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Because all know that funds are, and will always be, available to pay interest on bondholder debts

President Obama’s default drop dead date  pronouncements  could precipitate a financial crisis that is unjustified based upon the actual funds available to pay interest on the debt.

The holders of U.S. Treasury bonds care about one thing: Being paid interest owed to them on time. They know that the U.S. Treasury receives approximately $200B in tax receipts each month and they know that debt service interest payments due each month are approximately $29B each month, or less than 15% of total cash on hand.

Further, these creditors know that there exists no “default” date, after which America would automatically and inevitably default on debts owed to them. So why would the Moody’s credit rating agency threaten to lower the supreme AAA credit rating that the United States of America has maintained throughout its history? Why would world financial markets go wobbly as Timothy Geithner’s faux August 2 default date approaches?

Could it be that Moody’s and the holders of T-Bills have lost confidence in the maturity and good judgment of President Barack Obama?

Surely they know that Obama and Geithner are proficient at basic arithmetic, Obama’s still-hidden Ivy League academic record and Geithner’s personal income tax transgressions notwithstanding. Yet, they hear the Chief Executive and his Administration playing a game of chicken with Republicans in Congress over, not just their debt service payments, but even refusals to guarantee payments Social security payments to the nation’s elderly, disabled and orphan survivors.

We know that there are, and always will be, for the foreseeable future, more than enough funds to pay monthly costs for:

  • Interest on the national debt ($29B);
  • Social Security retirement, disability and survivors benefits ($49B);
  • Medicare and Medicaid ($50B);
  • Military personnel ($3B); and
  • Veterans Administration obligations ($3B), with tens of billions ($37) to spare for federal law enforcement, border patrol and what remaining government functions the Obama Administration deems essential, even if the debt ceiling is not raised.

Yet, this is the same administration that threatened not to pay the armed forces in the case of a government shutdown last Spring unless funds were restored to Planned Parenthood abortion mills.

Yes, everyone on Capitol Hill, at 1600 Pennsylvania Avenue and in foreign banks knows that there are no dates on, before or after August 2, 2011 when America will not have the money to pay its bills. But they also are beginning to suspect that the man responsible for actually writing the checks is willing to precipitate financial disaster on his own country merely for his own political purposes.

There are consequences to putting community organizers in charge of the nukes and our money. We the People are reaping the whirlwind of an ObamaDemRecession aftermath, already devastating for the unemployed, underemployed and small businesses whose customers have no money with which to buy their goods and services.

It can get worse and it appears that if Obama doesn’t get his way, he is willing to make it so. In fact, whether we had this debt ceiling issue or not, the fact of the huge debt we already owe could cause markets to dump American dollars any day. The laws of Nature have not been suspended.

But when you add to Nature’s laws an unnaturally irresponsible actor in the role of the most powerful man on Earth, prepare for the deluge.

I just hope that Congressional Republican leaders will begin to educate their constituents, especially including seniors, from whom the threat to their welfare and security comes: Barack Hussein Obama

Mike “gamecock” DeVine

Legal Editor – The Minority Report

Atlanta Law & Politics columnist for

“One man with courage makes a majority.” – Andrew Jackson

More DeVine Gamecock rooster crowings at Modern ConservativeHillbilly PoliticsUnified Patriots,  Political Daily and Conservative Outlooks. All Charlotte Observer and Atlanta Journal-Constitution op-eds archived at

16 Responses to Markets, Moody convinced Obama won’t pay debts out of spite

  • Bruce says:

    “Could it be that Moody’s and the holders of T-Bills have lost confidence in the maturity and good judgment of President Barack Obama?”

    It is my understanding the first debt limit ($11.5B) was established during WW1 in 1917 to help fund the war. It has been continuously raised and congress has never failed to raise the debt limit. Whether it be a democratic or republican congress. Maybe that is the crux of the problem. This has been business as usual since 1917. The analogy I will use for this is a husband and wife have been married for 30 years and have lived on credit. Then one day the wife (congress because as you say they have all the power) gets fed up and says I’m not going to pay the bills. Right or wrong this money has already been spent and the bills need to be paid. So now the husband tries to pay the bills alone and he can cover the mortgage, car payment, insurance but you know he is going to be a little late on some of those credit card payments and has to pick and choose who gets paid. Guess what happens to the credit rating. Guess what happens to their interest rates.

