[quote=livinincali][quote=SK in CV]
How is not sending out medicare checks or cutting social security checks or failing to pay a defense contractor not defaulting on government debt? It is. Those are still government debts.[/quote]
Failing to pay for work already performed may be a default but not issuing a social security check is not a default of debt. It could be classified as a default of a obligation created by a law that government passed but you can choose to change that law. Actually you can change that law rather easily as it isn’t in the constitution even though it would be impossible politically. That’s what happened in Greece when they had to reduce their budget. Government pension payments were cut dramatically.
Certainly you could cut 30% of military spending and they would have to cut employees and cancel orders for planes and ships but that wouldn’t be a default either. You could close the Department of Education and that wouldn’t constitute a default. You could cut the payments for various medical service Medicare will pay for. All of those things would be unpopular but they wouldn’t be a default of debt. They aren’t debt to begin with. They are spending obligations created by government bills that could be overturned.
The Supreme court has already ruled that social security is a tax and entitlement program so it isn’t a debt the federal government has to it’s people. See this supreme court case. http://en.wikipedia.org/wiki/Flemming_v._Nestor%5B/quote%5D
Mostly right, but you’ve changed the equation. If the government doesn’t pay debts already incurred, that’s defaulting on debt, irrespective of whether the debt is secured by a bond or a note. Social Security benefits are a current debt. They can’t be reduced without an act of congress. Certainly future expenditures can be cut, and effectively they already have been. Without a continuing resolution, most new government debt can’t be incurred. (SS benefits being one exception.) If this problem isn’t solved, the recession of 5 years ago will look like a delightful walk in the park. The debt limit will be almost incidental.
