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Fri October 11, 2013
Congressman John Yarmuth Admonishes Senator Rand Paul for Debt Ceiling Comments
Democratic Congressman John Yarmuth is scolding fellow Kentuckian and Republican Senator Rand Paul for downplaying the significance of default if the U.S. government doesn't raise the debt ceiling.
The borrowing limit is currently set at $16.7 trillion for things such as publicly traded bonds and Social Security payments.
Most experts on the matter say the U.S. won't be able to pay off those loans after the Oct. 17 deadline and could run out of money by the end of the month unless Congress raises the ceiling.
There are a number of so-called "default deniers" voicing skepticism, however.
Chief among them is Harvard Professor Martin Feldstein, who says the country's tax revenue could cover the cost of interest payments on the nation's debt.
Paul concurs with that view and in an interview earlier this month the senator said:
"I think it’s irresponsible of the president and his men to even talk about default. There’s no reason for us to default. We bring in $250 billion in taxes every month. Our interest payment is $20 billion. Tell me why we would ever default."
But Yarmuth says Paul is misleading the public about the dire consequences of default to the economy while dismissing the logic of "prioritized" payments.
"(Senator Paul) is technically right, but that doesn’t mean it’s okay to pay China before you pay our troops or before Social Security recipients or before government contractors and all these other vital services. It doesn’t mean it’s not catastrophic for the economy," he says. "And this is where what Senator Paul has said is absolutely irresponsible."
Kentucky could be seriously rattled by a default given that 35 percent of the state's economy is federal spending where many residents are dependent on Social Security checks, Medicare payments and veterans benefits.
Among the worst-case scenario predictions if the U.S. defaults are borrowing prices rising , stock prices plummeting and bank operations ceasing.
Fact-checkers also found Paul made significant omissions with his comments and gave him two Pinocchios for it.