Peering Through Debt Ceiling At What's Beyond
NEAL CONAN, host:
This is TALK OF THE NATION. Im Neal Conan in Washington.
The number of the day is 14.294 trillion. That's the debt ceiling set by Congress five years ago, and according to Treasury Secretary Timothy Geithner we hit that ceiling today.
The metaphor everyone's using is that the government just maxed out its collective credit card, but by juggling money between the MasterCard and the Visa, we can hold the line for a few more weeks.
Congress has until the first week of August to pass an agreement to raise the amount of money the government can borrow, or the U.S. could default on its loans for the first time in history.
The vote to raise the debt ceiling has been a perennial piece of political theater since 1917, when Congress first passed a bill to give the Treasury more power to pay for World War I. And this year, against the backdrop of the big budget debate, well, it's bigger than ever.
What do you want to understand about the debt limit? Give us a call, 800-989-8255. Email us, email@example.com. You can join the conversation on our website, too. Go to npr.org, and click on TALK OF THE NATION.
Later in the program, Haiti's new president on The Opinion Page, but first the debt ceiling, and we turn to NPR senior Washington editor Ron Elving here in Studio 3A. Ron, always good to have you on the program.
RON ELVING: Good to be with you, Neal.
CONAN: Also with us here in the studio is John Cranford, managing editor and columnist at Congressional Quarterly, and welcome to you.
Mr. JOHN CRANFORD (Managing Editor, Columnist, Congressional Quarterly): Thank you, Neal.
CONAN: And John Cranford, what happens when you hit the debt ceiling? Does someone send out a notice? Does the work of the government stop or anything?
Mr. CRANFORD: Well, the Treasury secretary sends out a notice, actually alerts Congress that this has happened.
CONAN: Congress isn't here this week.
Mr. CRANFORD: Well, the Senate is sort of, maybe.
ELVING: Kind of.
Mr. CRANFORD: They're kind of. They're on the schedule. The - this is not new. This is a slow-motion wave, kind of like the Mississippi River at this point. We've known since the beginning of the year that sometime in the spring, we would hit the limit on the debt.
And Mr. Geithner has been telling the Congress since February or so: Well, it's going to be in a month. It's going to be in six weeks. It's going to be in eight weeks. And most recently he told them it'll be August 2 because he can essentially play the books for a few more months.
CONAN: And Ron Elving, if Congress is not planning to do anything about it this week, one thing we should say that it's not is apparently a crisis.
ELVING: It's not a crisis at the moment. It is in the broadest sense a profound crisis, of course, and it could become an immediate crisis if we do go past August 2 because then I think the secretary of the Treasury would be quite sincere in saying he is out of options, and that would mean that obligations of the United States coming due would be defaulted upon.
That's never happened in our history, and the debt ceiling has been raised quite regularly since that 1917 second liberty bond issue created it. And this has just really not come to a point of crisis. It's come to a point of difficult votes.
Particularly in the House. Quite often, members have said, well, I'm not going to vote for that, it's a tough re-election for me, what have you. But it has been a regular, even routine matter. In fact, for many years, it was just rolled right into the budget process, and they didn't have a separate vote to raise the debt limit.
They've done it I believe 74 times since 1962, if I've got number...
Mr. CRANFORD: I think that's the right count, yeah.
ELVING: Yeah, so it's been a relatively routine matter. But we are into different political waters right now. We have a Republican Congress. We have a Democratic president. And of course everyone else wants somebody else to bear this particularly burden.
And let's also note that the size of the U.S. debt has reached such mind-staggering proportions that it really does have to be dealt with in a shorter term than we have ever really faced before.
CONAN: Yet, John Cranford, it's - when politicians start asking each other to act like adults, it's a little difficult to take them seriously sometimes.
Mr. CRANFORD: Sometimes. This is not something, as Ron points out, this is not something that isn't usually played as a political game. We think back to 1985, and the Gramm-Rudman anti-deficit law was a rider on a debt limit increase. We think back to the...
CONAN: Which had serious consequences and did a great deal to help the economy.
Mr. CRANFORD: It did help some. In 1995, it was President Clinton's veto of a debt-limit increase that had some constraints on it that led to the first government shutdown of any sizable nature.
CONAN: Which had serious political impact.
Mr. CRANFORD: Correct, got him re-elected probably.
(Soundbite of laughter)
CONAN: And it has been pointed out that the last time this came up, then-Senator Obama and his fellow Democrats, then in the minority, said: We couldn't possibly approve such a thing.
