As I noted earlier, if we reach the debt ceiling, the United States does not automatically default on its loans. The issue, however, is priority of payment. We will bring in more each month in tax revenue to the U.S. Treasury than we will need to pay out to our lenders.It requires Tim Geithner (why is he still on the job anyway?) to prioritize and pay our debt obligations first. But there is no law requiring him to do so. Senator Pat Toomey is proposing legislation that would require Geithner pay our debt obligations before all other obligations if we hit the debt ceiling.The left, naturally, is crying foul. For the absurdity of it, read this ‘article’ of leftist spin.
The full impact of an actual default is unclear, but Treasury, and independent experts have warned that it would among other consequences, cause an enormous loss of wealth among U.S. citizens. Under the circumstances, one would think that the government’s top priority would be ensuring that citizens owed money by the Treasury would take precedence over, say, foreign governments. But that wouldn’t be the case if Toomey and some House Republicans, including Republican Study Committee Chairman Jim Jordan (R-OH), get their way.
The Treasury Department likewise is crying foul, saying it would still amount to default — only it wouldn’t. And we know it wouldn’t based on simple math. Revenue will continue being greater than expenditures to pay interest and principal on our debt obligations.But the left is pushing back and using the Chinese boogeyman in their playbook. Here, though, is the ultimate point — we would not be in the mess we are in, but for Obama kowtowing to China to begin with.