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Power Mad Obama Offers Two Choices: Unconditional Surrender Or Default

By Michael Snyder, on October 9th, 2013

Barack Obama is warning that if he does not get
everything
that he wants that he will force the U.S. government into a devastating
debt default which will cripple the entire global economy. In essence,
Obama has become so power mad that he is actually willing to take the
entire planet hostage in order to achieve his goals. A lot of people
are blaming the government shutdown on the Republicans, but they have
already voted to fund the entire government except for Obamacare. The
U.S. Constitution requires that all spending bills originate in the
House of Representatives, and the House did their duty by passing a
spending bill. If the Senate or the President do not like the bill that
the House has passed, then negotiations need to take place. That is
how our system works. And the weak-kneed Republicans have already
indicated that they are willing to give up virtually all of their prior
demands. In fact, if Obama offered all of them 20 dollar gift
certificates to Denny's to end this crisis they would probably jump at
that deal. But that is not good enough for Obama. He has made it clear
that he will settle for nothing less than the complete and
unconditional surrender of the Republican Party.
Why is Obama doing this? Why is Obama willing to bring the country to the brink of financial disaster?
It isn't hard to figure out. Just check out what one senior Obama administration official
said last week...
"We are winning.... It doesn't really matter to us" how
long the shutdown lasts "because what matters is the end result," a
senior Obama Administration official told the Wall Street Journal last week.
This is all about a political victory and crushing the Republicans.
Obama doesn't really care how long this crisis lasts because he believes
that he is getting the end result that he wants.
According to Obama, the Republican Party is just supposed to roll
over and give him the exact spending bill that he wants and also give
him another trillion dollar increase in the debt limit.
If the Republicans do not give him that, he is willing to plunge us into financial oblivion.
The funny thing is that most Americans do not want the debt limit increased. According to one new poll,
58 percent of all Americans do not even want the debt ceiling to be increased by a single penny.
And recent polls show that Americans are against Obamacare by an average margin
of about 10 percent.
But the pathetic Republican Party is actually willing to hand Obama a
trillion dollar debt ceiling increase and fully fund Obamacare if Obama
will at least give them
something.
Unfortunately, Obama won't even give them the time of day.
So don't blame the Republicans for what is happening. The
Republicans have already compromised themselves to the point of utter
disgrace. If Obama had been willing to even compromise a couple of
inches this entire crisis would already be over.
And nobody should be claiming that the Republicans won't vote to end
this shutdown. They have already voted to end it. The following is
from a recent article
by Thomas Sowell...
There is really nothing complicated about the facts. The
Republican-controlled House of Representatives voted all the money
required to keep all government activities going -- except for
ObamaCare.
This is not a matter of opinion. You can check the Congressional Record.
As for the House of Representatives' right to grant or withhold
money, that is not a matter of opinion either. You can check the
Constitution of the United States. All spending bills must originate in
the House of Representatives, which means that Congressmen there have a
right to decide whether or not they want to spend money on a particular
government activity.
Whether ObamaCare is good, bad or indifferent is a matter of opinion.
But it is a matter of fact that members of the House of Representatives
have a right to make spending decisions based on their opinion.
Once again, the Republicans have already indicated that they are
willing to fund Obamacare. They just want Obama to throw them a bone.
And Obama will not do it.
So either the Republicans are going to cave in completely (a very
real possibility) or we are going to pass the "debt ceiling deadline".
What happens then?
Well, we would have more of a "real government shutdown" than the
fake shutdown that we are having right now.
Once the federal government cannot borrow any more money, it will
only be able to spend what it actually has on hand. That means that a
lot more government functions will have to shut down.
Money will still be coming in to the government, but it won't be enough to fund everything. According
to the Wall Street Journal,
the federal government will still have enough money to pay interest on
the debt, make Social Security payments, make Medicare payments, make
Medicaid payments, provide food stamp benefits and pay the military if
they cut almost everything else out.
The
other day,
I suggested that the federal government could potentially start
defaulting on interest payments on the debt as early as November. But
that would only happen if the federal government manages their money
foolishly.
If the federal government managed their money smartly and saved cash
for the interest payments as they came due, they would not have to miss
any.
But when was the last time the federal government ever did anything "smartly"?
For the sake of argument, however, let's assume that the federal
government can manage money wisely and can save up enough cash ahead of
time for large interest payments as they come due.
If that could somehow be managed, then according to
Paul Mampilly the government would never need to actually default...
The U.S. Treasury always has money coming into its
accounts. So its always got some amount of cash that it can use to pay
interest on bonds. That's especially true right now because the
government is partially shutdown and there's no cash going out from its
accounts.
In fact, when you look at it the U.S. Treasury should simply have no
trouble making interest payments on bonds that it has issued.
And there's no restriction on the U.S. Treasury prioritizing interest payments. Why?
The obligation to pay interest is set by the 1917 Second Liberty Bond
Act and laws that commanded the Treasury to pay interest on the debt.
You can look this up in section 3123 of Title 31 of the U.S. Code and
section 4 of the 14th Amendment of the Constitution and in Supreme Court
precedent (Perry v. United States). It's all there in black and white.
So the only possible way the U.S. defaults on its debt is if Barack
Obama, President of the United States, instructs his Treasury secretary
Jack Lew to default on the debt.
And according to
the Washington Post,
Moody's has just issued a memo that also indicates that the federal
government should be able to make all interest payments even if the debt
limit is not increased...
