WASHINGTON – Do Republicans want the country to default?
President Obama makes it sound that way, as the stand-off over the budget rapidly turns into a stand-off over the debt ceiling.
“They are threatening to actually force the United States to default on its obligations for the very first time in history,” Obama said Thursday in Maryland.
But the claim is one of several that don’t quite comport with the facts.
In the event Congress does not raise the debt ceiling, the Treasury Department “would make every effort to avoid default,” said economist Douglas Holtz-Eakin.
The former director of the Congressional Budget Office said there is some debate over how much flexibility the Treasury would have to prioritize certain payments. But he predicted they would find a way to make sure interest payments to bondholders are sent out first.
“I promise you – in the moment, they would do it. And who would sue them?” Holtz-Eakin said.
That’s not to say the Treasury Department would be able to avoid an economic calamity. Even if officials pay bondholders on time, without the ability to borrow, other bills would simply not get paid.
No comments:
Post a Comment