Rand Paul: There’s no reason to raise the debt ceiling

[TomCADem]

Source: The Hill

Sen. Rand Paul (R-Ky.) argued Wednesday that there’s no need to raise the debt ceiling because the U.S. can pay the interest on its debt with existing revenue.

“What’s going on is, interestingly, the Democrats are scaring people saying we might not pay [interest on the debt] because Republicans don’t want to raise the debt ceiling,” Paul said on CNN. “If you don’t raise the debt ceiling that means you won’t have a balanced budget, it doesn’t mean you wouldn’t pay your bills.”

Paul argued that the House has passed a bill, the Full Faith and Credit law, that mandates payments on debt interest, Social Security, Medicare and soldier’s salaries go out first. He said that if the debt ceiling is breached, other government function wouldn’t get financed, but that no default would occur.

“I’m for taking default completely off the table and for promising to the American people and the markets, to Wall Street, that we will always pay the interest on the debt as a priority,” he said. “You know how we do that? We bring in $250 billion in tax revenue every month. The debt payment is about $30 billion. We just promise that we’ll always pay it. “


Read more: http://thehill.com/blogs/blog-briefing-room/news/326265-paul-theres-no-reason-to-raise-the-debt-ceiling

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Once again, we have the pay China and investors first and welch on everyone else meme.

[alcibiades_mystery]

1. Keep it up, jackass

Indeed, sponsor a "China Priority Act" as soon as you get the chance, just so everybody knows why the federal budget is going to China rather than, say, the Center for Disease Control.

[trublu992]

2. Any Pipe dream he had of running for anything has just been cementd to hell

He will never raise the money to run for President he needs. The corporate elite are leeches of the state they don't want it blown up!

[Half-Century Man]

3. They want to default on the loan from Social Security

and kill it. And impound whatever money remains as a penalty for loaning out to a credit risk.

[HeiressofBickworth]

4. I think he has inadvertently revealed the game plan

They will keep things shut down until Oct 17 debt ceiling hits. Then they will pay what they think they must in order to keep their anarchist revolution going -- debts, SS, Medicare, Military, and not pay what they don't like -- Depts of Education, EPA, HUD, Agriculture (food stamps), Affordable Care Act, etc. ("other government function wouldn’t get financed, but that no default would occur.&quot They will have achieved the destruction of the government as they have always wished. Of course, they don't care about other consequences -- crashing the economy of not only this but other countries. Why should they care? They have theirs so fuck you. Make no mistake about it -- this is not only a revolution but outright anarchy!!

[JDPriestly]

5. And no matter the gerrymandering, they will not be re-elected.

Too many people depend on that little bit of extra money from the federal government -- people who work for federal agencies at the state and local level, those in education, transportation employees, doctors and nurses, defense workers in defense contractor companies and many, many more.

This ploy will backfire.

[leftynyc]

11. What do they do when

the market drops 5000 points?

[Amonester]

6. The next question to this shameless thug should be:

"So you don't care a short second about the survival of families, kids and relatives, of hundred of thousands of government employees you just thrown on the streets?"

[blkmusclmachine]

7. America, meet bathtub

[Make7]

8. I think he needs a copy of this book:

[div style="display:inline-block; border:4px solid #336699; border-radius:0.4615em; box-shadow:2px 2px 4px #999999;"]

[DallasNE]

9. That Rand Paul Doesn't Know What He Is Talking About Is A Given

What would Paul do about the large trade deficit we run every month. That is part of the debt that must be financed too and runs in the range of $40 billion a month. Our current budget deficit averages $50 billion a month but that includes the $30 billion for interest. This means that spending for items other than debt service, Social Security, Medicare and soldiers salaries (no mention of VA benefits) would have to take the entire $60 billion a month hit or $720 billion a year. My guess is that the rest of the budget doesn't have that much in total in it. That means no air traffic controllers, no student loans, no unemployment checks, no Medicaid --- nothing. Not at reduced levels but abolished completely.

[fasttense]

10. How about if we simply raise the amount of taxes the uber rich and corporations pay

then we could have a balanced budget.

When 1 out of 4 corporations pay ZERO in taxes it's time to make them pay what people pay.

This would avoid all this silly political shutdown crap.

[melm00se]

12. who actually holds the US federal public debt?

Approximately 2/3's are held by Americans for Americans.

Of that amount, a large portion are held in retirement type accounts.

[pampango]

13. Thanks, melm00se. Nice pie chart. Bookmarked. n/t

[florida08]

14. Like blkmusclmachine said

America meet bathtub. We're in dangerous times with these fockers

[Javaman]

15. And there is even less of a reason to listen to ayn rand paul. nt

[StevePaulson]

16. Rand Is Right

Have the billionaires pay taxes at the same rate I pay, and have corporations pay a minimum 25%, and our debt would be paid off in 10 years completely. Rand Paul is correct. We don't need to raise the debt limit, we just need to have the folks that have and make most of the money pay their fair share. Like that's gonna happen....

http://www.RepublicansAreADisease.com

Republicans Are A Disease!

By the way Rand, please explain why I have to pay more in just withholding taxes than Mitt Romney pays in income tax. You know, Mitt Romney. The guy that make millions robbing workers of their pensions, and shipping workers jobs overseas.

[Bandit]

17. We just promise that we’ll always pay it.

And we have a Bridge to sell you and some ocean front property in Montana as well. Republican's word is as useless as a speed boat in a desert.

[FurSure]

18. can't we just get rid of a "debt ceiling"?

That way we can always may our bills and not have to worry about republiCONS using it to take us hostage.

Sounds like a good idea to me.

[melm00se]

19. it sounds like a good idea

but the question then becomes:

Is there a level of federal debt (as a percentage of GDP) that is unhealthy to the overall economy?

While the government can print money to cover debt servicing, that has 3 implications:

1) the ability to borrow money is greatly eroded as inflation (the impact of growing monetary supply faster than the overall economy grows) benefits the borrower but punishes the creditor. As you can see from the above breakdown, this would impact quite a few Americans as the federal debt is held by a large number of retirement accounts.

2) to offset #1, creditors would demand, at the very least, an interest rate that would be greater than inflation rate. This impact of this would be to drive up borrowing costs for the average American for things like cars, houses and the like which would slow down the purchase of these items. This would lead to an overall slowing of the economy which would have, in the short term (at the very least), an impact upon the job market (less being sold = less being made = less jobs). Both of those would impact tax revenues, which would impact debt servicing which would drive up the interest rates demanded by creditors.

3) Increase in monetary supply impacts the ability to acquire imports especially things like commodities from overseas sources. Look at the the rising and falling value of the US dollar vs something like oil. As the US dollar drops in value (relative to other currencies), imported commodities see an increase in cost (in US dollars).

3a) there is an upside here: as imports increase in price, exports become a better value in overseas markets so it can spur on an increase in manufacturing (but only if the manufacturer can utilize domestically sourced raw materials). This can help drive an economy back towards a healthy footing (assuming that the countries who import the exports don't slap tariffs on these imports to protect their own economies).

Monetary policies have numerous ripple effects which can have severe implications to the economy at large.

Which is the bigger threat? A government shutdown or a long term inflationary spiral? I am not sure (nor, do I think, that anyone has a definitive answer) but if you err, it might be wise to err on the side of caution.