The first president in over a century to balance the budget and generate a surplus goes on the record talking about fiscal policy concerning US debt. His spoken truth damages the fiscal politicking of Da Messiah and so he's forced to backtrack.

The most fiscally responsible President in modern history finally spoke the truth that America needs to hear.

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" Bill Clinton ‘Inadvertently Misspoke’ on Debt Limit . Article Comments (8) Washington Wire HOME PAGE » . Email Print + More Text By Andrew Ackerman and Damian Paletta Former President Bill Clinton reeled back remarks he made earlier Wednesday suggesting a short-term default by the U.S. might not be so harmful. He said through a spokesman that he “inadvertently misspoke.” The slip might have caused major problems for the White House by emboldening Republicans who argue they can negotiate over a debt-limit increase until the last possible minute–and even risk a default–without major consequences. Speaking at a fiscal summit in Washington, D.C., Mr. Clinton said: “If we defaulted on the debt once for a few days, it might not be calamitous. But if people thought we were literally not going to pay our bills anymore, then they would stop buying our debt.” In a statement, Clinton spokesman Matt McKenna said Mr. Clinton “did not in any way mean to suggest that a default would not be highly damaging for the economy even for a very short period of time.” “What he meant to say was that if a vote to extend the debt limit failed in advance of a default, that might not be harmful for a couple of days, but that if people thought that we might actually default, that in his words ‘we were literally not going to pay our bills anymore,’ then they would stop [people from] buying our debt,” Mr. McKenna said. The U.S. hit its $14.3 trillion debt ceiling last week but the Treasury has several tools to avoid a default until the beginning of August. On Tuesday, House Republican leaders said they planned a vote next week on a bill to raise the borrowing limit by $2.4 trillion but expect it to fail. "

5/27/2011 7:00:29 PM

You mean people in power have to use extreme black/white language to frame the debate and people who don't have to worry about that can be more realistic? Wow, that's new.

I guess that's why the GOP isn't casting the debt ceiling debate in the same do-or-die language (cut what we want or pay the consequences!), right?

6/1/2011 12:15:55 PM

The policy of the U.S. government has been default for at least the past 20 years, just not openly stated. No matter what, we will be giving bondholders a haircut, whether it's through devalued dollars, or just saying "sorry, you won't be getting the full yield - in fact, you'll be getting less than you paid for the bond to begin with."

This whole thing is very much about maintaining appearances. Clinton could have been right either way; maybe bondholders wouldn't get spooked if there was a delay in raising the debt ceiling. Maybe they would get spooked. Clinton doesn't know, and neither does anyone else. We're in uncharted territory, but his premise (which users like Kris vehemently dismiss as "speculation") is correct: if bondholders feel that we will not be paying our "bills" (bond maturities), they will start dumping bonds, and certainly not buying any more in the future.

[Edited on June 1, 2011 at 12:38 PM. Reason : ]

6/1/2011 12:37:37 PM

Quote :

"We're in uncharted territory, but his premise (which users like Kris vehemently dismiss as "speculation") is correct: if bondholders feel that we will not be paying our "bills" (bond maturities), they will start dumping bonds, and certainly not buying any more in the future."

Nice name drop, but unfortunately a strawman.

6/1/2011 2:06:59 PM

It's really not though, man. You've said as much in the last few days. What do you see as the possible outcomes, in regards to the bond market and the debt ceiling? Lay out what you see as the potential endgame here, because it isn't clear to me (or anyone else) what your position is.

6/1/2011 2:18:44 PM

So you want me to predict the future with absolute certainty? I'm not as foolish as you and face to think I can do that with little more than my own imagination.

Do you want me to list the possible outcomes?
1. We raise the debt limit. (most likely)
2. We don't for a little while, and no one really cares (what Bill Clinton described)
3. We don't for quite a while and our economy falls into ruin
4. We raise the debt limit and by doing so, open a hole in the sky where the ghosts of Friedman, Rand, and Mises and the angels of neoliberalism come down to force us into financial hell on earth to punish us for our free market sins (the face scenario)

6/1/2011 2:31:11 PM

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"1. We raise the debt limit. (most likely)"

I agree that this is the most likely outcome. Obviously, though, this is not a permanent solution. We will reach the debt ceiling again in a rather short period of time, at which point the same hard decisions will have to be made.

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"We don't for quite a while and our economy falls into ruin"

Why does it fall into ruin? Does it have anything to do with the fact that people would stop buying our bonds?

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"We raise the debt limit and by doing so, open a hole in the sky where the ghosts of Friedman, Rand, and Mises and the angels of neoliberalism come down to force us into financial hell on earth to punish us for our free market sins (the face scenario)"

No one is saying this. Raising the debt limit buys time, but that's it.

6/1/2011 2:41:41 PM

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"Obviously, though, this is not a permanent solution."

It very well could be. The debt problem is much more long term than you and your kind like to make it out to be. We have two real options to solve it, grow more or spend less, or some combination of those two.

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"Does it have anything to do with the fact that people would stop buying our bonds?"

That's the least of it.

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"No one is saying this."

I've read something pretty close to that on here before.

6/1/2011 2:51:31 PM

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"The first president in over a century to balance the budget and generate a surplus through no act of his own and only by simple shear luck"

FTFY

6/2/2011 10:44:18 AM

Moody's Warns of Credit Downgrade...if Debt Ceiling Isn't Raised...

http://www.reuters.com/article/2011/06/02/us-moodys-debt-idUSTRE75153020110602?feedType=RSS&feedName=topNews

Take on more debt...or we'll downgrade the debt you have. Things are really backwards, these days.

6/2/2011 2:29:03 PM