    Back in 1979 the United States was late on payments of $120M. A paltry sum compared to today’s issue. Not quite sure why it happened, computer glitch, the check was in the mail, you know something like that. The result was a rise on .6 percentage points in T-Bill rates. The total cost of that interest hike was about $6B per year. The debt was only about $800B (that was pre Reagan before he started doubling the debt). Now just think of what a .6 percentage point rise in interest would do to us today.

    So all this to say first of all this raising the debt ceiling is not an Obama issue (Barack Hussein Obama as you like to say), but an over historical issue that really should have been dealt with a long time ago. Maybe by one of those republican presidents who were in office 20 of the last 30 years. Maybe GB2 should have done something. No but he was too busy raising it 10 times.

    This new “tea party” crew while they say they are here to serve are just like any other politician and are trying to protect their votes for the next reelection and have chosen the debt ceiling as their stake in the ground. I think it’s the wrong battle. Yes we need to get spending under control. Yes we need to reduce the deficit and the debt but we still need to pay the bills. The husband and wife must agree to pay the bills and get their spending in line it’s not a either or.

    Black in America Baby…. The revolution has been televised…

  • StephC says:

    Bruce, you once again miss the main point and choose, instead, to center on a theme of “everybody else did it”. The necessaries, like interest and SS and veterans benefits, could be paid with what is now coming in revenues, but there’s a whole lot of “fluff” that needs to be cut.

    Raising the debt ceiling in and of itself is not the problem. It’s the spending without regard to the limits of other people’s money. At some point the ceiling will exceed our ability to pay enough taxes to cover it.

    To be honest, I don’t know why we have a debt ceiling in the first place. It makes no sense to me. Nobody should spend more than they have, including the government.

    Here’s a short simple run-down of some things that could be cut.

    Beneficiary: Cost:

    ObamaCare $1.5 trillion

    Planned Parenthood (annually) $330 million

    Fannie Mae/Freddie Mac $145 billion

    Amtrak $1.9 billion

    Unspent Stimulus/ War Chest $60 billion

    National Endowment for the Arts $133 million

    National Endowment for the Humanities $140 million

    The Post Office $1.0 billion

    Vacant Federal Properties $25.0 billion

    Medicare Fraud $47.0 billion

    National Broadband Coverage Map $350.0 million

    Federal Employee Flight Upgrades $146.0 million

    Beach Re-sanding $3.0 billion

    Payments Not to Use Land (conservation) $2.0 billion

    International Abortions/Population Control $650.0 million

    Libya Kinetic Military Action $750.0 million

    Consumer Protection Bureau $329.0 million

    United Nations $6.4 billion

    NPR/Corporation for Public Broadcasting $451.0 million

    Renewable Energy Tax Credits (mostly wind) $6.9 billion

    Tax Credits to IRS employees/Others $513.0 million

    Federal Weatherization Programs $5.0 billion

    99 Week Unemployment Benefits $100.0 billion

    Total $1.9 – 2.0 trillion.

    Clearly, in tough times, choices must be made. These are some of the choices Barack Obama and his party might favor over seniors and veterans.

    Now, I’m sure you’ll have something to say about a lot of that but when the budget is what it is, you cover the basics first and then look to see what you have left in disposable income.

    I’d add a lot to that list but it’s not bad for a start.

  • Bruce says:


    “Bruce, you once again miss the main point and choose, instead, to center on a theme of “everybody else did it”.”

    How is it that in your eyes I am always missing the point when the fact was I was making a point. In my analogy I was trying to say yes the essentials can and will be paid, but just like the family that is late on a non-essential credit payment the result is their credit rate is affected. If we don’t raise the debt ceiling credit rating for the US will be affected because there will be some nonessential late payments. And as I was trying to point out if that happens it will cost the taxpayer billions of dollars in additional interest on the debt.

