Toomey: Pay China First, Social Security Last

If We Default On Our Debt, Toomey Thinks We Should Pay China Before Social Security. This is, of course, something of a worst-case scenario, but in the event that Congress fails to raise the debt ceiling, Senator Pat Toomey has proposed legislation that would require the Treasury to pay off the interest on the debt—in other words, send money to Chinese banks—before meeting its obligations to its own citizenry, including sending out Social Security checks. According to the Treasury Department: “[T]his idea is unworkable. It would not actually prevent default, since it would seek to protect only principal and interest payments, and not other legal obligations of the U.S., from non-payment. Adopting a policy that payments to investors should take precedence over other U.S. legal obligations would merely be default by another name, since the world would recognize it as a failure by the U.S. to stand behind its commitments.” [Talking Points Memo]