ELVING: It was back in 2006. He was in his first two years in the United States Senate, and he was, of course, already thinking about his larger ambitions.
And he said: Look, I can't possibly conscience a vote to raise a debt that is largely being incurred by policies I disagree with, specifically the Iraq War, which had not been financed with any kind of financing, any kind of tax increase, any kind of revenues or any kind of corresponding decrease in other forms of spending and the Bush tax cuts of 2001 and 2003.
Those were the elements that tended to turn around the expectation of that decade from surplus, where we started in the year 2000, to enormous debts and enormous increases in the U.S. debt.
And so Senator Obama felt, as a member of the minority at that time, perfectly legitimate in saying: I didn't vote for these policies. I don't feel like I should be responsible for raising the U.S. debt to pay for them.
CONAN: He now says he regrets what he candidly describes as a political vote. Nevertheless, John Cranford, I've heard this vote described as political tax on whichever party is in the majority.
Mr. CRANFORD: Absolutely right, and that's why the House is almost always a party-line vote. The Senate about half of the time has a bipartisan vote to raise the debt ceiling, but that's because they have different dynamics in that chamber. It's just a different game.
CONAN: And two-thirds of them, their election is at least...
Mr. CRANFORD: Four years away, exactly.
CONAN: In any case, let's get some callers on the line who have questions about the debt ceiling, what it means and what may happen come August 3 if Congress has not voted to increase the debt ceiling, 800-989-8255. Email us, firstname.lastname@example.org. We'll start with Alex(ph) and Alex with us from Sierra Vista in Arizona.
ALEX (Caller): How are you doing, sir? Good to speak with you.
CONAN: Good to speak with you.
ALEX: My biggest question is: Who are our creditors, and why are we borrowing money from anyone other than ourselves? I mean, I don't understand how we're the richest country in the world, and we have to borrow money to do anything. If we dont have it, we shouldn't even be borrowing it from anybody other than ourselves. I've never been able to understand that.
CONAN: Any help here?
Mr. CRANFORD: Easy. It's - the Treasury's debt, it's sold in denominations ranging from one week to 30 years, is sold on the open market. Anybody who wants to buy it can, and the fact is it's probably the most secure investment in the world.
It's regarded that way, at least until we get to August 3, and we start to default.
ALEX: Yeah, that's one of my biggest problems. Like, America's one of the only countries that allows foreign people to buy land in our country and own it. And it's, like, I just feel like...
CONAN: That's another issue, Alex. Alex, that's another issue, another issue, another day. Let's stick to the debt.
ALEX: (Unintelligible) gone one day. You have a good day.
CONAN: All right, thanks very much. So as I understand it, China owns a great big chunk of our debt, as does Japan.
Mr. CRANFORD: Yes. About half of the publicly traded debt is owned overseas. A lot of it is held by oil producers. A lot of it is held by investors running through London, which that may mean Saudi princes, or it may mean people from China even. And China's central bank owns quite a large share.
CONAN: All right. Let's go next to - this is Pat(ph), Pat with us from Norwood in Massachusetts.
PAT (Caller): Yeah, hi. Hey, I was wondering, like, let's say we get to this August 2 deadline, where we do have to start picking and choosing debts to pay. I was wondering if we could - if there would be some way to say: Well, guess what? You Republicans are trying to hold the debt limit hostage. Well, we're not going to pay doctors in your state because you're trying to get rid of Medicare or something like that. Or, you know, or we're not going to pay the military industrial complex contractors in your state or something like that. Is there any way to pick and choose, basically...
CONAN: So you're talking about picking and choosing congressional appropriations or, Ron Elving, does it come in the form of these bonds that we sold on the open market are now coming mature, and we have to pay them off no matter who owns them?
ELVING: If you're looking for an alternative to default, if you're looking for some way to cut the outlays of the federal government overnight, in August, so as not to have to default and to live within the debt limit that we are at today, you would have to cut something along the lines of $125 billion a month. That's one estimate that I have seen.
Now, I don't know if that's the exact amount, but we're talking about extraordinary amounts of money. It would not help to say we're not going to pay the doctors under Medicare in one state or two states or even 50 states. It wouldn't be enough.
It is an enormous amount of money that would have to be cut overnight. And as we learned just in this last threatened government shutdown, even if you sign on for $38.5 billion in cuts, as they did at that time, the immediate budget impact, not over years, but the immediate budget impact, is rather modest. It was only, out of $38.5 billion cuts in that particular deal, it was only about a third of a billion that was going to be immediate in this fiscal year.