    I wasn’t taking a “everybody else did it” approach I was simply pointing out the history of how the debt ceiling has been handled. Just pointing out the facts. I am not going to dispute your list while there are some things on it I may not agree on the fact is we do have to cut spending and all of these should be looked. But that has nothing to do with the current debt ceiling which is money that has already been spent. Just like any family you have to pay your bills. Like I said before it is not either or we have to do both cut spending and pay our bills.

    Black in America Baby…..The revolution has been televised

  • Mike gamecock DeVine says:

    I see your point Bruce and it is not without merit, but unlike an individual, I think the credit rating of the US would be enhanced if we don’t raise the debt ceiling and are forced to re-structure the bills we pay with tax dollars. The main point I was making is that Obama is essentially threatening to CHOOSE not to pay all interest payments to bondholders despite the availability of the funds…and is threatening seniors much as he did the military in the Spring. These tactics are quite loathsome and could precipitate a crisis based on expectations of what Obama threatens to do.

  • Bruce says:

    “but unlike an individual, I think the credit rating of the US would be enhanced if we don’t raise the debt ceiling”

    Take a look at this quote:

    S&P Managing Director John Chambers said that even if the United States makes all its debt payments, it could be downgraded for missing payments to any creditors whatsoever, including veterans or vendors.

    S&P is the other credit rating agency that rates the US credit. It’s like I said the credit rating can be lowered for missing nonessential payments. It is my understanding Moody and S&P have lowered the credit rating of Portugal and Greece and neither one of them has missed an essential bond payment. Everybody here is guilty of playing politics on this on including Obama. The end result of this politicking is going to cost us a lot in the long run. Remember the interest rate will go up on the debt if the credit rating is lowered. That will probably suck up any spending cuts that could be implemented in the near term.

    This grandstanding that both sides are doing is a no win situation. It is making the credit rating agencies nervous and is already affecting the dollar, it fell 1.1% drop on Wednesday – its biggest one-day drop in six months, because of Moody threatening to drop the credit rating.

    Black in America Baby….The revolution has been televised

  • Mike gamecock DeVine says:

    Of course, the underlying reason our credit rating is at risk is the absolute size of our debt in relation to the size of our economy and budget. Obviously, if we cut spending, that would be an enhancement of our credit since it would reduce our debt/income ratio. I see your point about vendors, but confess I don’t know what that comes to. Moreover, I think these discussions about the debt ceiling as well as other budget debates of late are akin to discussion with a man that has leaped off the top floor of the Empire State building and is having discussions on his cell phone about getting some mattresses on the sidewalk. In other words, deck chairs on the Titanic. We the People are going to suffer much more more before we can start re-building the nation.

  • Mike gamecock DeVine says:

    But I do think that it is Obama that has made the credit agencies nervous by essentially promising to intentionally CHOOSE not to make interest payments despite the fact that said debt service is only 15% of available funds.

  • BB-Idaho says:

    The debt limit was raised 17 times during the Reagan admin.
    Didn’t seem like a big deal in those days….

  • StephC says:

    In my analogy I was trying to say yes the essentials can and will be paid, but just like the family that is late on a non-essential credit payment the result is their credit rate is affected.

    I’m not as kind as Mike. I don’t see it has merit when all the bills can be paid with incoming revenues, including those “non-essential credit payment”s.

    I was being kind, at least in my eyes, by not pointing out how your hero has squandered a lot of money on non-essentials such as parties, vacations, and other assorted trips while preaching “shared sacrifice” for everyone else. The average salary for a WH employee is 6 figures, not to mention the number of employees he has added to his staff. As a leader, he should be setting the example. Instead, he expects the average person to do it all.

    I gave a list of things where cuts could be made that wouldn’t affect our credit rating one percent. And then added that I could think of lots more cuts that could be made all of which sum up to a tidy amount and cut the sheer waste that goes on.

