Treasury to Weigh Which Bills to Pay

[DeepModem Mom]

Source: New York Times

The Treasury Department is preparing to answer a question that it has dodged and rebuffed for months: If there’s not enough money for everyone, who is left empty-handed?...

The outlines of the answer...already are clear. Officials have said repeatedly that Treasury does not have the legal authority to pay bills based on political, moral or economic considerations. It cannot, for instance, set aside invoices from weapons companies to preserve money for children’s programs.

The implication is that the government will need to pay bills in the order that they come due. President Obama has warned as a result that the government “cannot guarantee” payments of Social Security benefits or other popular programs. Officials also have disputed the assertion of some Republicans that the government could prioritize interest payments....

The government keeps its cash on deposit at the regional banks of the Federal Reserve, which issue payments at Treasury’s direction. The process, largely automatic, must be adjusted to allow for human intervention. Officials also are starting to address the consequences likely to flow from a disruption in payments.

The federal agency that oversees national banks said Wednesday that it would tell banks to “exercise judgment” before penalizing customers who overdrew their accounts because money from the government did not arrive on schedule....

Read more: http://www.nytimes.com/2011/07/28/business/economy/treasury-to-weigh-which-bills-to-pay.html?hp

[CakeGrrl]

1. Underscoring one major reason for the President's address the other day:

For those who do not watch these developments daily, it was time to spell out to them what was at stake and who was responsible for us being where we are, so that when these preparatory measures are taken, they understand why.

As he said at the most recent presser (not the national address), we should never have been here.

Congressional Republicans are obstructing a process they never obstructed before. Inexcusable.

[gateley]

2. ...

:cry:

:hug:

[Demeter]

3. Don't Believe Obama, and Definitely Not Little Timmy

They don't get to choose, they have to pay them all, and the debt ceiling is no obstacle to doing so.

there are at least 6 different ways to do so, all of which make the "debt ceiling" as irrelevant as the draft.

This is a Great Con Game, to steal social security and medicare. Nothing more, and nothing less.

[No Elephants]

6. +1.

I drafted and posted my reply before reading yours. We took slightly different approaches, but we came out the same: This is bs.

[Igel]

10. So what you're saying is this.

The debt must be paid. That's the 14th Amendment. The Constitution says that legislation to implement this is left to Congress, just as raising taxes and borrowing money is left to taxes. As well as passing a budget.

And, as good Democrats, we love the Constitution and the checks/balances and division of authority that enables a long-term government to exist. We insist on being known for this, and take great umbrage at the very mention that we don't lvoe the Constitution and the principles on which it was built.

But if it comes down to prioritizing things within the budget and doing things like paying the debt that the Constitution and budget say must be paid and not paying things that just the budget talks about, we can't do that.

The budget doesn't just authorize expenditures, no matter what it says, we assume it mandates them at the levels budgeted for. Everything's mandated, so everything must be funded. Doesn't matter what the language is, we have our assumptions. Obama is entirely servile when it suits us.

To violate our assumptions is wrong, even though it would just violate the alleged even-handedness of the Congress-passed budget. We can use that alleged even-handedness to force the 14th Amendment to come into play. This allows us to shred part--but only in the way that we find politically palatable--of Article I of the Constitution.

So we can't ignore an infringement of the Constitution, but to avoid the infringement we invoke part of the 14th Amendment to disregard the rest of the 14th Amendment and Article I. Of course, this puts real power in the hand of a strong leader who's nobody's servant, Obama.

Why? Because as good Democrats we have our assumptions and goals, and while nobody can even hint that we don't love the Constitution, it's toilet paper if it gets between us and our goals. Is this a fair reading of the situation?

[customerserviceguy]

4. Asking the banks to "excercise judgment"

Is like asking Charlie Sheen to excercise restraint.

[No Elephants]

7. Banks? Treasury directs the payments.

[customerserviceguy]

8. I'm referring to the 5th paragraph in the OP. n/t

[No Elephants]

5. BULLSHIT! Every individual and company prioritizes payments without a specific law allowing it.

If money is short, or cash flow is irregular, and it's January in Maine and you have an infant, you WILL pay your home heating bill before you pay your motgage or your property taxes.

If you "repay
your mom that "loan" she supposedly gave you that no one can prove, that's a whole other issue.

If you ultimately end up in backruptcy court, payments you made in good faith may get re-arranged. However, even then, no one goes to jail for prioritizing payments in good faith.

Heck, colonists, states and the Continental Congress prioritized payments during the Revolutionary War and those folks went on to write our Constitution when things calmed down.

Unless there is a specific law saying Treasury CANNOT prioritize payments, why would anyone assume it can't?

Answer: Because they want to do what they want to do and, for purposes of political cover, claim they have no other choice.

"I could do nothing else!" I had no other choice!" We've heard those kinds of things too often from this WH.

When the SCOTUS said FDR had no legal authority for his recovery programs, FDR found a way to put the fear of God into the SCOTUS; and the entire freakin' SCOTUS caved. Obama simply declares he has no legal authority and Democrats cave.

What a spectacle!

[lunatica]

9. Shit. I remember it well. The beginning of the road to bankruptcy and foreclosure process

It doesn't happen overnight. If the government defaults on it's payments the same thing will happen to it. By Christmas Scrooge will be king and we'll be lucky to get a lump of coal and it will just get worse after that.

[Yavin4]

11. Don't Pay The Bills for Congressional Health Care and Security

Hey, don't worry. They'll be protected by the invisible hand.

[sarcasmo]

12. If they don't pay the wife's SSDI check the second Wednesday of August

I refuse to pay anyone of my bills. I will invoke my own 14th Amendment that states if we don't have money you don't get money.

[Safetykitten]

13. Well they actually do know...and you won't like it. From ZeroHedge.

"Things are getting real. After all the bluffing, huffing and puffing by Geithner, the rating agencies, and anything with a pulse and a TV or radio pulpit has failed, the last trump card is coming down. While yesterday the Treasury informed that it would not disclose any details of its contingency plan, Bloomberg has just learned via a Treasury leak that the US government will give priority to bondholders. From Bloomberg: "The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise the debt ceiling, according to an administration official. The official requested anonymity because no announcement has been made. The Treasury has said about $90b in debt matures on Aug. 4 and more than $30b in interest comes due Aug. 15. Overall, more than $500b matures in August."

Bondholders first....the answer you were looking for was Bondholders, Bob.