US Treasury has never defaulted on its debt? Not so fast, historians say
WASHINGTON (AP) — You hear the same proud claim every time Washington wrestles with the debt limit: The United States has never defaulted. But the record's not that clean. America has stiffed creditors on at least two occasions.
Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren't getting paid.
A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. 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.
These lapses, little noted outside financial circles in their day, are nearly forgotten now.
Indeed, Treasury Secretary Jacob Lew frequently declares that the United States has always met all of its obligations; a Treasury spokeswoman declined to discuss any possible exceptions. President Barack Obama, reminding Congress of the urgency of raising the debt limit before a Thursday deadline, warned of "the chaos that could result if, for the first time in our history, we don't pay our bills on time."
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Posted on Tue, October 15, 2013