Can someone please explain to me "why not raising the debt limit" is catastrophic

[kiwiman127]

To American business world, large and small, not raising the debt limit would be disasterous.

Chamber, GOP Butt Heads on Debt Ceiling
Chamber, GOP Butt Heads on Debt Ceiling - US News and World Report

Letter from business groups: Raise debt limit before stock market 'disarray'
Letter from business groups: Raise debt limit before stock market 'disarray' - TheHill.com

Raising the debt ceiling is critical for small business
Raising the debt ceiling is critical for small business - USATODAY.com

On debt limit, business lobby sides with Obama
On debt limit, business lobby sides with Obama | StarTribune.com

Business Groups to Congress: ‘Raising Debt Ceiling Is Critical’.
Business Groups to Congress: ‘Raising Debt Ceiling Is Critical’ - Washington Wire - WSJ[/QUOTE]

So, using the business world's thought process, if you think things are bad now,,,,,,,,!!!!!

 

[cbirch2]

To American business world, large and small, not raising the debt limit would be disasterous.

Chamber, GOP Butt Heads on Debt Ceiling
Chamber, GOP Butt Heads on Debt Ceiling - US News and World Report

Letter from business groups: Raise debt limit before stock market 'disarray'
Letter from business groups: Raise debt limit before stock market 'disarray' - TheHill.com

Raising the debt ceiling is critical for small business
Raising the debt ceiling is critical for small business - USATODAY.com

On debt limit, business lobby sides with Obama
On debt limit, business lobby sides with Obama | StarTribune.com

Business Groups to Congress: ‘Raising Debt Ceiling Is Critical’.
Business Groups to Congress: ‘Raising Debt Ceiling Is Critical’ - Washington Wire - WSJ

So, using the business world's thought process, if you think things are bad now,,,,,,,,!!!!!

Yes. Some businesses and even some banks might not be able to handle another credit shock. We can say it might not have an effect 6 months afterwards but in the week following any kind of default credit will dry up and interest rates will rise. Right now i wouldnt risk that.

 

[Sactowndog]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

Here is the data...


Total Debt: 13,528,807


Total Deficit: 1,293,489
Total Discretionary: 658,213
Total Military Discretionary: 688,955
Total Income Security (minus federal Retirement: 426,699
Total Health Medicare: 303,668

So do you cut total discretionary spending? Customs would shut down. Passports and immigration would shut down, the courts would shut down, food safety would shut down, the FDA would shut down, Air control towers would shut down, the FBI. How much of this do you really think you will cut?

How about the military. You will have to pull back to 20's isolation mode. Are your ready for that. That would also mean you will eliminate all Income Security and All Medicare and likely still come up short.

That doesn't account for any changes in the interest rate. If rates rise only 5% which would be modest increase with our current level of debt it would add $676,440M more than the total discretionary budget. At this point we would have no choice but to default on the debt or eliminate Medicare or Social Security.

 

[Remodeling Maidiac]

What sacrifies do you think we can make?

Are we going to make drastic cuts to military and every entitlement program, implement all those changes in full in two weeks, and then collect enough savings from the time those are implemented until august 2nd to run the government on a budget surplus for the rest of the year?

I can understand not knowing the niceties of it but the general numbers simply make not raising the debt limit impossible. It has to be raised.

It can't be that black n white. If it was we wouldn't have elected officials advocating not raising it.

Do you really think its mathematically possible to not raise the debt limit? its not. The government runs a $1.5 trillion deficit. 40% of our spending is deficit spending. To not raise the debt limit is to immediately operate on surplus. Not only that but to run enough of a surplus to pay interest (which wont work).

Interest on debt is about 5% of our budget. So tack 5% on to that 40% we need to save. So basically, by saying you dont want to raise the debt limit, your saying you want the government to immediately slash all spending by 45% for the rest of the year. Thats the same as totally eliminating social security, medicare, and all other mandatory spending like welfare and unemployment. Its not possible.

Repubs say it because it sounds good and not many people know what it means. But its all rhetoric. When the biden talks started the white house came out and said the repubs had already assured them the debt limit would be raised.

assuming your numbers are correct, which I won't be looking up tonight, I have to draw the conclusion that you are correct. That and the fact that despite over 100 views no one had the balls to come in and give me an alternate pov out of fear of looking uninformed like me or I'm just the only one still on the fence.

