Goldman Sachs shows Obama's bluff on 'default' 

Goldman Sachs, in a research note, describes default on U.S. debt as "extremely unlikely," even if the debt ceiling isn't lifted, Jim Pethokoukis at Reuters reports. Here's the money quote:

The other outcome – whose probability has unfortunately risen in recent weeks – is that there is no deal by August 2. Even in this case, we continue to believe a default is extremely unlikely, as the Treasury would likely prioritize interest payments, Social Security and Medicare payments, and “essential” defense payments over other types of spending, and should have enough revenues to cover the essentials

The Obama administration, meanwhile, continues to speak as if no debt-limit hike necesssarily means default.

The remaining question is whether Goldman and Obama simply disagree, or whether Obama is being misleading. To solve this mystery, let's ask:

(1) has Obama ever misled the American people?

That's an easy yes.

(2) Does Goldman have any access to the Treasury Department?

I think that one answers itself, too, most importantly in the person of Treasury Department Chief of Staff Mark Patterson, a former Goldman Sachs lobbyist.

So, yes, as my colleague Conn Carroll put it this morning:

Not raising the debt limit would cause a limited government shutdown, not default, as Obama has been claiming. 

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Timothy P. Carney

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