So if, as of August 3, you're trying to spend $125 billion less, month by month...
CONAN: Per month, yeah.
ELVING: Yeah, that would entail shutting down very large swaths of the federal government, and I don't know if anyone's even contemplated how they'd do it.
Mr. CRANFORD: You'd have to shut down virtually all of the government other than paying the bondholders and maybe paying Social Security recipients for a while and maybe paying the military.
Mr. CRANFORD: And maybe covering some VA hospital bills. But virtually everything else would stop.
CONAN: Why would you be obliged to pay the holders of the debt more quickly than the members of the military?
Mr. CRANFORD: Well, that's a good question. Patrick Toomey, a senator from Pennsylvania, argues that we have enough income coming in from tax receipts to cover the most important obligation here, which he defines as the debt owed to bondholders - that would be interest payments and principal payments coming due - and the minimal payments due to Social Security beneficiaries and the military. And the rest of it could be just forgotten for a while.
The folks I know on Wall Street say a default of an obligation to a contractor or paying federal workers with scrip isn't a whole lot better than defaulting on a bond. So they're not happy about that idea.
CONAN: And we read about options in the paper today. There's all that gold in Fort Knox. Gold is $500 an ounce. Sell now.
Mr. CRANFORD: Exactly. Where would sell it? And what would the price of gold be if you put 1.4 trillion ounces on the market tomorrow.
ELVING: It would be a little bit like the price of Microsoft's stock if all of a sudden Mr. Gates were to decide he was going to divest himself entirely of his Microsoft stock.
CONAN: So Fort Knox is probably not an option is what you're saying, except for maybe 500 bucks at a time.
ELVING: It is certainly not a magic wand. It is not a panacea. It is not a magic bullet.
CONAN: And are there other government assets that could be sold off in a crisis, oil lands, something like that?
ELVING: Not overnight. You could take a list of states and cross out the ones you didnt like. No, I'm obviously being jocular here. I don't think that there are assets the federal government could sell overnight or even in a matter of months that would even begin to meet the obligation costs that we're talking about.
CONAN: We're talking about the U.S. debt ceiling, which we hit today and which becomes a crisis, perhaps, on August 2, unless Congress votes to raise the debt ceiling, and the president goes along with that and signs the bill into law.
So, 800-989-8255. What do you want to know about the debt ceiling? Email us, email@example.com. Ron Elving, NPR senior Washington editor, is with us, along with John Cranford, managing editor for enterprise at CQ and a columnist for Congressional Quarterly, as well. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.
(Soundbite of music)
CONAN: This is TALK OF THE NATION from NPR News. Im Neal Conan in Washington.
We're talking about the federal debt limit, currently just under $14.3 trillion. It's been called a speed bump for spending. Congress has voted to raise the debt ceiling 74 times since 1962. They've never voted down an increase.
Now with a backdrop of worry about government spending and a looming presidential election, many Republicans threaten to do just that unless Congress also cuts more than a trillion dollars in spending.
Treasury Secretary Tim Geithner warns that a failure to increase the debt ceiling by August could force the U.S. into default. What do you want to understand about the debt limit? 800-989-8255. Email firstname.lastname@example.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Our guests, NPR senior Washington editor Ron Elving, and John Cranford, managing editor and columnist for Congressional Quarterly. And let's see if we can go next to - this is Corey(ph), Corey with us from Roanoke in Virginia.
COREY (Caller): Hi, how are you doing?
CONAN: Very well, thanks.
COREY: Well, good deal. Thanks for taking my call. I guess ever since I turned on the radio this morning, I've been on a sort of a bit of a panic, I guess, because every time I hear the talk of just partisan politics in general, I keep thinking back to the health care reform and how it just - one senator would filibuster and derail the whole process for weeks and months. And, well, what is the likelihood of this happening again over the debt increase?
CONAN: The - politically speaking, whoever holds the majority in the House of Representatives usually can wield that vote pretty easily, Ron Elving. But in the Senate, you're talking a very different animal.
ELVING: Yes, and as a matter of fact, we have at least one Republican senator in the Senate who has said that shy of a deal, a package, an arrangement with the Obama administration that he personally feels meets his criteria, he plans to do that. It's Mike Lee of Utah. And I believe that there may have been others who have said: Yeah, Mike, I give you a hand with that.
CONAN: Marco Rubio, I believe.
