Post to Facebook 8 states where student debt is out of control on USATODAY.com: http://usat.ly/1acbnrQ Incorrect please try again A link has been posted to your Facebook feed. Sent! A link has been sent to your friend’s email address. 21 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs 8 states where student debt is out of control Kurtis Droge, Wall St. Cheat Sheet 6:03 a.m. EDT October 6, 2013 Tuition can cost easily more than $10,000 per year, ranging all the way up to $50,000. (Photo: Rana Faure, Getty Images) Story Highlights Tuition can cost easily more than $10,000 per year, ranging up to $50,000 Debt rates on student loans vary widely from state to state No. 1 state has a whopping average debt of $32,440 for graduates with loans SHARE 369 CONNECT 99 TWEET 21 COMMENTEMAILMORE Rising levels of student debt have raised alarm bells in the minds of economists and recent college graduates alike. With a bachelor’s degree virtually indispensable in today’s workplace and a master’s necessary in many fields, as well many people, be they fresh out of high school or not, have found themselves needing to a seek a higher education in order to pay the bills. The problem is that these days, college is far from cheap. Tuition for a four-year college can cost easily more than $10,000 per year, ranging all the way up to $50,000 or even more for top-of-the-line institutions. With many inbound college students finding themselves strapped for cash, their only option aside from obtaining federal aid is to seek loans to cover the difference between the costs of college and living and any income they might obtain in the meantime. This can amount to a crippling debt load by the time students graduate. However, student debt rates are not the same across the nation: In fact, there is a surprising amount of variance, according to numbers collected by College In Sight. The average graduate of a four-year institution (or higher) with student debt has less than $20,000 of debt in Utah or Arizona. Let’s take a look at eight states at the other end of the spectrum, those with the highest amounts of student debt in the country. 8. Vermont If you are graduating with debt from a college in Vermont, you will have an average of $28,873 owed. That’s right: even in a state home to small names like Middlebury College and Norwich University, student debt rates are still fantastically high. What’s worse is that 63% of graduates almost 2 out of every 3 outgoing students are graduating with debt to their name. 7. Ohio We travel to the Midwest for the seventh spot on our list, which belongs to Ohio. With an average debt rate of $28,683 among those graduating with obligations to lenders, the home of Ohio State University is certainly not a cheap state in which to attend university. It might be appealing to root for the Buckeyes, but your pocketbook may not be such a huge fan of the prospect, especially with 68% of outgoing students bearing debts from their education. 6. Iowa Staying in the Midwest, we move on to Iowa, home of the Hawkeyes and the Cyclones. Getting closer to your Big 10 or Big 12 favorites for a few years is going to cost you: Graduates from the state who have borrowed come out with an average of $28,753 in debt. The percentage of students who are in debt has gone up, too, with 72% of those who attend college in the corn belt state turning to the bank for help pay for their tuition. 5. Connecticut Jumping out East, the next state on the list is Connecticut, where the average indebted graduate owes $28,783 after completing college. It will certainly cost you a pretty penny to go to Yale, located in New Haven, and even the home of the Huskies, UConn, isn’t exactly cheap, either. The good news is that more than a third of those graduating from the state are debt-free. 4. Rhode Island We stay on the Eastern Seaboard for the fourth spot on the list, Rhode Island. Breaking the $29,000 mark with an average debt of $29,097 for those who are indebted, it certainly doesn’t seem like it was inexpensive for Harry Potter star Emma Watson to make her foray into the world of American higher education at Brown University. Even schools like the Rhode Island School of Design and Roger Williams University can cause you to rack up the debt. 3. Minnesota The bronze medal goes to Minnesota, the home of the Golden Gophers. The average graduate who isn’t debt-free owes $29,793 to the bank. If you’re looking for an option other than Walden or Capella universities in the state, you can try Carleton College; either way, it seems like there’s no way to avoid tacking on extra debt if you’re bound for the North Star State out of high school. 2. Pennsylvania The penultimate spot on the list belongs to none other than Pennsylvania, where a graduate who is burdened by loans averages $29,959 in debt. There might be plenty of options to go to college in Pennsylvania including Temple, Lehigh, Carnegie Mellon, and the University of Pittsburgh but the sheer number of prestigious schools hasn’t helped debt levels of the outgoing students in the state. Another deadly statistic is the percent of graduates who have taken out student loans, which weighs in at 70%. 1. New Hampshire The surprising top of the list goes to New Hampshire, which, with a whopping average debt of $32,440 for graduates running a loan tab, comes in at nearly $2,500 more than its nearest competitor. Besides Dartmouth, there aren’t too many familiar colleges in the state to those outside of New England, but even the lack of notoriety for New Hampshire’s universities hasn’t prevented many graduates from tacking on over $30,000 of debt during their college years.
