"The U.S. won't default, because default means that you don't pay your creditors. And it takes about 10% of the money that's coming in right now" to pay interest to bondholders.The AJC's Truth-O-Meter scored this statement as false. As they write: while it may be true that we have enough money coming in to cover our obligations to bondholders -- it would mean that the government would have to prioritize payments. If we pay the bond debts for August, then $134 billion in cuts elsewhere would be necessary for the month of August.
Here are some of the things that Rep. Price apparently thinks are less important to pay:
The cost of Medicare, $50 billionNow, in fairness, Rep. Price didn't say those things are not important for us to pay. But, in true Republican form, his concern seems mainly with the business community, not the people's needs. George Washington University economics professor Neil Buchanan responded:
The cost of Social Security, $49 billion
Unemployment, $12.8 billion
Salaries and benefits for federal employees, $14.2 billion
Military active-duty pay, $2.9 billion
"Can you imagine the firestorm if Americans were told that we cannot afford to pay Social Security recipients because we have to pay foreign banks and governments first? . . . Any foreign investor would know that this is not politically sustainable. They would have every reason to dump our bonds or at least to require much higher rates of return."And the AJC concludes:
"Price downplays the real risks of default and credit worthiness in a prioritization strategy that pays debt holders at the expense of other federal credit holders. So we rate his statement false."This is the thinking of the Chairman of the Republican Policy Committee, who should know better. But apparently they are blinded by their commitment to big business, wealthy donors, and an ideology of shrinking the government, spending cuts and no tax increases forever.
Could we move up the election to November 2011, please?