  • Mike gamecock DeVine says:

    BB and B, it is true that the debt crisis grew slowly over time under both R and D presidents and congresses. I would also admit that I, in a written column last Spring, advocated bringing the battle over the budget to a head last Spring over the government shutdown and not the debt ceiling. I would also point out that the US is the only nation of which I am aware that has a separate debt ceiling law and that I think it was made law by progressives early in the 20th Century for political purposes. That said, I have also concluded that a severe financial crisis for the US based upon the shear magnitude of our debt and Fed dollars in circulation is inevitable and that I would just as soon it begin earlier as later, so that we can get on with the task of trying to get back to re-building a nation based upon the principles of the founders…if enough of us that understand the Miracle at Philadelphia and have the courage to fight for same, still exist in this country. In other words, I’m a bit lonely in my poverty. I have been living in a crisis for over 2 years. I want more Americans to join me because I think there is strength in numbers…smile.

  • StephC says:

    it is true that the debt crisis grew slowly over time under both R and D presidents and congresses.

    We’ve been kicking a can down a road that will end at the edge of a cliff in the very near future. Regardless of where it came from, who used it to their advantage, or whether it’s being called a crisis now for political reasons, we’ve been doing this same thing for a century. it hasn’t worked as it comes to a head at some point, regardless of who is president at the time for every presidential term since its inception. And it always ends the same way. It’s lunacy to keep doing things the same way when it always comes out with the same results.

    We, as a country, have enemies who would love nothing more than to collapse the dollar and have been working actively to do so. Going further into debt would please them mightily. Those who hold most of our debt are not our friends.

    It’s not enough to point fingers or say everybody’s doing it. We are Americans and we are better than this.

  • Bruce says:

    For those who still believe we shouldn’t raise the debt ceiling. For those who believe we should just deal with the possibility of default on even some of the non-essential payments and risk a lowering of our credit rating. For you I give you the words of former President Reagan when he was faced with the same dilemma :

    “‘The full consequences of a default,’ he said, ‘or even the serious prospect of a default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The nation can ill afford to allow such a result.’

    What has changed now. Is is just the fact its Obama who is in the same situation.

    Black in America Baby…. The revolution has been televised…

  • Mike DeVine says:

    Many things have changed since the 80s. The absolute level of the debt and its percentage of GDP and the total budget is exponentially higher. We were also in a Cold War that took much more money to win than the current war on terror. Plus, Reagan never threatened to not pay debts, Soc sec and military pay so long as the funds were available, as Obama has done.

  • Bruce says:


    Obama didn’t threatened to simply not pay bills he said there is the possibility of social security and the military not getting paid. He was politicking and I said before everyone in this debate on the hill is doing the same. The truth is they will get paid. As I stated before the essentials will get paid but there will be some non-essential payments that won’t happen on time. Regardless of the politicking that is going on now there remains this fact. The definition of default hasn’t changed since the 80’s. Default is default plain and simple. You are right this is not the 80’s we were not as much of a global economy then as are now due to the introduction of the internet. The ” substantial effects on the domestic financial markets and the value of the dollar in exchange markets” could be a quicker and more devastating. Those republicans and tea partiers that say let the default happen are a bit naïve or just can’t see the forest for the trees.

  • Mike DeVine says:

    There is no possibility that there would not be money to pay interest on the debt or Soc Sec on Aug 2 and for many months into the future (did you not see the numbers in my column?) unless the Treasury has been raided. Of course, neither the GOP nor the media have subpoenaed or issued a FOIA demand for the balance sheet, but rather have taken the word of Geithner. Boggles the mind, esp given that Timmy said a date in May was “default day”. In any event, a lawyer would have committed malpractice for not demanding the balance sheet.

    Wrong Bruce, Obama did threaten by any reasonable definition of the word, to not pay the military as “essential” employees during the CR govt shutdown showdown last Spring.

    And when we know that the govt has 5 times the funds on hand or more required to pay bondholders and soc sec, then to say their “might not be funds” (which you admit is a lie), then it is a threat.

    Get real Bruce.

July 2011


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