Indonesia Dollar Debt Gains as Rupiah Plummets: Southeast Asia
In an exclusive interview on ABCs This Week with George Stephanopoulos, Boehner said he does not know how and when the current standoffs will end. But he made clear that, in his view, President Obama and Democrats in Congress are to blame for both the government shutdown and the possibility that the United States will default on its debt. The speaker reiterated his demand for negotiations with the president to find a path forward on both fronts. RELATED: Shutdown Continues, But Furloughed Workers Will Likely Be Paid The American people expect in Washington when we have a crisis like this that the leaders will sit down and have a conversation. And I told my members the other day that there may be a back room somewhere, but theres nobody in it, said Boehner, R-Ohio. Were interested in having a conversation about how we open the government and how we begin to pay our bills. But it begins with a simple conversation. The president has said no talks are possible until government operations are fully funded again, and has ruled out entirely negotiations over the debt ceiling. If the government shutdown lasts longer, and if the nation defaults on its debt, Boehner said blame should fall on the president: Im willing to sit down and have a conversation with the president. But his refusal to negotiate is putting our country at risk. While a growing number of his colleagues have expressed frustration with the House GOP strategy, Boehner gave no ground in continuing his push for changes to the presidents health care law, as well as broader fiscal reforms, in the current fights. Some 21 House Republicans have said publicly that theyre willing to support a clean measure to extend all government funding without other conditions attached, according to ABC News count. Thats apparently enough, when added to Democratic votes, to pass a bill out of the House. But the speaker disputed that notion: There are not the votes in the house to pass a clean CR. Boehner also appeared to back off of private assurances hes offered colleagues that the nation would not default on its debt. Treasury Secretary Jack Lew has said the nation will run out of ways to continue to pay all of its bills Oct. 17, making an increase in the debt limit an urgent priority. RELATED: Obama Doesnt Rule Out Using 14th Amendment To Raise The Debt Limit Boehner said repeatedly that he does not intend to have the nation default on its debt. But he declined to guarantee that hed bring a debt-limit bill to the floor of the House without concessions from Democrats. The nations credit is at risk because of the administrations refusal to sit down and have a conversation, he said. The votes are not in the House to pass a clean debt limit. And the president is risking default by not having a conversation with us. Were not going down that path. It is time to deal with Americas problems. How can you raise the debt limit and do nothing about the underlying problem? Asked by Stephanopoulos whether that no negotiations means the country will default on its debt, Boehner responded: Thats the path were on. Listen, the president canceled his trip to Asia. I assumed, well, maybe he wants to have a conversation. I decided to stay here in Washington this weekend. He knows what my phone number is. All he has to do is call. RELATED: John Boehner Tells GOP Moderates to Trust Me Boehner acknowledged that the showdown over government funding, aimed at scaling back the Obama health care law, isnt a fight that he chose. He also appeared to confirm that, in conversations with Senate Majority Leader Harry Reid, he had previously sought to ensure full government funding, only to be convinced to take a different course after consulting with his fellow House Republicans. I and my members decided that the threat of Obamacare and what was happening was so important that it was time for us to take a stand. And we took a stand, he said. I thought the fight would be over the debt ceiling. But you know, working with my members, they decided, well, lets do it now. And the fact is, this fight was going to come, one way or the other. Were in the fight. Boehner suggested that hed like negotiations with the president to include entitlement reform. But he ruled out including new tax revenues as part of a deal. J. Scott Applewhite/AP Photo The president got $650 billion of new revenues on January the 1st. He got his revenues. Now, its time to talk about the spending problem, he said. Very simple. Were not raising taxes. Responding to Boehners appearance, Sen. Charles Schumer, D-N.Y., challenged Boehner to test his claim that the votes arent there to reopen the government. Let me issue him a friendly challenge: put it on the floor Monday or Tuesday, Schumer said on This Week. Speaker Boehner, just vote. He also rejected Boehners request for negotiations until or unless House leaders agree to end the shutdown and raise the debt limit. This is playing with fire. And we are happy to negotiate, but we want to negotiate without a gun to our head, Schumer said. Like This Week on Facebook here . You can also follow the show on Twitter here . Go here to find out when This Week is on in your area.
