Sailing Down Denial

Mike Konczal looks at What are Conservative Experts Saying About Breaking Through the Debt Ceiling? He starts by talking about one of the biggest problems we have in getting at the truth:

…I have the same feelings about engaging in a debate over whether or not breaching the debt ceiling matters. I don’t want it to become a debate that people have, because it will get coded as yet another partisan thing pundits fight about, and thus reduce the seriousness with which we should regard the situation. That, in turn, could make a default even more likely. This is a problem we face because of the he-said/she-said coverage of political topics in most U.S. media.

Both the Cato Institute and the Heritage Foundation parrot the party line about no default because the Treasury just has to ‘prioritize payments’, and if it doesn’t happen it’s Obama’s fault.

But not everyone was willing to go along: “Bucking the trend, the American Enterprise Institute put me in touch with Michael Strain. What happens if we go through the debt ceiling? ‘First thing I’d say is that nobody really knows, and that’s the scary thing,’ he told me.”

As if on cue, John Ydstie of NPR creates: In A Debt Crisis, U.S. May Have To Decide Payment Priorities

House Speaker John Boehner defended the idea on Bloomberg TV. “I think doing a debt-prioritization bill makes it clear to our bondholders that we’re going to meet our obligations,” he said.

When asked if that means paying China before U.S. troops, Boehner said it’s no different than “in any other court proceeding.”

“The bondholders usually get paid first,” he said. “Same thing here.”

Since I’m not the media, I will add some context to Mr. Boehner’s claim about ‘court proceeding’. The only court proceeding where this takes place is so special that it has its own law, and its own court. That proceeding is bankruptcy. Mr. Boehner want to bankrupt the US government and doesn’t think there will be a problem as long as no one says the word or goes to court.

Mr. Ydstie then interviews Mark Patterson, the chief of staff at the U.S. Treasury from 2009 to last May, who says you can’t do it with the current system in place at the Treasury.

The Treasury has an automated Accounts Payable system that makes payments when bills are due. When the system can’t make the payment because of insufficient funds, it stops processing until the funds are available.

I’m not sure how the government shutdown has affected the Treasury Department staffing, but they have already had to stop processing payments to functions that are not currently funded.

The other little problem is that no one can state unequivocally that it is legal to prioritize payments.

The Trillion Dollar Platinum Coin is legal and Constitutional. Just do it, and stop screwing around with the full faith and credit of the United States.