WASHINGTON — If lawmakers fail to reach a compromise on the nation’s deficit, it would not be the first time America defaulted on its loans…sort of.
According to a report in The Washington Post, in 1979 the U.S. reached a last-minute approval that resulted in technical malfunctions in processing the backlog of paperwork, and subsequently thousands of late payments to holders of Treasury bills that were maturing that April and May.
While brief and inadvertent, the U.S. did technically default on loans.
The Treasury had missed payments on about $120 million worth of bills that led to a class suit against the Government. The bills were eventually payed with back interest.
The Washington Post Reports:
“It’s not as if God appeared to Moses on Mount Sinai and said, ‘The U.S. will always be a AAA credit.’ Our reputation is something that we have earned,” Angel said, adding that history is filled “with countries that were once great and blew it. The simple lesson is, you’ve got to pay your bills on time. If you don’t pay your bills on time, bad things happen.”