Cruz: Use debt ceiling debate for leverage
By Bill Mears, CNN Supreme Court Producer updated 8:31 AM EDT, Fri October 4, 2013 STORY HIGHLIGHTS Little known legal provision could again provide opening for President Obama on debt ceiling Obama said that the stakes were stark if the government could not pay its bills Former President Bill Clinton said previously he http://www.cbsnews.com/8301-250_162-57606227/cruz-urges-gop-to-use-debt-ceiling-fight-for-obamacare-changes/ would act unilaterally and test the courts But Obama had the chance in 2011 and wasn’t convinced it was the correct legal strategy Washington (CNN) — A little-known provision of the Constitution might provide a little-used way for President Barack Obama to unilaterally get around stalled efforts to prevent the country from defaulting on its debts. It is a legal audible that was considered two years ago in a similar crisis, and ultimately rejected by Obama, a former constitutional scholar. In remarks on Thursday, the president said the stakes were stark, if the debt ceiling were not raised, and the government unable to pay its bills. “As reckless as a government shutdown is, an economic shutdown that results from default would be dramatically worse,” he said, pointing the finger at Capitol Hill. Government shutdown vs. debt ceiling Why debt ceiling is so important to you What about the debt ceiling? Congressional Republicans who control the House insist they will not act until the administration commits to delaying implementation of key parts of the healthcare reform law, or to further spending cuts– ultimatums the White House rejects. The game of political chicken raises the potential of a recession and market meltdown if the Treasury is not replenished by mid-month. Some economists warn the debt ceiling impasse is a far greater threat than the ongoing government shutdown. That’s where Section 4 of the 14th Amendment comes in: “The validity of the public debt of the United States, authorized by law … shall not be questioned.” Does that mean the president could on own his raise the debt ceiling? Some congressional allies say yes. “It is an option that should seriously be considered,” said Senate Finance Committee Chairman Max Baucus of Montana. House Minority Leader Nancy Pelosi of California said it should have been done in 2011, the last time the two branches went through this. Back then it was former President Clinton who led the rhetorical charge. He said he would have raised the debt ceiling “without hesitation” and “force the courts to stop me.” Then-Treasury Secretary Timothy Geithner also suggested such a legal right was possible, and plausible. But Obama was not sure. “I have talked to my lawyers,” he said at the time. “They are not persuaded that that is a winning argument,” suggesting he believed the courts would not accept such a move — and more importantly, would the nation’s creditors. Fast forward to 2013. His spokesman Monday repeated the White House line Congress had the responsibility here. “The president can’t raise it by himself,” said White House spokesman Jay Carney. “This administration does not believe that the 14th Amendment gives the power to ignore the debt ceiling. And even if the president could ignore the debt ceiling, the fact that there is significant controversy around the president’s authority to act unilaterally means that it would not be a credible alternative to Congress raising the debt ceiling, and would not be taken seriously by the global economy and markets.” Legal and political scholars — and the federal courts — have debated just how relevant, and how far Section 4 was designed to go. The amendment was ratified in 1868, to ensure in part, the unified nation’s debts from the just-ended Civil War would be honored, and that Confederate claims would not. The unquoted part of the provision specifically mentions the public debt “incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion.” The U.S. Supreme Court in 1935– in Perry v. U.S.