ELVING: Marco Rubio has also said that he would be interested in joining in such a filibuster. That is, in a sense, though, an implicit filibuster threat that exists really across the board in the Senate in our day, where there is almost always at least a handful of people who are going to say they are going to filibuster just about anything.
And we have seen, in the last Congress, as the caller was suggesting, that the Republican minority often held together and said: We're not going to allow anything to come to the floor until you bring up X or until you bring Y to the floor or until you do Z. Until you do one of those things, we're going to have a blanket threat to filibuster literally anything and everything.
So it's not surprising that something as big as this debt ceiling increase at this moment in time, which is a golden opportunity for fiscal conservatives to say: Look America, pay attention here for a moment. This is how high the U.S. debt has gotten. This is our moment to try to do something about it.
Mr. CRANFORD: I'm not sure, though, that John Boehner would bring a bill to the House floor that didn't constitute a deal that would probably get 60 votes in the Senate. I think he's saying now - his more strident line now, remember he was one who said in December we have to be adults and raise this. Now he's saying we have to have trillions, not billions, of dollars in cuts.
ELVING: Any deal that he acceded to, anything that he agreed to with the Obama administration would be backed up, in a sense, by the implicit threat that he knows that anything that didn't pass muster in the Senate would be filibustered, and therefore he has that leverage in his negotiation with the Obama administration.
CONAN: Corey, so you're probably right to worry.
COREY: Yeah, I hope I'm not. It's just - the stakes of this is so much higher than just health care reform.
CONAN: All right, Corey, thanks very much for the call. Let's see if we can go next to - this is Shannon(ph), Shannon with us from Denver.
SHANNON (Caller): Hi. My question is pretty simplistic I think: Why can we not just bill each taxpayer a few dollars, earmarked specifically for debt repayment? It's not a tax. It's a share in paying off the debt for services we've received from the government.
ELVING: I think people would call that a tax.
SHANNON: I'm sorry?
ELVING: I think people would call that a tax, and the Republican Party has a pretty strong aversion to that right now. Anything really that is even a revenue increase, anything that would bring money into the government that is not already coming into the government has been defined by many of the current Republicans, not only Tea Party members but by some of the senior members of the Republican Party in the Senate, as a tax increase.
So if any dollar being separated from a taxpayer anywhere in America and brought to Washington, figuratively speaking, is considered a tax increase, it's very hard to imagine that even a dedicated request, and the caller's suggestion would not fall in that category.
CONAN: You couldn't call this - we're passing a separate appropriation asking the people of the United States to pay a U.S. Navy SEALS appropriation or, you know...
Mr. CRANFORD: In fact, we've done that in the past for wars. We've had separate tax, surtaxes for the Vietnam War to cover just that very circumstance.
ELVING: And which gave us one of our last balanced budgets, in 1969. That was largely because the Vietnam War and all of the social programs of the middle '60s were actually being financed by higher taxes.
Lyndon Johnson put in place a 10 percent surcharge on incomes specifically to pay for the Vietnam War. We didn't do that in the case of the social benefits and the wars of the past decade.
CONAN: John Cranford, in the current climate, with gasoline over $4 a gallon in most places, the Democrats proposed an increase, well, elimination of some tax breaks for big oil companies, $23 billion of low-hanging fruit, as Dick Durbin, the Democratic whip in the Senate, described it. And at least at first blush, John Boehner, the speaker of the House, seemed to say: Well, maybe that's not such a bad idea.
Mr. CRANFORD: I think that's a possibility. But the thing that's interesting is the Democrats, when they first put this on the table, were going to pay for social programs with it. Now they're saying: Let's use it to reduce the red ink.
ELVING: That's a big victory from the standpoint of fiscal conservatives.
CONAN: Here's an email question that we have from Lynnette(ph) in Old Greenwich, Connecticut: Would it be possible to cancel all international aid for two or three years while we get our own house in order? Would it have much impact on our national debt?
Mr. CRANFORD: Less than one percent of the budget, maybe three-tenths of a percent of the budget.
ELVING: In other words, it would be possible to do it, and it might not be the end of the world in terms of some of our international relationships, although I think we've seen how sensitive some of those relationships are and how much they're based on that money.
CONAN: Pakistan is the one we've been talking about most recently.
ELVING: Or Egypt or a number of others that we've been concerned about in recent months. But even if that were not the case, even if you could wipe out all of that foreign aid overnight without repercussions of a terrible kind, even if that were possible, the difference it would make to the federal debt would be de minimis.
