RUSH: Obama is banking on the hope that people are too stupid to distinguish the difference between debt and deficits. I’m not talking about the national debt here, which is the accumulation of deficits. I’m talking about the debt we’re discussing here in this deal. He’s counting on people being too stupid to understand the difference.
RUSH: The meeting’s finished, and Obama said the leaders came here in a spirit of compromise. Big whoop. I know, the independents want to hear compromise. Okay, good, they came in an attitude of compromise. That’s beautiful thing. I love it. Now, one thing I think Obama’s counting on here, banking on, in fact, is his hope that people don’t know the difference, critical difference between debt and deficits. The debt that’s being talked about here is basically the Treasury bonds issued by the government backed by the full faith and credit of the United States. That’s the kind of debt we’re talking about. The stuff the ChiComs buy and the Japanese buy. We’re not talking national debt here in these debt ceiling meetings and so forth. Well, in one way we are but Obama’s not talking about that. When he starts talking about the difference between debt and deficits, he’s talking about the debt as issued.
Now, the debt is the bonds issued by Uncle Sam backed by the full faith and credit of the US. Deficit spending is all the insane spending the government does that outstrips the money that it takes in from taxes, fees for government services, sale of these bonds and government land, all of that. No one is saying we should default on our debt. What I’m saying is we won’t. We can’t. I mean we literally can’t. We couldn’t if we wanted to. Well, we could if we wanted to if we just stopped accepting payments which is what we would have to do. We cannot default, and there’s no reason to default. It’s a scare tactic. With the number of bonds that the Treasury has issued, it costs the government about $20 billion every month to service this debt. But the government actually takes in about $200 billion every month, minimum. So we easily have enough to cover the debt service of these bonds. In fact, we could easily cover debt service even if the debt limit was slashed instead of raised.
We don’t need to raise the debt limit to cover the debt service, and he’s banking on you not knowing that. And I guess it might be working ’cause Snerdley looks confused here. What am I not making clear? You sure you got it? You’re not just saying that to impress me? We do. We’ve got enough money to cover the debt — (interruption) $20 billion a month to cover the debt service on the bonds we sell, period, is all we need. The rest is just for spending. The problem is that Obama’s spending 300, 500, $600 billion a month more than the $200 billion coming in. That’s the problem. The problem is not that we don’t have enough revenue coming in to service the debt or the bonds, the sale of the bonds, and Obama is counting on nobody understanding this. Again, the government actually takes in about $200 billion every month. We easily have enough money to cover the debt service, and we could cover that $20 billion a month if we cut, if we reduced the debt limit.
The two really aren’t even related, is my point. Obama’s trying to conflate them here. The problem that Obama has is that he spends and wants to spend over $300 billion a month, which is a spending problem, my friends, it’s not a debt servicing problem. We don’t have a debt servicing problem. We don’t have a default problem. Ain’t possible. Isn’t going to happen. Now, the sad thing here is that Obama knows this, so he is intentionally confusing the public that every dollar government spends is the same as every other dollar meaning he wants you to think that there’s no difference between paying bond holders who lent the government money on the solemn promise of repayment backed by the full faith and credit of the US. The bond buyers, the people who go out and buy the T-bill, the long bond, short bond, whatever bond they buy, Obama is trying to confuse the public that every dollar the government spends is the same as every other dollar. He wants you to think there’s no difference between paying the bondholders, servicing the debt, and paying, say, investments in these absurd green jobs initiatives that he wants to slide to his pals over at GE.
He’s telling the public that if we don’t pay the latter, we don’t continue to make these investments, that we will be defaulting on our debt every bit as much as if we stiff our bondholders, which is a misrepresentation at its charitable best. In fact, Geithner, Little Timmy, says that he can’t, which means he won’t, distinguish between the first kind of payment and the second because once the government commits to some kind of spending, he claims there’s no difference. That’s insane. To avoid default all we have to do is reaffirm that we will continue making interest and maturity payments on bonds as they come due. That’s all we have to do. It has nothing to do with a Social Security check. It has nothing to do with Medicare services. It has nothing to do with any of these stupid education investments, zilch, zero, nada.
To avoid default all we have to do is to keep making interest and maturity payments on the bonds as they come due. The rest ought to be Obama’s political problem, not ours. We’re the ones that want to live within our means. He’s the one who wants to spend $300-plus billion dollars a month, when we only got $180 billion coming in after we make the $20 billion payment on service to the debt. That’s not a default issue. That’s a scare tactic. There is no default. It’s a common sense problem any adult understands. You can’t keep spending money you don’t have. We don’t have the money. It’s no more complicated than that which is why I sit here and get so frustrated.
As I said at the top of the show, he’s president so he sets the agenda or sets the premise and because you gotta be polite, respectful to the president, what have you, you accept the premise, you do the deal, or you do the discussion, you do the debate within those parameters, and it’s all bogus. I’m holding in my formerly nicotine-stained fingers a story from Reuters, the journalists are Ross Colvin and Jackie Frank. “A small team of Treasury officials is discussing options to stave off default if Congress fails to raise the country’s borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday. Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the U.S. government the authority to borrow more money.”