– suggested Section 4 could be applied in other circumstances. “While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government during the Civil War, its language indicates broader connotation,” said Chief Justice Charles Evans Hughes in the opinion, which concluded that voiding a U.S. government debt was beyond the power of Congress. Indeed other better-known parts of the 14th Amendment– the “due process,” “equal protection,” and “privileges or immunities” citizenship clauses– have been cited in a sweeping range of litigation beyond its original Reconstruction response to the rights of former slaves. Those cases include abortion, segregation, even the 2000 Bush v. Gore presidential ballot dispute. Despite Mr. Clinton’s bold challenge daring the courts to intervene, any unilateral action on the debt ceiling would be sure to prompt immediate lawsuits. Whether an “aggrieved party” such as a taxpayer or bondholder, could establish legal “standing”– allowing any legal action to proceed– would be the first legal hurdle, a process that could drag on for months, even years before the Supreme Court would be asked to offer the final word. But some politicians have said a default on the nation’s debt would constitute the kind of national emergency requiring of bold presidential action, something that would be politically acceptable to the public. Legal challenges, they say, would wither if the economy rebounds. Obama urged negotiations to continue, but on Thursday said the 2011 debt crisis hurt average Americans, and could do so again. “Our economy took a bad hit. Our country’s credit rating was downgraded for the first time, just like you would be downgraded if you didn’t pay your mortgage. This time, they are threatening to actually force the United States to default on its obligations for the very first time in history.” But some Republicans say a constitutional crisis is overblown and so is concern of what will happen if both sides fail to agree in coming days. “I don’t think the credit of the United States is going to be collapsed,” said Rep. Steve King (R-Iowa) on CNN Thursday. “I think that all this talk about a default has been a lot of demagoguery, a lot of false demagoguery. We have plenty of money coming in to service the debt. When we stop servicing the debt, that would be default. We’re a long, long ways from that.” So the dilemma here for the White House would appear more political, less legal. In invoking executive power to raise the debt ceiling, Obama might earn quick political points, by claiming to put the nation’s financial health above congressional inaction.
Constitution and the debt: Can the president go it alone?
Bush School of Logical Thought and Effective Governance. He pasted at the head of his class. He did not attend classes on syntax and grammar though. October 6, 2013 12:53 pm at 12:53 pm | tony The answer to criminal extortion is the 2nd Amendment and “stand your ground”. Why has the NRA gone quiet? October 6, 2013 12:53 pm at 12:53 pm | stevezeledon Crowley cut Lew off and yet let Cruz spout ad nauseam, and regretted not having more time to give him. Get her off the air! October 6, 2013 12:54 pm at 12:54 pm | al “would destroy the private health care system.” So increasing their customer base will destroy their business? said no executive, ever. October 6, 2013 12:54 pm at 12:54 pm | Just clarifying Why only one sided political affiliated people comment on this board. People should be non bias if possible when posting comments. October 6, 2013 12:55 pm at 12:55 pm | Tag9 This guy should be arrested for fraud ! October 6, 2013 12:55 pm at 12:55 pm | jon I know people think this guy is a puppet from Canada, but tbh over there people don’t go grandstanding to get what they want. I think he left Canada cause nobody wanted him in office XD October 6, 2013 12:55 pm at 12:55 pm | Terry in Florida This is the face of the Tea Party. This is the voice of Big-Business fueled extremism. This is the venom of the snake. October 6, 2013 12:55 pm at 12:55 pm | ED8_Cruz What an idiot this Cruz is. He wants to screw the country to save the country? And he’s doing all these because he THINKS the ACA is going to screw the country? Talk about a stupid dog chasing its own tail. October 6, 2013 12:55 pm at 12:55 pm | DMR Sen. Cruz once again prove the interests of the GOP\TP are not the citizens of the United States. Cruz has made it clear that he, nor the GOP \ Tea Party folks understand how the U.S. budgeting process works. Cruz and his Tea Party buddies would rather cripple the U.S. economy with their largely false and misleading rhetoric, than do their job. The ACA is settled law, end of story. If one does not want to be a part of the ACA, the solution is simple, pay the penalty tax. That said, if you get seriously ill or hurt, just who should step in to help you with the bills? There is a well-established process for repealing or changing a law and the GOP \ TP refuse to follow it. The entire Federal shut down and the looming debt ceiling mess are without question the fault of the GOP \ TP. The GOP has let a small number of right