In a memo being circulated on Capitol Hill Wednesday,
Moody’s Investors Service offers "answers to frequently asked questions"
about the government shutdown, now in its second week, and the federal
debt limit. President Obama has said that, unless Congress acts to raise
the $16.7 trillion limit by next Thursday, the nation will be at risk
of default.
Not so, Moody’s says in the memo dated Oct. 7.
"We believe the government would continue to pay interest and
principal on its debt even in the event that the debt limit is not
raised, leaving its creditworthiness intact," the memo says. "The debt
limit restricts government expenditures to the amount of its incoming
revenues; it does not prohibit the government from servicing its debt.
There is no direct connection between the debt limit (actually the
exhaustion of the Treasury’s extraordinary measures to raise funds) and a
default."
Of course the federal government would have to stop throwing money
around like a drunk gambler at a casino in Las Vegas in order for this
to work.
On the very first day of the government shutdown, the feds gave
$445 million
to the Corporation for Public Broadcasting. Apparently Elmo is
considered to be "essential personnel" by the Obama administration.
And according to
CNS News, the U.S. Army has committed more than $47,000 to buy a mechanical bull during this "shutdown"...
The government shutdown may be keeping furloughed federal
workers at home, but on Monday the U.S. Army contracted to buy a
mechanical bull.
The $47,174 contract was awarded on Oct. 7 to Mechanical Bull Sales Inc. of State College, Penn.
So needless to say, there is some serious doubt about whether the
federal government would be able to manage their money effectively in
the event that the debt ceiling deadline passes.
And if the U.S. did start defaulting on debt payments, it would be
absolutely disastrous for the global economy as I discussed in a
previous article...
"A U.S. debt default would cause stocks to crash, would
cause bonds to crash, would cause interest rates to soar wildly out of
control, would cause a massive credit crunch, and would cause a
derivatives panic that would be absolutely unprecedented. And that
would just be for starters."
Other nations that we depend upon to lend us money would stop lending to us and would start dumping U.S. debt instead.
Could you imagine what would happen if China started dumping a large portion of the
1.3 trillion dollars in U.S. debt that they are holding?
It would be a total nightmare. The collapse of Lehman Brothers would pale in comparison.
And already some banks are stuffing their ATM machines
with extra cash just in case the general public starts to panic.
But none of this has to happen.
If Obama decides to negotiate with the Republicans, this crisis will likely end very rapidly.
If not, and we pass the "debt ceiling deadline", the federal
government will still have enough money to make interest payments on the
debt as long as they manage their money correctly.
Unfortunately, Obama seems far more interested in playing political games than he is in solving our problems.
In fact, Park Service rangers have been ordered to "
make life as difficult for people as we can"
during this government shutdown. Obama has apparently decided to
punish the American people in order to get leverage on the Republicans.
Just check out the following example from
a new Weekly Standard article...
There’s a cute little historic site just outside of the
capital in McLean, Virginia, called the Claude Moore Colonial Farm. They
do historical reenactments, and once upon a time the National Park
Service helped run the place. But in 1980, the NPS cut the farm out of
its budget. A group of private citizens set up an endowment to take care
of the farm’s expenses. Ever since, the site has operated independently
through a combination of private donations and volunteer workers.
The Park Service told Claude Moore Colonial Farm to shut down.
The farm’s administrators appealed this directive—they explained that the Park Service doesn’t actually do anything
for the historic site. The folks at the NPS were unmoved. And so, last
week, the National Park Service found the scratch to send officers to
the park to forcibly remove both volunteer workers and visitors.
Think about that for a minute. The Park Service, which is supposed to serve the public by administering parks, is now in the business of forcing parks they don’t administer to close. As Homer Simpson famously asked, did we lose a war?
The hypocrisy that Obama has demonstrated during this "government shutdown" has been astounding.
He has barricaded open air war memorials to keep military veterans from visiting them, but he temporarily reopened the National Mall so that a huge pro-immigration rally that would benefit him politically could be held.
He has continued to fund al-Qaeda rebels in Syria that are trying to overthrow the Syrian government, but he has been
withholding death benefits from families of fallen U.S. soldiers.
The conduct of the Obama administration during this shutdown has been
so egregious that is hard to put into words. Obama has chosen to
purposely harm the American people in order to score political points.
But this is how our politicians view us these days. As
Monty Pelerin recently explained, most of our politicians have absolutely no problem with exploiting us for their own purposes...
The concept of political service has been replaced by
that of masked exploitation. The public is no longer viewed as clients
or constituents to be served. Instead they have become political prey.
Politicians see the public as a collection of wallets and votes, fair
game to be hunted as the means to expand power and wealth. Constituents
are now the Soylent Green of the political food chain.
The political class assumes the public exists to serve them, not the
other way around. Public participation beyond the lightening of wallets
or the provision of votes is unwelcome. It is considered “interference”
that must be deterred by the ruling class.
The political class is now a huge, voracious parasite. Like the plant
in the Little Shop of Horrors, its needs have grown to the point where
it threatens anything productive. Its needs now exceed the willingness
for continued sacrifice on the part of the productive. The parasite
threatens the very existence of the host.
The political Ponzi scheme of tax, borrow and spend has reached its
limit. Either it will die when citizens turn on it or it will kill the
productive, ensuring its own destruction.
It perishes in the end. Whether it takes civilization with it is the bigger question.
Is there anyone out there that still does not believe that our system is broken?
Hopefully cooler heads will prevail and power mad Obama will decide
to toss the Republicans a few crumbs and this crisis will be resolved.
Because if this crisis is not resolved soon, it could have
consequences that are far beyond what any of us could possibly imagine.