Tick, tick. August 2nd is the Debt Limit Armageddon. Or Not.

The “debt shall not be questioned” clause was added to the Fourteenth Amendment for a specific and immediate purpose: to prevent the new Southern members of Congress, should they gain a majority, from cancelling the debt the Union had incurred in the war. But constitutional interpretation is not a catalogue of historical anecdotes; it is a matter of principle and we are therefore required to identify the principle on which the authors of the clause had to rely. As Chief Justice Hughes said of the clause in 1935, speaking for a unanimous Supreme Court, “While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle … ” [...]

Of course the principle does not prevent Congress from refusing to authorize new obligations. Obviously, Congress may modify or even extinguish the Social Security or Medicare programs prospectively. But the Republican majority in the House now refuses to permit the country to meet debts duly authorized in the past that remain duly authorized now, unless the Democrats and the President agree to a radical reduction in essential public services that they would never otherwise accept. That is playing blackmail with the nation’s honor. It threatens exactly the kind of forced default that the principle behind the debt clause declares it has no authority to inflict. I believe the best, principled, interpretation of the clause gives the president authority to ignore that blackmail and to borrow enough to meet the nation’s standing legal obligations.

I think the House would probably vote to impeach him (or at least try to) if he does that

I will only say my definition of terrorist differs from yours. Even fearmongering like raising the possibility of suspension of Social Security payments doesn't get there for me.

Doctors, hospitals, nursing homes and pharmacies might not get paid for products and services if the federal government defaults on its debt next week.
Some physician groups, anticipating this scenario, have started to warn their members that a possible default means their Medicare paychecks may not get mailed.

The American Academy of Family Physicians, which has more than 100,000 members, alerted them this week that a default means the government will only have enough money to pay about half of its bills, resulting in a likely delay in Medicare payments to physicians.

In that scenario, the government would likely halt Medicare reimbursements to doctors until the debt ceiling issue is resolved, the group said.

"We felt it was important to tell our members for be ready for this," said Dr. Roland Goertz, president of the American Academy of Family Physicians. "It is highly likely that there will be some impact upon Medicare payments."
The American College of Surgeons sent out a similar alert via e-mail to its members this week, warning them that "if Congress and the president do not raise the debt ceiling by Aug. 2, there is a chance that Medicare claims will not be paid."

In 2010, the federal government paid out $515.8 billion in total Medicare benefits to health care providers, including doctors, hospitals, nursing facilities, home health care centers and pharmacies.
Here's a breakdown of Medicare payments to those providers last year:
-- $168 billion to hospitals

-- $64.5 billion to doctors

-- $26.9 billion to nursing facilities

-- $19.1 billion to home health centers

-- $61.7 billion to pharmacies as part of Medicare's prescription drug programs.

The big ten financial bubbles
1. The Dutch Tulip Bulb Bubble 1636
2. The South Sea Bubble 1720
3. The Mississippi Bubble 1720
4. The late 1920s stock price bubble 1927–1929
5. The surge in bank loans to Mexico and other developing countries
in the 1970s
6. The bubble in real estate and stocks in Japan 1985–1989
7. The 1985–1989 bubble in real estate and stocks in Finland, Norway
and Sweden
8. The bubble in real estate and stocks in Thailand, Malaysia, Indonesia
and several other Asian countries 1992–1997
9. The surge in foreign investment in Mexico 1990–1993
10. The bubble in over-the-counter stocks in the United States
1995–2000

Pity the federal worker. Washington won't.


FORTUNE -- The austerity consensus among policymakers in the debt ceiling debate has ensured that the federal workforce will face cuts -- just how much is still unknown. And as soon as next week, government employees could be asked to report for work with no certainty about when they'll actually receive their next paychecks.

That's because if lawmakers can't agree on a plan to extend the federal government's borrowing authority by Tuesday, the Treasury Department will start running short on the cash it needs to pay the nation's bills. And it will begin prioritizing payments, with interest on the debt likely at the top of that list.

What comes next isn't clear -- Treasury so far hasn't tipped its hand on its contingency plan -- but it's a relatively safe bet that checks to rank-and-file workers will place behind benefits owed through Social Security, Medicare, and other social safety net programs, pay to military personnel and vets, and education assistance as millions of kids get ready to ship off for college.

The Treasury has since dipped into the trust funds and the exchange stabilization fund, but even so tax receipts that came in ensure there's enough money until at least Aug. 15. This is an Obama + Democrats charade

Moody's says US should retain top credit rating
Posted: 6:21 p.m. yesterday
Updated: 33 minutes ago

WASHINGTON &mdashMoody's Investors Service said late Friday that the United States should be able to keep its triple-A credit rating as long as Washington works out a deal that lets it continue to pay bondholders.

The credit rating agency said it thinks that even if the nation's $14.3 trillion borrowing limit isn't raised by Tuesday's deadline, the government would give priority to making interest payments on its debt and thereby avoid a default.

Moody's had warned July 13 that the country's credit rating was in danger of being downgraded because of the stalemate in Congress over raising the debt limit.

In its statement Friday, however, Moody's said that based on its current review it would likely rate the U.S. debt as triple-A but with a negative outlook. That would mean that there is a possibility of a downgrade in the future.

"If there were a default on a Treasury debt obligation, a downgrade would likely follow, even if the default were swiftly cured and investors suffered no permanent losses," Moody's said in its new report.

Credit rating agencies assess the riskiness of debt issued by companies and governments. The three major agencies — Moody's, Standard & Poor's and Fitch Ratings — have all raised warnings in recent months that they might downgrade the U.S. government's triple-A rating.

Such a downgrade would send shockwaves through the financial system. The government has had the highest credit rating for nearly a century. That rating has allowed the United States to pay the lowest interest rates possible to finance Treasury debt.

Sherry Cooper, chief economist at BMO Financial Group, said the decision by Moody's to back away from its threatened downgrade was "great news" and would probably make a potential downgrade by S&P less of a threat as well.

"What is really important is that the likelihood of a Treasury default has fallen sharply as the prospects of a debt-ceiling hike in the next few days has increased," Cooper said. "The U.S. is now more likely to retain its Moody's triple-A rating as long as it does not default."

In its new report, Moody's said that it would consider the government in default only if it missed an interest or principal payment on its debt, not if the government had to delay payments in such areas as federal employee salaries, Social Security or bills from vendors.

"If the debt limit is not raised before Aug. 2, we believe that the Treasury would give priority to debt service payments and could thus postpone a potential default for a number of days," Moody's said. "Revenues would be more than adequate for some period of time to meet those payments, although other outlays would be severely reduced as a result."

Some private economists have estimated that the government could keep operating without defaulting on its debt payments perhaps as long as Aug. 15.

The announcement by Moody's on Friday followed favorable comments Wednesday by Deven Sharma, the president of Standard & Poor's. He told a congressional committee that some of the deficit-cutting plans Congress is considering would lower the U.S. debt burden enough to allow the country to retain its triple-A rating.

However, Sharma said that S&P would not make a final determination until it had a much clearer view of what package of deficit-cutting proposals Congress would be adopting as part of a deal to raise the debt limit.

However, he said that previous reports indicating that Congress would need to make $4 trillion in deficit cuts over 10 years to retain a triple-A rating were not accurate. He declined during his testimony to be specific about the threshold, although he said the plan would have to make a credible attack on the U.S. deficit problems.
http://www.wral.com/business/story/9931024/