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Moody’s has confirmed that the federal government will not default on its debt obligations if Congress does not increase the statutory debt limit. Steven Hess, Moody’s principal U.S. sovereign credit analyst, said:

We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact. The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.

The statutory debt limit is a limit on the amount of debt outstanding. As debt matures, it can be refinanced with new Treasury issuance without affecting the total amount of debt (principal). Interest, by contrast, is an expenditure and could be included among the expenses that the Treasury could decide not to pay.

There will be no default if Congress decides not to raise the debt limit. The government is required by the 14th Amendment to pay its debt obligations, and it can service our $17 trillion debt with less than 10% of federal revenues.

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1. Revenues. Treasury will collect more than enough revenue in fiscal year 2014 to meet all debt obligations and most non-debt obligations on an annualized basis. Interest payments consume less than 10 percent of revenues, and even if interest rates rose, the U.S. would still be able to service its debt.

2. Prioritization: The Treasury and President Obama have discretion at the debt limit to prioritize payments in the best interest of the nation. Treasury could hold some cash reserves to ensure debt obligations are met on time, prioritizing debt payment above all other spending. Some non-debt payments would be delayed during a debt limit impasse.

3. “Assets.” Nearly one-third of the federal debt subject to the limit consists of intragovernmental debt, or debt which federal agencies have incurred amongst themselves. Redeeming bonds in government trust funds frees up room under the debt limit to borrow additional cash to meet obligations.

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Originally posted by Jongsstraw:
Since when does a communist sow like Sniggy give a damn what the WSJ says about anything?

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Originally posted by Storymark:

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Originally posted by Jongsstraw:
Since when does a communist sow like Sniggy give a damn what the WSJ says about anything?

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Translated from crazytalk: "Stop poking holes in my psychotic ramblings with details and facts!"

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Originally posted by Storymark:
Are you so stupid you don't realize you just illustrated my point?

Nevermind - of course you are

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Originally posted by Jongsstraw:

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Originally posted by Storymark:
Are you so stupid you don't realize you just illustrated my point?

Nevermind - of course you are

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Only a really really stupid or psychotic person like you would ask a question and then proceed to answer it.

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Originally posted by Storymark:

Id like to be able to pretend that Im surprised that you are ignorant to the notion of a "rhetorical question," but sadly, I cannot.

Only someone truly stupid would be in such a hurry to illustrate their amazingly low literacy skills.

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Originally posted by Jongsstraw:

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Originally posted by Storymark:

Id like to be able to pretend that Im surprised that you are ignorant to the notion of a "rhetorical question," but sadly, I cannot.

Only someone truly stupid would be in such a hurry to illustrate their amazingly low literacy skills.

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You continue to show off your staggering ignorance. A rhetorical question is a question asked merely for effect with no answer expected. But you gave an answer to your own question. Like someone who talks to himself, you desperately need psychiatric help.

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[Originally posted by Storymark:

Now, go educate yourself, fuckwit

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Originally posted by SIGNYM:

So Medicare and Social Security... totally internal operations... will take the brunt?

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Originally posted by Storymark:

But hey, at least you didn't make a bigger ass of yourself by insisting you were right about a term you clearly didn't understand.

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Originally posted by Jongsstraw:

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Originally posted by Storymark:

But hey, at least you didn't make a bigger ass of yourself by insisting you were right about a term you clearly didn't understand.

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YOU said what YOU posted was "rhetorical". When I challenged that by providing the definition of "rhetorical, YOU then decided to call what you posted something else. That makes you an ass.

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Originally posted by Storymark:
Shit, I even posted a link to the definition for you.

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