Wednesday, July 27, 2011

Judd Gregg: Obama Can Punish GOP with Default

There will be no default, former GOP Sen. Judd Gregg writes in The Hill. It’s not that government will stop – just 41 percent of government. The coming political battle may be over which 41 percent is going to get defunded.

“There will be no default. Social Security checks can go out. The military will be funded. Even most of the costs of Medicare could be reimbursed,” Gregg writes.

Rather, because 41 cents of every $1 spent by the federal government is borrowed, about 41 percent of government will not be paid for. The rest is covered by tax receipts.

“The practical effect of hitting the debt limit is not that the entire activities of the government suddenly stop. It is that 41 percent of the government stops,” Gregg writes.

“Unfortunately, because the decision as to who and what gets paid is left to the president and his people, it is more than likely that the politics of the situation might cause them to choose not to send out Social Security checks or pay Medicare,” Gregg points out.

“This would give them the double benefit of enraging seniors, whose rage the president’s party would adeptly (with the assistance of NPR) direct at the Republicans while continuing to fund their favored departments such as Labor and Transportation that take care of their issues and friends.

“This is why the Republican House needs to pass a bill that outlines how it thinks the revenues that will be coming in should be spent. They need to be on record as opposing a default and supporting paying the military, Social Security and Medicare, otherwise they will be brutalized in this political battle by a White House that may not know how to govern but certainly knows how to blame others.”

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