wing extremist take control of the party and this is the mess they create. The solution to the U.S. debt is actually very basic, roll back the tax rate to that prior to the G.W. Bush tax cuts. Those tax cuts did not benefit middle America, they benefited the wealthy. It is time for that extreme benefit to end. I would also take a long look at taxing off shore income, and closing other tax loopholes that only the very rich can use. That too needs to end. The Social Security issues that might be looming in several years can be nipped now. Remove the cap on the Social Security tax. (The Social Security tax rate is 6.2 percent on income under $113,700 through the end of 2013. The Medicare tax rate is 1.45 percent of all income.) October 6, 2013 12:55 pm at 12:55 pm | chris B Cruz is playing the game for personal political gain October 6, 2013 12:56 pm at 12:56 pm | L R W Anybody who listens to Cruz is listening to the DEVIL ! October 6, 2013 12:56 pm at 12:56 pm | Amazing Ted Cruz = Homer Simpson! Enough said although I have probably insulted Homer Simpson! October 6, 2013 12:56 pm at 12:56 pm | John Holroyd I would like to use the Debt Ceiling Debate to mitigate the harm caused by Senator Cruz and the Tea Party. October 6, 2013 12:56 pm at 12:56 pm | James I’m curious why the GOP doesn’t cut loose these Tea Party ultra conservatives. Clearly they don’t abide by their own Party’s dominant position. So why don’t they renounce them and cut off their funding and let them try to run under their own 3rd party instead of hiding within the Republican party. I’ll bet if they had to stand on their own they wouldn’t last be able to try this crap. October 6, 2013 12:57 pm at 12:57 pm | Mary No Cruz is not working or sent by the Canadian Government, in fact he was kicked out from them that’s why he left canada Now it’s up to us to do the same thing.
Absolutely everything you need to know about the debt ceiling
Global notes gained 6.9 percent since the start of September, after losing 18 percent in August in the worst http://www.debtconsolidationloanswiz.com/ performance since 2008, according to indexes compiled by HSBC Holdings Plc. That exceeded the 4.1 percent advance in local securities, which snapped a four-month decline. The rupiah fell for a seventh month in September, losing 5.7 percent, the most among 24 emerging-market currencies tracked by Bloomberg. Kokusai Asset Management Co. says the dollar bonds will enable investors to cushion themselves against the rupiah, the most volatile currency in Asia , while UOB Asset Management Ltd. said it favors the foreign-currency notes. Inflation (IDCPIY) slowed last month from a three-year high in August and the countrys trade balance returned to surplus for the first time in five months following a record deficit in July, data showed last week. As the rupiah is still seeing high volatility, buying the dollar debt of Indonesia is one good option to expose yourself to the improving macroeconomic picture, Takahide Irimura, the Tokyo-based head of emerging-market research at Kokusai, Japan s biggest mutual fund, said in an Oct. 1 interview. Economic stabilization will bring the country back to a sustainable growth path and compress the credit-risk premium. Bounce Back The yield premium investors demand to own Indonesias dollar notes over U.S. Treasuries narrowed 83 basis points, or 0.83 percentage point, to 290 from a four-year high of 373 on Sept. 4, according to JPMorgan Chase & Co.s EMBI Plus Index. Indonesias government has a debt-to-gross domestic product ratio of 23 percent, the lowest in Asia, while its budget deficit of 1.14 percent matches that of China and is the smallest in the region after Taiwan s 0.1 percent, according to data compiled by Bloomberg. JPMorgan Asset Management is buying more Indonesian dollar bonds, while being underweight on the rupiah, Pierre-Yves Bareau, the London-based global head of emerging-market debt, said in an interview in Singapore last month. Indonesias economy has the capacity to bounce back, given its low debt-to-GDP figure, he said. Morgan Stanley prefers Indonesias dollar bonds over those of Turkey and South Africa and sees scope for the securities to outperform, London-based strategist Robert Tancsa wrote in a Sept. 26 report. Along with India and Brazil , the three countries have been dubbed the fragile five emerging-market economies by the U.S. lender because of their high current-account deficits. High Volatility Indonesias foreign debt is 29 percent of GDP compared with 43 percent for Turkey and 36 percent