It has contractual obligations to vendors, but not to recipients of Social Security.
We had a disconnect on our last transaction. I was questioning your use of "specific" as a qualifier of "contractual obligations." It suggested to me that you meant that default might apply to some contractual obligations, the one you designate as "specific," but not to the rest of the contractual obligations. I was trying to figure out why you were differentiating between specific and other contractual obligations. I was not comparing federal contractual obligations to other federal financial obligations, like Social Security.
Back to the application of the term, "default." Unlike the private sector, the federal government has both contractual obligations and other legal financial obligations, like entitlements such as Social Security. When either doesn't meet a contractual obligation, it is said to be in default. We are comfortable with that terminology because companies and people have been known to default on contractual obligations and we can easily get our heads around the notion of the government defaulting on contractual obligations even though that is not a familiar situation. OTOH, the government has never defaulted on a legal financial obligation that was not a contract. It has never defaulted on an entitlement so the terminology applied that way seems alien. That it seems alien because it has never happened doesn't mean that the terminology does not apply, only that it's harder to get one's head around. When the government does not meet a non-contractual financial obligation, an entitlement, that would be a default no less than not meeting a contractual obligation would be a default.
The US government's rent payments, while very high compared to the rent payments of individuals or other organizations, are a very small part of its total spending.
I didn't mean to distract the discussion and refocus on rent. I mentioned it only in that what the Post itemized as the Education Department includes contractual obligations as well as programmatic costs and there was no way to use the Post's model to get an accurate count of what could be cut without being in default on contractual obligations vs what would not incur default. When I used to Post's model to pay all the contractual and entitlement obligations, I came close to running out of money so I couldn't determine clearly whether or not there was enough money to meet all legal financial obligations and avoid default, as you claimed. I was unable to use that tool to validate or refute your claim. It would seem to be fairly close.
You're right that rent is not much money and some rents could be stopped without default. I was just trying to illustrate why the Post model was not adequate for my purpose. |
