The August 2 date is the deadline given by U.S. Treasury Secretary Timothy Geithner as the day when the federal government will have exhausted all of its emergency funds.
However, 3rd District Congressman Jeff Duncan disputes that, telling Greenwood affiliate WLMA that August 2 was an arbitrary date picked by Geithner.
Duncan says the country has already hit the debt ceiling.
We actually hit the debt ceiling back in May and then they continue to fund government this summer by borrowing money from pension funds. Which, I don’t know that they have the authority to borrow money from pension funds. But that’s how they’re funding government in excess of the normal cash flows of government. That’s how they’re funding it, is borrowing there.
Duncan said the government could still pay off interest on the debts to avoid a default. He suggested Geithner should manage the nation’s cash like businesses manage their cash.
As a nation, we need to pay our creditors, we need to pay Social Security benefits, because we have an obligation there as a nation, and we need to pay for our military. We need to pay for the military … men and women that are out there in the field defending our liberties. We need to make sure they get paid. And then beyond that, we manage our cash, and then we determine what we are going to pay.
Duncan says he thinks the market will respond positively to a technical default as long as the government is cutting spending.
If they see that there’s not a diligent effort on the United States government to truly rein in spending and get our fiscal house in order, if they truly see that we’re going to go down this road of continuing to add on debt upon debt that we cannot pay, then they know, ultimately that there’s going to be an actual default.
Congressman Duncan was a guest on Greenwood affiliate WLMA.