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U.S. has defaulted at least twice in the past

1:56 PM, Oct 14, 2013   |    comments
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WASHINGTON (USA Today) -- President Obama and members of Congress say the nation faces the prospect of a first-ever debt default later this week, but that's not exactly true.

As the Associated Press notes, the government has defaulted at least twice before - once because of a 19th century war and once because of a 20th century paperwork problem.

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During the War of 1812, the British invaded Washington and burned down the White House; an empty U.S. Treasury could not even afford to pay American troops.

A second default in 1979 flowed from "a back-office glitch that ended up costing taxpayers billions of dollars," the AP reported. "The Treasury Department blamed it on a crush of paperwork partly caused by lawmakers who - this will sound familiar - bickered too long before raising the nation's debt limit."

Members of both parties will try to avoid a similar fate this week by raising the $16.7 trillion debt ceiling ahead of Thursday's vote.

The Associated Press also reports:

"Other maneuvers that undercut investors get labeled 'technical defaults' by some historians and economists. A leading example is 1933, when President Franklin D. Roosevelt took the nation off the gold standard amid the bank panics of the Great Depression. The nation's creditors were paid with dollars of much lower value than the gold they were due.

"The Supreme Court said the government could do it, but mourned the abandonment of 'the solemn promise of bonds of the United States.'"

(USA Today)

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