for South Africa, according to the Morgan Stanley report. The bank remains structurally bearish on the rupiah, although it says Indonesia needs to rebuild its foreign-exchange reserves , which decreased 18 percent this year to $93 billion, according to the report. The rupiahs Sharpe ratio, which measures returns adjusted for price fluctuations, was minus 1.6 over three months, the least among 23 emerging markets tracked by Bloomberg. Its three-month implied volatility, a measure of expected moves in the exchange rate used to price options, more than doubled to 15.64 percent this year. Thats the highest in Asia, followed by 14.07 percent for Indias rupee and 10.64 percent for Japans yen. We like Indonesias dollar bonds because they have better liquidity, while for rupiah-denominated bonds there is a need to consider the currency risks, Chia Tse Chern, head of Singapore and Asia fixed-income at UOB Asset Management, which oversees S$41.5 billion ($33 billion), said in a Oct. 1 interview. Policy Response Inflation in Southeast Asia s largest economy accelerated from 5.47 percent in May to 8.79 percent in August as the government raised the price of subsidized fuel in June and the weaker currency pushed up the cost of imported goods. Consumer-price gains eased to 8.4 percent last month. The August trade surplus was $132 million, following a $2.3 billion shortfall in July, official data show. The current-account deficit reached $9.8 billion in the three months through June, the largest in data compiled by Bloomberg going back to 1989, following shortfalls in the previous six quarters. Bank Indonesia raised its benchmark interest rate by 1.5 percentage points to 7.25 percent since mid-June in an attempt to slow the economy and reduce the deficits. It will increase the rate by 25 basis points tomorrow and another 25 basis points in November, according to a Goldman Sachs Inc. research note on Oct. 4. The government announced in August that it would allow more shipments of unprocessed mineral ores for the rest of this year and increase a tax on luxury imported goods. Potential Intact Amundi, a Paris-based asset manager that manages about $1 trillion, and BNP Paribas Investment Partners said they are increasing investments in both Indonesias dollar and local-currency bonds. The measures to improve the trade balance will have an effect in the coming months, Mark Capstick, a London-based portfolio manager at BNP Paribas, which oversees 478 billion euros ($651 billion), said in a Sept. 26 e-mail. The repricing of Indonesian assets has brought valuations much closer to where we see fundamental relative value, he said. We are however still very concerned over the fragility of the currency in the context of the external environment so are very slightly underweight. Indonesias economy will probably grow 5.78 percent this year, according to the median forecast in a Bloomberg survey. Gross domestic product increased 6.23 percent in 2012 and has risen by an average of 5.74 percent over the last 10 years. The cost to protect the countrys bonds from non-payment using five-year credit-default swaps fell 50 basis points to 253 basis points on Oct. 3 from a 22-month high of 303 on Aug. 27, according to CMA prices. Indonesias long-term economic potential remains intact with very low debt-to-GDP and conservative budget deficits, Raymond Lim, head of Asian bonds in Singapore at Amundi, said in a Oct. 1 e-mail. The challenges faced by Indonesia are cyclical in nature. To contact the reporters on this story: Lilian Karunungan in Singapore at firstname.lastname@example.org ; Yumi Teso in Bangkok at email@example.com To contact the editor responsible for this story: James Regan at firstname.lastname@example.org More News:
Government Shutdown Heads For Collision With Debt Limit
Chuck Schumer (D-N.Y.) both said the debt limit and shutdown should be dealt with together. Still, the path forward remained unclear because Democrats were sticking by their vow to talk with the GOP only after Republicans open the shuttered government and take potential default off the table. “We’ll talk about anything,” Reid told reporters. “But open the government, get the debt ceiling out of here.” “We’ll negotiate on anything they want to talk about,” Reid emphasized. “But the government has to be open, we have to get the debt ceiling out of the way.” He was echoed by Schumer. “We’d like to move them both together,” Schumer said. “I think having them together is a good thing, because who wants to go through this again? With debt ceiling, it’s 20 