get more Federal Dollars Back from Washington than they pay in.

Just make it no State can get more than they pay in if the Debt Limit is not raised .

http://www.thedailybeast.com/galleries/2011/04/04/state-finances.html

[JessCostello]

01:39 PM on 07/27/2011

I'm surprised HuffPo would run this article seeing that it goes against what the Democrats and the liberal media is saying. I noticed the same thing yesterday on NPR when the host tried to get the guests to confirm the Democrats line on default and it backfired.

[obamathegreat235]

01:11 PM on 07/27/2011

I seee the teapots are on here trying to negate this article in hopes that a default would occur in their destructive and treasonous ambitions against America.

[Kye154]

09:22 AM on 07/27/2011

If worse came to worst, we could always sell off some of the Red states, to make up for the debt. I am sure either Russia or China would like to have the additional property and resources. Perhaps the Saudis would like to have Texas too.

[flkewlkid00]

11:37 AM on 07/27/2011

what an awesome idea,let the saudis purchase all the red states and keep china and russia out of the mix since they have military industrial complexes similar to ours.if need be we can just give away texas just to get them off the books.

[JessCostello]

01:40 PM on 07/27/2011

Texas also has one of the strongest economies in the U.S. right now.

[Sirlarek]

12:20 AM on 07/27/2011

I find the argument weak. Any expense that is contracted out and not paid for will be a default. If there are layoffs....each one will be voting for whom ever they see to have been caught over the barrel. Probably the republicans.

[FogBelter]

07:34 PM on 07/26/2011

Time magazine is scared ... fun.

[P51MUSTANG]

07:15 PM on 07/26/2011

TIME magazine is wrong. The author leaves out the fact that while we may be able to (currently) make the interest payments on the debt, the fact is that a certain percentage of our debt comes DUE every month, requiring repayment of principal. Without an increase in the debt ceiling it can't just be "rolled over" into new t-bills and notes. An amazing faux pas by TIME!

[P51MUSTANG]

07:07 PM on 07/26/2011

I think what TIME is saying is "It won't default on all of its debts ALL AT ONCE"

Sure, we can "print some more money" with "Quantitative Easing," or pull a few more rabbits out of the hat on Aug 2, but every one of them will ultimately result in hyperinflation.

The real issue is politically, how to get the most bang for the buck out of a default. If I were Obama I'd lay off all the air traffic controllers and see how fast Republicans, and Wall Street, decided a debt ceiling increase needed to occur.

Or you can stop SS checks to Seniors, who I'm sure, would storm their Congressmen's offices within a matter of hours.

Obama has to be careful, HE could be the one taking a huge political hit for choosing the wrong group to suffer FIRST.

The bottom line is the US borrowing, and debt, has now become untenable. We are going to need 20 years of austerity --- higher taxes AND reduced services --- to even make a dent in it.

Or else we will simply face an even bigger and more painful default further down the road.

Simply kicking the can ain't gonna work anymore. As a nation, we can take our medicine, one way or the other --- a default, with resultant economic collapse, austerity, or else Zimbabwe-style hyperinflation.

Choose your poison!