Point is that you;re trying to apply the term "defaut" across dissimilar situations. It doesn't work.
Defaulting on the debt is not the same as lowering the benefits paid from SS, in any way shape of form.
It might not seem the same to you, but the question is if it will seem the same to bondholders. Imagine that you're a corporate bondholder, and the corporation to which you've loaned money starts hemmorhaging cash. They start closing various departments, but they assure you that YOU will be paid before anyone else. Wouldn't that make you a bit suspicious?
Your continued use of the term as applied to entitlements is dishonest, and, really, I've come to expect better of you.
Not hardly. The money paid from SS is not debt in any sense. It's a self-assumed payout of benefits created by law, and nothing more.
ALL government debt is a self-assumed payout of benefits created by law, and nothing more. If the government wanted to walk away from the entire national debt tomorrow, there is no one that could stop them.
Nothing about changing the specifics of that obligation equates to a "default" in any sense.
They paid into those programs because the law forced them to do so. There was never any guarantee, expressed or implied, that they'd receive any specific benefit from it.
I agree, in a political/legal sense, social security is not debt. But from a fiscal perspective, that is certainly how it is viewed. The markets are going to view any payment stoppage on any of our obligations (regardless of whether they are self-imposed obligations, as if there was another kind) in pretty much the same way: as the inability to pay the bills we are legally required to pay.
This is a baseless assumption; your presumption of what is and is not 'politically sustainable' does not a solid foundation make.
Well...let's look at the words and actions of the people in power then. This idea is pretty much a non-starter with Democrats, so that's more than half the power base right there. And it's not much more popular among Repulicans; Boehner and McConnell have both repeatedly said that no one is even considering a default on the debt (although whether they'll be able to pull back in time to make a deal before August 2 remains to be seen). If they actually supported a plan to cut spending by 43%, immediately and permanently, then they would likely be talking it up...in fact, they'd likely be asking for MORE. But they aren't doing anything even close to that.
Aside from that - the bondholders ALWAYS get paid at the same time, if not before, anyone else.
Yes, but how long would that arrangement hold up if the debt ceiling isn't raised?
Tell me:
What evidence is there that this will -ever- happen?
We have several promising ideas. There's the Wyden-Gregg tax reform proposal which could bring in some much needed revenue. Republicans have signaled an openness to cutting defense spending. Social security requires only some minor adjustments to eliminate the long-term deficit it would create. There's the deficit commission from last year that had many good ideas (and a few bad ones) for cutting spending. The only really tough one to tackle is Medicare/Medicaid, and I suspect that there won't be any further action on that front until after the Affordable Care Act plays out in the courts and becomes fully effective in 2014.