CONAN: This is one of those issues on which, in polling, people say: What percentage of the budget do you think goes to foreign aid? And it's way out of whack.
Mr. CRANFORD: Yes, they say 10 percent or more, and it's not even close.
CONAN: All right. Let's see if we can go next to - this is Jack(ph), and Jack's with us from Windsor in Colorado.
JACK (Caller): Yes, Neal, I think that my question has been answered with that last comment. And I think that the foreign aid has basically, well, almost buried us. Maybe I'm wrong, but...
CONAN: It's about one-half of one percent of the federal budget, something like that.
Mr. CRANFORD: About.
JACK: Is there...?
Mr. CRANFORD: $17 billion a year sounds like a lot of money, but it's a tiny fraction of what we spend every day.
JACK: Okay, would I be out of line by saying stop foreign aid?
ELVING: Not if your goal is to change our relationship with those other governments, and many people prefer the idea of our not giving any money to any foreign governments for reasons that have nothing to do with the budget deficit or deficit spending. They just don't think foreign aid is a good idea.
But as far as attacking the budget problem, it is not going to make a discernable difference, not in the short term and not in the long term. The big, big, big dollars are in other kinds of spending, particularly Medicare, Social Security and defense.
JACK: Okay, so you're saying that Medicare and that group is responsible for raising our - the level?
ELVING: No, I don't think those programs are responsible for it. Those programs, in and of themselves, are just programs. They're adopted by the Congress, signed into law by the president over many, many years. And it clearly has popular support. Social Security does. Medicare does. Our national security does. They're all popularly supported.
What is not popularly supported is the realization that all that spending, which we want, has to require a certain amount of revenue, which we don't want to pay. We don't want higher taxes. Our taxes are actually lower today than they were 10 years ago for the federal government and for government overall. And if you raise spending and decrease taxes, as we've done in the last 10 years, you're going to wind up with a bigger deficit. That's the problem.
CONAN: John Cranford - Jack, thanks very much for the call - other people would point out: Wait a minute. We didn't pay for the wars in Afghanistan and Iraq. There was no national sacrifice, no war bonds for that, no special tax for that.
Plus Medicare Part D, when that was passed in the Bush administration, there was no special increase in revenue to account for that.
Mr. CRANFORD: That's all correct. And the basic tax receipts of the federal government have fallen about five percentage points during the recession. So not only did we have tax cuts enacted in 2001, 2003 that substantially removed part of the revenue stream, but the recession knocked 15 million people off the payrolls, and access went away from that.
CONAN: And Ron Elving, it's fair to say that those who say yes, we need to increase revenues to pay for these programs that everybody likes, well, they say we're in a recession right now. We've also spent a lot of money on stimulus to help us get of the recession, which - well, whether that did or not, you can debate - different economists can debate. Nevertheless, this is the wrong time for a tax increase, because we're still trying to get these employers to hire more people and get the country back to work.
ELVING: Yes. This is - we are still suffering the effects of a recession. The recession itself would appear to be - by economic terms - over. But the hangover of the recession, the joblessness, that is still very much with us. And nobody wants a tax increase at any time such as that. However, we are at a level of taxation that is down, for federal purposes, from about 21 percent of the gross domestic product, to about 15 percent of the gross domestic product.
And yet, despite the fact that we've lowered taxes over this period of time, we still have all these problems. So the assumption that higher taxes are going to tank the economy, crush the economy was not borne out after the 1990 and 1993 budget agreements, both of which raised taxes, and both of which contributed to balanced budgets that we reached by the end of the 1990s, right around the year 2000, as I was saying, and...
Mr. CRANFORD: Let's point out that the economy grew at 4 percent a year the second of the half '90s, a historic high for a sustained period.
ELVING: So it was apparently able to survive the higher tax levels that were also giving us a federal budget that was more imbalanced. So it's not a popular idea ever to raise taxes. And it's certainly not a panacea to raise taxes. And, as a caller talked about earlier, it's extremely important, if you are going to raise taxes, that the revenue be dedicated to the problems - such as deficit reduction in this particular case, or paying for the wars - and not just used for what have you, not just allowed to...
Mr. CRANFORD: Expand something else.
ELVING: Exactly. Or go to new spending.
CONAN: Now, here's an email question from Jessie: I was hoping your guests could talk a little bit more about what kind of mechanisms the Treasury Department will use between now and August 2nd. I know these products can get a little complicated, but whatever light you could shed would be appreciated.
