Moody's: Obama and the Democrats are Lying about Default

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I've been saying it for more than two years, and even though the math is completely clear, people still don't get it: hitting the debt limit does not mean default. We have more than enough money to service the debt. If we service the debt, we do not default.

What Jack Lew and President Obama are mostly doing is explicitly claiming that failing to pay for various "obligations" is "default." But they are simply lying. They talk about our credit rating, but that is related to actual default on our public debt, not the new definition of "default" they are inventing.

Now, it is true that we do not get revenues on the same schedule as we need to pay the debt service, which could mean that we don't have enough revenues right away to pay debt service right away, but that just means we need to manage the incoming revenues to make sure we have enough for the debt when it comes due (which is harder than it sounds, but not a lot harder, but that's another discussion). Some also claim the President does not have the power to prioritize payments for the debt. That is simply untrue, but to get rid of all doubt, the House passed a simple bill giving explicit authority to do such prioritization. The Democrats refuse to agree to it, apparently just so they can continue to falsely claim they are not allowed to prioritize.

There is only one possible way to default on our debt: through the explicit choice of the President. If we default, it is literally because President Obama chose for us to default.

I am not the only one who can do simple math. Moody's apparently can, too. "We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact. ... The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury's extraordinary measures to raise funds) and a default." (emphasis added)

That's not to say there is no problem with running out of debt. But default is a choice. We will not default, because Obama will not choose to default, because not only would it be economically bad, it would also violate the Constitution. But if we do default, it is literally entirely on the President and his explicit choice to default.

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