times as dangerous.” While Democrats refuse to talk unless Republicans stop threatening shutdown and default, Schumer argued that was not the same as the GOP’s intransigence. “If one guy has a gun to your head, and you say please don’t shoot, you’re saying the two sides are the same?” Schumer told a reporter who asked why it wasn’t fair to say Democrats were just as dug-in as Republicans. However, Republicans have long signaled that they think the debt limit is their strongest bit of leverage to win concessions from the Democrats, either on spending or Obamacare. Boehner has said repeatedly in public that he would not let the nation default, but many members of his caucus have said they think they can avoid a technical default even if the $16.7 trillion debt limit is breached. They argue that the United States can pay principal and interest on its bonds, even if it doesn’t meet its other obligations. For Boehner to flatly pledge to moderates that he would avoid default in the way that most economists define it — by raising the limit to pay all the nation’s bills — he would likely have to violate the so-called Hastert rule, an informal practice of the GOP caucus of only moving bills that are supported by the majority of Republicans. Most of those Republicans believe that the debt limit should only be hiked in return for spending cuts, and Boehner spokesman Michael Steel said that remains the speaker’s position. “Speaker Boehner has always said that the United States will not default on its debt, but if we’re going to raise the debt limit, we need to deal with the drivers of our debt and deficits,” Steel said in a statement. “Thats why we need a bill with cuts and reforms to get our economy moving again.” At least one moderate Republican, however, said he would be willing to reopen the government and boost the borrowing limit with Democratic votes. “If there’s an arrangement or deal, then you don’t have to get 218 from one side or the other,” said Rep. Tom Cole (R-Okla.), a deputy whip of the GOP conference. Cole acknowledged that the battle lines were over more than restoring government funding. “I think we’re moving toward something a little bit bigger,” Cole said. Also on HuffPost: Loading Slideshow Into The Weekend Sunrise at the U.S. Capitol as the federal government shut down goes in to its fifth day on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) John Boehner House Speaker John Boehner (R-OH) walks to the House floor on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Nancy Pelosi Rep. James Clyburn (D-SC); House Minority Leader Nancy Pelosi (D-CA); and Rep. Xavier Becerra (D-CA) speak to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Kevin McCarthy House Majority Whip Kevin McCarthy, (R-CA) speaks to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) Capitol Tourists Tourists visit the U.S. Capitol in Washington on October 5, 2013, the fifth day of the government shutdown. The US government shut down for the first time in 17 years on October 1 after lawmakers failed to reach a budget deal by the end of the fiscal year. (NICHOLAS KAMM/AFP/Getty Images) Eric Cantor House Majority Leader Eric Cantor (R-VA) speaks to members of the media during a news conference in the Capitol on October 5, 2013 in Washington, D.C. (Photo by Chris Maddaloni/Getty Images) President Obama And Vice President Biden Walk To Lunch As Government Shutdown Continues WASHINGTON, DC – OCTOBER 4: U.S. President Barack Obama (R) and Vice President Joe Biden look over the menu at Taylor Gourmet on Pennsylvania Avenue after walking from the White House for a take-out lunch October 4, 2013 in Washington, DC. Democrats and Republicans are still at a stalemate on funding for the federal government as the shutdown goes into the fourth day. The deli, like many other eateries in Washington, is currently offering a discount for furloughed federal workers. (Photo by Pete Marovich-Pool/Getty Images) Government Shutdown Enters Fourth Day With No Resolution WASHINGTON, DC – OCTOBER 04: Senate Majority Leader Harry Reid (D-NV) speaks at a press conference on the government shutdown October 4, 2013 in Washington, DC. Today marks the fourth day of the government shutdown as Republicans and Democrats remain at an impasse over funding the federal government. Also pictured are Sen. Richard Durbin (D-IL) and Sen. Patty Murray (D-WA). (Photo by Win McNamee/Getty Images) Shutdown Protester A protestor holds a sign against the government shutdown in front of the U.S. Capitol in Washington on October 5, 2013. The U.S.
