WASHINGTON - At a Capitol Hill press conference yesterday, Rep. Michele Bachmann sought to downplay a failure to raise the Treasury Department's borrowing authority when it expires Aug. 2.
"This is a misnomer, that I believe that the president and treasury secretary have been trying to pass off on the American people and it's this," Bachmann, who's also running for the Republican presidential nomination, said. "If Congress fails to raise the debt ceiling by $2.5 trillion that somehow the United States will go into default and we will lose the full faith and credit of the United States. That is simply not true."
"It's just nonsense," said Stan Collender, a partner at Qorvis Communications and a former House and Senate budget staffer with decades of experience, of Bachmann's comments. "She has no idea what she's talking about."
Before dismissing Collender as a biased source, consider this: earlier this year, Bachmann invited Collender to speak about the federal budget before the House tea party caucus that she co-chairs.
Bachmann was promoting a bill, co-sponsored with fellow House Republicans Louie Gohmert and Steve King, that would prioritize government payments to make sure America's creditors and soldiers would be first to get their checks in the event that the debt ceiling isn't increased.
"Do they really want to tell Medicare and Social Security recipients they're not getting paid?" Collender asked.
At yesterday's press conference a reporter asked Bachmann who would not get paid in the event of a default. She evaded the question and sought to imply that Social Security and Medicare wouldn't be touched.
According to the Bipartisan Policy Center, it's true that debt payments, defense spending, Social Security and Medicare account together would account for slightly more than all of the revenue coming in each month, meaning that Bachmann's priorities could be funded. All other federal government spending, from food safety to NASA would have to shut down immediately.
But it's not clear that the government possesses an efficient payment mechanism to prioritize payments, said Collender.
"At least initially, you pay in the order in which things are presented," said Collander. "The only control is to not issue checks, but it's not easy to do because it's never been done before and the Treasury and the Office of Management and Budget have to tell agencies which bills to not pay."
Then there are constitutional issues. Congress has already made spending decisions codified into law through the appropriations process. Collender said there's no way, absent another act of Congress, to distinguish between Congress' other priorities.
Even if government spending were to be drastically cut after the Aug. 2 deadline to raise the debt ceiling, and Bachmann 's plan to pay creditors was done, Collender said it was almost a certainty that ratings agencies would downgrade U.S. government debt because the of the increased chance that bondholders would not be paid in the future.
Pension funds are required to hold vast portfolios of triple-A rated securities, including Treasury bonds. They would have to shed their holdings in a vast fire sale once a downgrade took place, said Collender. Intra-bank lending would also dry up over night because banks use Treasury bills as collateral.
Interest rates would shoot up overnight and an economic calamity would be inevitable, said Collender, comparing the implications to the financial crisis.
"It would make what happened in 2008 look like child's play," said Collender.
Who in the world would listen to Michele Bachmann and think she actually has a clue!
Michelle Bachmann is a serial liar who should be charged with treason and, when found guilty, sentenced to the full extent of the law.
Michelle Bachmann has always been out of touch with the real problems in MN or the USA. Never offers a solution when she talks only seems to ignore the question because she doesn't have an answer. Just hard to see people believe that she can lead us.
The Federal government has essentially defaulted in the past not to mention they've almost entirely debased the currency.
We are ALREADY defaulting ya dope.
Michelle is not an economist; she is a politician. She is probably one of the less informed members of the House and 'thinks'' with her desires and feelings, not with facts and research. To be an intelligent voter, one must always factcheck her statements or simply disregard them and listen to the worldview she is really speaking about. She wishes the USA was different, more like America as represented in 50's and 60's television shows. When she addresses an issue, you can hear her trying to figure out how we can change the country to get back to that world.
You have to admire her consistency..... Nonsensically speaking.
Welcome to the real world, Uncle Sam. Private sector firms and people have to prioritize payables all the time. Even the US govt has limited resources. Bachmann is trying to fix the budget now before it's too late. What solution does this budget staffer propose--"this is the way we've always done it"?
Picking up on what suestuben wrote, she's a Reactionary on the political spectrum. She's just as far from center as a Radical (farther than a Liberal). There are a bunch of right wingers now that have gone beyond Conservative and into Reactionary. Makes you wonder what else from the 1950s they'd like to see. Segregation? I live in her district and haven't been represented this whole time. Like lemmings, the voters here pull the lever for her when the word "abortion" gets mentioned about 10 days before the election.
From Wikipedia: Change: Radicals (who believe in rapid change) and Progressives (who believe in measured, incremental change) vs. Conservatives (who believe in preserving the status quo) vs. Reactionaries (who believe in changing things to a previous state).
sunbeam: regarding your 14July2011 1644 hrs comment
Your disrespect for the qualifications of Stan Collender either are carefully orchestrated obscurification to detract from the truth, or you are a wise-guy attempting to impersonate a wise-man. Did ypu read the article?
="this is the way we've always done it"
refers to the fact
that to change t
he established process would require:
some changes to the laws directing the handling of disbursements, and
an extraordinary management effort to pay claims "out of order", and
major mods to the automation of the bookkeepers!.
What part of this is so strange to you? Even private sector firms are not able to overnight change totally the way they handle their computer-managed billing systems.
We can verify the qualifications of Stan Collender and research his track record of decades of experience in the field in which he speaks! What are, Sir, your qualifications to post your noise in the conversation? In what way are you contributing to solution-seeking discussion?
If Bachmann carries Iowa in the Republican primary, what does that say about Iowa's conservative voters?
During the last Presidential election, CSpan2 Book TV aired a program where the author discussed the results of his or her research, which suggested that something like 5-10% of Democrats , and 5-10% of Republicans, essentially debated and defined the ideological constructs of each party. The point was that the vast, vast, vast majority of the citizens of this country have their lives dictated by the most active and vocal members of society, who also happen to be more privileged .
I strongly suspect that the same thing is occurring with the debt ceiling debate. The debate is not really about the debt ceiling per se, but rather a very deep, long-standing debate about the role and size of government. It’s never been resolved, and never will be resolved in our representative democracy. However, in the mean time, the regular folks in our society run the risk of being irreparably damaged. The elites (the upper and upper middle socio-economic classes) on each side of the fence have theirs, their corporate contributions, decent jobs and income, and will fare just fine economically. It’s the ordinary citizens (lower middle socio-economic class) who will most likely get screwed, no matter which side ultimately prevails in the short term.
The analogies comparing the government to a private business meeting payroll or a family meeting their budget are wrong. The government is nothing like those other entities and thinking in those terms completely misrepresents the issues.
Why do we care what the ratings agencies say about the government's debt? After all, they testified before Congress that they just give "opinions" which are of little consequence in the working of the economy. HA! HA! Liars!