Mr. CRANFORD: There's two basic ways that the Treasury is avoiding a default right now. Previously, a few weeks ago, the Treasury suspended sales of special-issue bonds to state and local governments. These are basically used just to let states and locals manage their finances a little better.
If they've borrowed money themselves and they have - they're not going to spend the money right away, they turn around and buy these special issues from the federal government so they can earn a little bit of money while they're paying interest to their own lenders. That's been stopped.
The bigger one is that, as of today, the federal government is no longer investing in the Civil Service Retirement fund. And it will have to make that whole at some point, but that's a whole big chunk of change that's coming in, and they're not investing it.
CONAN: We're talking about the debt ceiling, and what is it and what does it mean when we hit it? You're listening to TALK OF THE NATION, from NPR News.
You just heard John Cranford, who a columnist for Congressional Quarterly, managing editor of - for Enterprise there, as well. Our - Ron Elving is with us, NPR's senior Washington editor.
And there has been - we mentioned the pension fund for federal bureaucrats, as someone called them, Ron Elving. And that has been one of the things that's been on the table as various groups try to meet to work out a deal. Where does that stand at this point? Vice President Biden has been presiding.
ELVING: Vice President Biden has a group of two Republican leaders, the number two and - of the Senate leaders, John Kyl, and the number of the House leaders, Eric Cantor, a meeting with him, along with several of the important Democrats in the House and the Senate, the chair of the Budget Committee, the chair of the Appropriations Committee, people who do the money in those bodies.
And these people know the innards of the fiscal systems of Congress and of the nation. And they should know how to do this mechanically better than anybody else if - and this is the big if - if the political will is there to make the deal. And you have to make a deal. Everybody has to give something.
Democrats are going to have to cut spending they don't want to cut. Republicans are going to have to either cut some spending they don't want to cut - such as defense - or they're going to have to talk about revenues, or you're not going to be making any kind of a change at all. So, in order to have that change, you have to have to deal. Everybody is going to have to give something up.
Now, federal employees have been whipping boys and whipping women in this entire struggle up to now over the federal budget, and probably always will be. They're suffering by not having their pension funds properly handled for the time being. That's going to be a counterproductive measure in the long run, in fiscal terms, I'm sure.
And there will be some pain for them. There will be some pain, probably, for a lot of people who do business with the federal government and would like their contracts to continue. So that's where the pain is going to have to be felt. Broadly, generally, it can't all be loaded on, you know, the whipping boys and the foreign aid and other things people would - don't really care that much about.
CONAN: And John Cranford, at the end, will there be an agreement that will mean the United States is not increasing the deficit this year?
Mr. CRANFORD: No. I mean, not for this year. I think that, ultimately, there will be a deal that will bring spending down as a share of GDP. It might come down, anyway, if the economy fully recovers. But for now, it's not. I think there will be a deal that will raise revenue by some degree.
Even Paul Ryan, the chairman of the House Budget Committee, Republican from Wisconsin, even he has sort of quietly acceded that there will be a tax increase at some point, or at least some form of additional revenue by some manner. He hasn't said exactly how he would accomplish it.
CONAN: And finally, this email question from Storm(ph) in Moss Beach, California: I think many Americans don't have a good idea what it would mean for the U.S. to default. Could you paint a picture of the likely consequences?
Mr. CRANFORD: Boy, that's really hard to do, actually, because we've never seen it happen. But the doomsayers on Wall Street would say that if we failed to make a payment, an interest payment to bondholders, or if we failed to repay a principal - and I don't think either of those would happen, by the way. I think that the Treasury would, if it was forced to not pay somebody, it would first not pay federal workers, and then it would find somebody else not to pay - not pay contractors.
But if it got to the point where there was an actual default on the debt, we would see an instantaneous jump in interest rates, worldwide, for all instruments because the treasuries are the benchmark for other borrowing. Two percentage points, three percentage points, who knows? People would then believe that the safest investment in the world was no longer safe at all.
CONAN: John Cranford, thanks very much for your time today, and joins us anytime you'd like to prophesy doom again.
(Soundbite of laughter)
CONAN: Managing editor for enterprise at CQ and a columnist for Congressional Quarterly. Ron Elving forecasts doom every morning in the morning meeting here at NPR, where he's senior Washington editor.
Coming up: a peaceful transition of power in Haiti. Garry Pierre-Pierre calls it another disaster for that country. He joins us next on the Opinion Page.
Stay with us. I'm Neal Conan. It's the TALK OF THE NATION, from NPR News.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.