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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (612816)	5/26/2011 12:29:18 AM
From: TimF	Read Replies (1) \| Respond to of 1579725

The rating agencies had stated that they consider any defaulting on spending to be a sovereign default, not just service of the debt. Nonsense. Not just in the sense its extremely wrong, but that it doesn't even make sense. You default on debt, not on spending. In addition to the debt, you have a smaller amount of contractual obligations that couldn't be rescheduled (or that if the debt limit was permanent wouldn't be helped much by a rescheduling). But both together are much less than federal tax revenue. Changing entitlement spending to zero, wouldn't be a default, in fact or in law. It would not be a violation of a contract or a canceling of the debt because it is not a debt or a contractual obligation. If a downgrade did come over the debt limit not being increased, it wouldn't be for feat that entitlement payments would not be made. It would be the feat by bond holders that they would be made, even at the expense of a default on the bond payments. Such a default would not be required by a failure to raise the debt limit, but the administration could choose to not prioritize debt payments and thus default on the debt, even if such payments would be a fairly small fraction of government revenue.