See, that is not even what we’re talking about. Here’s the next paragraph: “But behind the scenes, top Treasury officials have been exploring ways to prevent a financial meltdown that would be triggered if the government were unable to pay its bills on time.” But we are in no risk of being unable to pay our bills. “Treasury has studied the following issues:
Now, folks, Obama claims that there’s a clause in the 14th Amendment that gives him the right to spend money. Oh, yeah, he does. Of course he does. He’s an authoritarian, he’s a statist. Of course the Constitution’s gonna say whatever he wants to say in that regard. But it doesn’t. Anyway, so that’s the truth of this. That’s what this is really all about. There’s no possible default. We purely have a spending problem. We do not have the money to continue the spending Obama and the Democrats want. We do not have the money. Raising the debt limit will not give us the money. We don’t have the money and we haven’t had the money for a long time.
RUSH: Green Bay, Wisconsin, Steve. Thank you for calling, sir. Glad you waited. Great to have you on the program. Hi.
CALLER: Thank you, Rush. How you doing today?
RUSH: Very good. Thank you.
CALLER: You were saying we can’t default and a thought popped into my head. If you and I were running the business, of course we wouldn’t — well, we wouldn’t be in the position in the first place, but given who’s sitting in the big chair, is there any possibility in his desire to destroy the economy and rebuild it with big government planning that he would let us default, blame the Republicans, and then he’d come sweeping in with another messianic complex?
RUSH: Yeah, I mean they could just stop making payments on things. He could just stop making the payment, instruct Geithner to stop making the payment on the basis that Republicans haven’t authorized any new revenue increases and so forth. He could do that. But there are real world consequences of not making your payments. I mean that’s gonna affect a lot of potential voters, too. You know, we’ve never not paid off the T-bondholders, we’ve never not paid ’em off. We moved it down the road, but we’ve never done that before. He’d destroy the stock market. He would create a panic like you haven’t seen if he did something like that.
CALLER: Yeah, I can see that. I’m wondering if that would stop him. With the ego and, like you say, with being The One, if he sees this as an opportunity, if he can lay all the blame at the feet of the Republicans.
RUSH: Well, that would be the key. He’d have to be able to make sure that would be the vast majority conclusion, if it happens. But he couldn’t get away with it. I’m answering this in the sense that, yeah, anything’s possible. But refusing to make payments under the 14th Amendment is unconstitutional. I mean there would be total hell to pay for that. Too many people are watching this now. It’s impeachable. That’s an impeachable offense. That’s banana republic kind of stuff and we are, in many people’s eyes, headed in that direction. I mean the president’s brother still lives in a hut, after all.
Jay in Ketchikan, Alaska. Great to have you on the EIB Network. Hello, sir.
CALLER: Hi, Rush, give Snerdley a raise, would you? He’s the hardest working screener in America.
RUSH: You know what, I know that just by observing him every day. I can see what an arduous, challenging, mood destroying job it is. I see it. I can’t avoid it, I look across the glass, I see it. So I’ll pass along to him the fact that you know he’s the hardest working screener in America.
CALLER: Thank you.
RUSH: You bet.
CALLER: We need to change the discussion to reducing the size of government. My dad used to think you could starve ’em out, the bureaucrats, but if they have the printing press I’m not sure that’s possible. You know, I’m old school. I thought the tipping point was when the Grace Commission humbly suggested that automatic elevators in Washington shouldn’t have operators with them, and then Congress took the Grace Commission report, that was about $12 trillion ago or so, and just put it on a shelf and laughed at it. But I think that they need to start talking in terms of reduction in the size of government. I’m not sure if the Department of Education falls under the interstate commerce clause or the general welfare part of the Constitution, you know, but I don’t think it’s either. Thanks.
RUSH: Well, what is your real point here?
CALLER: That they talk about spending, spending, cutting taxes, spending. The problem is we need to reduce the size of government. We need to deconstruct federal government —
RUSH: Oh, you’re saying that spending cuts alone do not equal reducing the size of government?
CALLER: Right. They’ll find way around it. They’ll print more money.
RUSH: No, but it doesn’t mean — the jet industry is livid over something Obama just said, and I’m trying to find that out while I’m talking to you here. it’s something about the tax break for jet owners, and I’m intrigued what he said, I’m trying to find that out right now. But you’d have to cut whole departments, but cutting spending, independent of reducing the size of government, you’ve got to do it.
CALLER: Well, that’s fine, but if you eliminate large areas of government that are unnecessary or wasteful, you know, remember all the stories about how the IRS lost track of $40 billion back in the nineties or whatever, and the post office losing money? Now all you hear about is the military wasting money, and I’m sure those other departments are —
RUSH: Don’t even have to talk about that. All you gotta is cite the Department of Energy. The Department of Energy was formed to reduce our dependence on foreign oil. The Department of Energy now spends who knows how many billions of dollars, our dependence has increased. We need to get rid of the Department of Energy. The Department of Education, the same way. In your mind, and a lot of other people’s, by the way, that would constitute reducing the size of government, and it would. Now, the political reality of that is in this context right now unlikely.
If you’re trying to tell me that spending cuts, why even pursue ’em ’cause they don’t reduce the size of government, I disagree totally. We do not have the money we’re spending, we’re borrowing, we’re taking away opportunity for prosperity for two future generations. We are destroying the job creation sector. We are destroying the opportunity for economic growth, which will raise revenue all because we’re spending money and borrowing money and printing money that we don’t have, and that has to stop. Whether or not there is an actual reduction in the size of government is not really relevant. Don’t try to be too smart by half here.
I know the conventional wisdom is, “We’re never gonna cut the Department of Energy, Rush, be realistic.” Fine, okay, we’re never gonna cut it. We can reduce spending, and we can reduce the size of government in that regard and we must. There’s no option.
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