So, with the shenanigans now going on in the budget talks, the fear of a looming debt limit crisis is growing. Those fears are
quite real, and if no deal is reached, a default could have vast and serious consequences.
As a response, many (including
Congressmen involved in the debt ceiling fight) have suggested that there is a constitutional bar on
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"..a default doesn't question the validity of the debt." No, it just means a country that does it is a flake, can't be trusted, and has no business being regarded as a world leader.
You're right; it will never get to court. It ranks right up there on the judicial fear scale with interpreting the 2nd Amendment.
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Seriously though, it's not necessarily a lie. If a bond issue comes due and there's no new issue, then when it's due you need to have the cash on hand to pay it out. It's not just a matter of matching revenue and expenses (though that really needs doing). But if there's no large payment due immediately and it's just day to day expenses, then yes they could immediately shut some things down and avoid a default. It really depends on how the debt is structured at the time the borrowing taps get cut off.
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Maybe it is for the best, that they drag their feet on doing whatever they are going to do with the debt limit.
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