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Politics : Actual left/right wing discussion
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To: Lane3 who wrote (9991)8/2/2011 2:55:14 PM
From: TimF  Read Replies (1) of 10087
 
Default has different meanings, and in the legal and financial sense there would be no default. No reason to downgrade American credit (except the general thought that the US government can't get its act together, but arguably expanding the debt the way that's done all the time is a worse example of not getting its act together). Default means not paying debt (or debt service) or contractual obligations. It can more broadly mean not keeping a promise, but that's not particularly relevant (not much more than the other reason of the preselected and/or normal option)

There may be enough money to service the debt but there would not be enough money to pay all that the government was obligated by law to pay.

There is enough to pay all the "entitlement" spending, plus interest on the debt, and specific contractual requirements.

The budget (if one had been passed, or the continuing resolutions that the government has been operating on) are law, technically you could call all the spending authorized by them "required by law", and then use the definition you provided to argue that reducing spending, without a new law calling for lower spending, would be a default, but that's not a definition that's really to the point here. The credibility of the US government to current and potential future creditors relies on the government making debt payments and contractually required payments. Calling anything beyond that stretches things too much and distorts the issue.
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