Originally
posted by
mdevol:
Atryn, how do you propose we avoid default within the naxt 5-10 years? If you could have any policy in place, how would you change it?
Not sure what you are referring to...
Make sure you are familiar with the U.S. Debt history... here is a good article from 2012.
http://www.theatlantic.com/...in-1-little-chart/265185/
Note that the article points out that the U.S. has ALWAYS been in debt. "The earliest full reckoning of US national debt was compiled by Alexander Hamilton, the first US Treasury Secretary... The analysis dates to 1790 and puts the newborn US at around a 30% debt-to-GDP ratio, with the debt a bit higher than $75 million."
In other words, debt doesn't make us default on our debt. Default on debt is based on an inability to pay the interest on the debt. We are in no danger of that.
The next concern is whether we can afford to continue spending at a deficit (increasing the debt) AND continue providing the benefits (largely entitlements) AND running the military we run. Social Security's disability fund should be insolvent in 2016 based on its current trajectory. The broader SS fund won't be insolvent until 2020 or later. But even if SS went totally bankrupt, that wouldn't impact our ability to service our debt.
So, not paying the interest on the debt isn't a matter of "can-do", it is a matter of WILL. The question is whether we will just decide not to pay the interest on the debt. Currently, by law, the U.S. Treasury pays the interest on the debt FIRST. If there isn't enough money, it is other bills that don't get paid (like entitlements, government salaries). If we don't raise the debt ceiling, the government won't default on its debt. But it will likely default on SS payments, veterans benefits, etc.
What does that actually look like? Well, if you are a U.S. Veteran, the U.S. by LAW owes you that money. But if it doesn't have the money, they will (literally) send you an I.O.U. promising to pay you at some later date. You could then sell the IOU on a publicly traded market for some cash value. Here is an interesting article on that:
http://money.cnn.com/...y/debt-ceiling/index.html