Republican Senator: We Can Crash Into Debt Limit "Because the Only People Buying Our Bonds Are the Federal Reserve"

Reporting on Politics and Policy.
Oct. 7 2013 6:20 PM

Republican Senator: We Can Crash Into Debt Limit "Because the Only People Buying Our Bonds Are the Federal Reserve"

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Sen. Richard Burr, R-N.C., has done the math, and is ready to hit the ceiling.

Photo by Win McNamee/Getty Images

My latest piece explains why the business world's expectations on the shutdown crisis—that the backlash might make Republicans ready to deal on the debt limit—were folly. Republicans believe that the sequestration fallout, and the shutdown fallout thus far, have been goosed by Barack Obama in an attempt to maximize the damage to their party. That makes them less likely, not more likely, to raise the debt limit in a hurry. The theory that the government could hit the limit then just prioritize spending on debt service, troops, and entitlements is widely accepted, more than Democrats like to think.

The whole story seemed a little House-centric, so I ended the day at the Senate, asking the Republicans who are seen as potential deal-makers there whether the people who said we could prioritize debt and crash through the ceiling were right.

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"They're right on that, and I think the administration could work on who gets paid and who doesn't in a way that would pull us through," said Utah Sen. Orrin Hatch, ranking member of the Senate Finance Committee. "I don't think the markets have been spooked so far, and I personally believe that if they realized there was a legitimate attempt to make the government work, they would be less likely [to be spooked]."

"You gotta take Jack Lew at his word, but from the standpoint of [whether] that puts us in default, technically, no," said North Carolina Sen. Richard Burr. "The federal government still has about 85 percent of the revenues we spend coming in, and all they have to do is prioritize that they're gonna pay debt service first. And that leaves some prioritization for federal programs. I'm not as concerned as the president is on the debt ceiling, because the only people buying our bonds right now is the Federal Reserve. So it's like scaring ourselves."

David Weigel is a Slate political reporter. 

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