[credit provider=”Nigel Wedge via Flickr” url=”http://www.flickr.com/photos/sarniebill/4837766629/”]
We wanted to update you on a story we first wrote about yesterday…The buzz this week within the GOP conference surrounded a 1985 GAO ruling that said, essentially, that the Treasury did have the right to prioritise interest payments over domestic spending.
This is a key tenet of the debt ceiling hawks, who claim there’s no risk in not raising the ceiling, because the Treasury has plenty of revenue to pay off bondholders and avoid default.
In other words: The Treasury would stop paying things like social services, various bureaus, possibly the military, etc., in order to have enough money to make interest payments.
But there was some debate about whether the 26-year old ruling still applies due to some changes in the law since then.
Well, the GAO believes it does. We hear that the GAO sent a message to Congress that the 85 ruling still applies, and nothing has changed in the statutes since then that would make it null and void. GAO attorneys signed off on it as well.
So within the GOP, this should be a shot in the arm to the hard right, now feeling fully confident that failure to raise the debt ceiling won’t cause a crisis.