It’s déjà vu all over again from Washington to Wall Street as politicians revisit the battle over government funding and the debt ceiling a scant two years after the last showdown that led to the historic downgrade of the U.S. credit rating. Once again, the full faith and credit of the United States moves front and center.
The sacrosanct notion that the U.S. will always and forever pay its borrowing obligations is again the talk of Wall Street and Washington as two major budget issues, the federal spending authority and the government debt limit, must be addressed soon.
Highlighting the issue, Treasury Secretary Jack Lew warned congressional leaders Wednesday that the debt ceiling will be reached “no later than Oct. 17,” at which point he will have exhausted emergency borrowing measures and would have only approximately $30 billion on hand to pay the nation’s bills.
“This amount would be far short of net expenditures on certain days, which can be as high as $60 billion,” Lew wrote in a letter to Speaker of the House John Boehner. “If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.”
Not everyone takes the same position, though, and Daniel J. Mitchell, a senior tax analyst at the libertarian Cato Institute said, “We’re collecting about $3 trillion in revenue, and interest on the debt is about $230 billion. There’s no way that we’ll ever default. The people who are making that argument either are genuinely stupid or they’re being deliberately dishonest.”
read more here--- http://www.ibtimes.com/debt-ceiling-breach-government-shutdown-threats-reignite-debate-about-us-credit-downgrade
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