Boehner: No ‘Clean’ Votes on Reopening Government or Debt Ceiling Without Negotiations with President Obama
“Anyone who says they know for sure whether this is legal is not telling the truth,” Steve Bell of the Bipartisan Policy Center told me. (See pages 8 and 9 of this Congressional Research Service report for more on the arguments here.) The legal questions could, in theory, be cleared up: Back in 2011, Toomey introduced a bill that would require Treasury to prioritize bondholders above everyone else. But that bill never passed Congress. The Obama administration, for its part, has maintained that it can’t and shouldn’t prioritize payments. “Any plan to prioritize some payments over others is simply default by another name,” Lew wrote in his letter to Congress. “There is no way of knowing the damage any prioritization plan would have on our economy and financial markets.” What would be the economic consequences of breaching the debt ceiling? A scene from HieronymousBosch’s famous painting, “Breaching the debt ceiling” (Wikipedia) Nothing good. A prolonged breach could result in a massive dose of fiscal austerity, putting a dent in economic growth. And a default on the debt would almost certainly roil financial markets. If Congress refused to lift the debt ceiling, then the federal government could only spend as much as it takes in taxes. Overall outlays would drop by 32 percent, or $106 billion over the coming month a much sharper drop than, say, the sequestration budget cuts or the furloughs caused by the government shutdown. The financial response is harder to forecast. The Treasury Department certainly thinks the prospect of missing a debt payment could be ruinous: “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negativespillovers could reverberate around the world,and there might be a financial crisis and recession that could echo the events of 2008 or worse.” Other analysts agree. Take Fedwire, the central clearing systemthat banks in America use to move cash, bonds, and other financial assets around. This system shuffles around trillions of dollars a day. But as a recent note by RBC Capital Markets notes, Fedwire isn’t set up to handle defaulted securities. The entire system would freeze. “Let us be perfectly clear,” the note says, “crossing the debt ceiling would be catastrophic.” (For more on other potential financial consequences of a default, most of them bad, see this post by Kevin Roose.) Has the United States ever defaulted on its debt before? Shakedown, 1979. Sort of. Back in 1979, the government inadvertently defaulted on about $122 million worth of Treasury bills, due to unexpectedly high demand and an error in word-processing equipment. This was only temporary, and Treasury quickly corrected the error. Still, the damage was long-lasting.A 1989 study in the Financial Review estimated that the incident raised the nation’s borrowing costs by about 0.6 percent, or $12 billion. And the damage lasted for months. That was after a brief, accidental default that was corrected quickly. A debt-ceiling breach today would almost certainly be far more consequential. (Technically, the United States also defaulted on some war debts in the late 18th century, thanks to a plan drawn up by Alexander Hamilton. And when Franklin Roosevelt ended the gold standard in 1933, that was a default of sorts. But those aren’t great analogues.) Come on. Surely the Obama administration can dosomethingto avoid financial Armageddon. Right? Dudes, don’t look at me. This ceiling is unstoppable. (AP) Well…there are a few other possibilities if we blow past the debt ceiling. Some are impractical. Others, like the platinum coin option, sound ludicrous. But it’s also a bit moot: The Obama administration has explicitly ruled them all out. First, Treasury could try to buy time by delaying payments agency officials deemed this the least-badapproach back in 2011.If Treasury was facing $10 billion in obligations on Monday, but only $7 billion in revenue came in, the agency could wait until it had the full $10 billion on hand before paying Mondays bills in full. The problem is that during the delay, Tuesdays bills are piling up. Then Wednesdays. This tactic would quickly become unsustainable. Alternatively, the Obama administration could try simply ignoring the debt ceiling. Last fall, two legal scholars, Neil Buchanan and Michael Dorf, wrote a paper arguing that Obama would be caught in a constitutional dilemma come Oct. 17. Congress has mandated that he spend money on certain programs, but they’ve also mandated that he can’t borrow any more to pay for it. The least bad constitutional option, say Buchanan and Dorf, is for Obama to ignore the debt ceiling and unilaterally issue new bonds.