At any rate I will check into the numbers tomorrow and consider myself non sheepified.

 

[cbirch2]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

Here is the data...


Total Debt: 13,528,807


Total Deficit: 1,293,489
Total Discretionary: 658,213
Total Military Discretionary: 688,955
Total Income Security (minus federal Retirement: 426,699
Total Health Medicare: 303,668

So do you cut total discretionary spending? Customs would shut down. Passports and immigration would shut down, the courts would shut down, food safety would shut down, the FDA would shut down, Air control towers would shut down, the FBI. How much of this do you really think you will cut?

How about the military. You will have to pull back to 20's isolation mode. Are your ready for that. That would also mean you will eliminate all Income Security and All Medicare and likely still come up short.

That doesn't account for any changes in the interest rate. If rates rise only 5% which would be modest increase with our current level of debt it would add $676,440M more than the total discretionary budget. At this point we would have no choice but to default on the debt or eliminate Medicare or Social Security.

Haha we are in quite the pickle arent we. Its actually worse than that. Before we can even begin to make a dent in the debt we have to turn our deficit into a surplus. To do that is to eliminate 40% of our federal budget. So basically were screwed no matter what.

 

[Remodeling Maidiac]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

Here is the data...


Total Debt: 13,528,807


Total Deficit: 1,293,489
Total Discretionary: 658,213
Total Military Discretionary: 688,955
Total Income Security (minus federal Retirement: 426,699
Total Health Medicare: 303,668

So do you cut total discretionary spending? Customs would shut down. Passports and immigration would shut down, the courts would shut down, food safety would shut down, the FDA would shut down, Air control towers would shut down, the FBI. How much of this do you really think you will cut?

How about the military. You will have to pull back to 20's isolation mode. Are your ready for that. That would also mean you will eliminate all Income Security and All Medicare and likely still come up short.

That doesn't account for any changes in the interest rate. If rates rise only 5% which would be modest increase with our current level of debt it would add $676,440M more than the total discretionary budget. At this point we would have no choice but to default on the debt or eliminate Medicare or Social Security.

You saw the free beer sign huh? Lol sorry, the bank says I'm over my debt limit and can no longer give rep out baselessly. LOL sound familiar? Anyhow thanks for the response but I've already been schooled aparently.

Now if I could just get someone to school my EVO on drunken typing I'd be in great shape.

 

[cbirch2]

2011 United States federal budget - Wikipedia, the free encyclopedia

Total revenue: $2.17 trillion (estimated)
Total expenditures: $3.82 trillion (estimated)
Deficit: $1.48 trillion (estimated)

1.48 / 3.82 = .39.

So thats about 40% deficit spending. Oh yes we are financially screwed. Astonishingly short term talk about debt limits and defaults isnt really that scary when you realize we have to either cut 40% of our budget or almost double the amount of taxes we take in just to not go into debt more.

 

[cbirch2]

But dont get me wrong. Just because we have so much deficit spending doesnt mean i support harsh austerity measures. I support all the smart targeted cuts we can get. But when the private sector adds 60,000 jobs but the jobs report is 18,000 because tens of thousands of of public sector employees are laid off, something is wrong. Sure the public sector is bloated, no doubt about that. More people need to be fired eventually. But should we maybe refrain from firing those people in the middle of a recession?

Look at greece. They got a bailout but had to pass austerity measures in order to get it. Austerity measures shrunk the economy, the government took in less tax revenue, and the situation was largely unchanged. Now theyre in line for another bailout with more austerity measure attached and the same thing is likely to happen again. Everything needs to be well thought out and targeted. You need to make cuts in places that wont come back to cause more pain later, financially and practically.

 

[cbirch2]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

Here is the data...


Total Debt: 13,528,807


Total Deficit: 1,293,489
Total Discretionary: 658,213
Total Military Discretionary: 688,955
Total Income Security (minus federal Retirement: 426,699
Total Health Medicare: 303,668

So do you cut total discretionary spending? Customs would shut down. Passports and immigration would shut down, the courts would shut down, food safety would shut down, the FDA would shut down, Air control towers would shut down, the FBI. How much of this do you really think you will cut?

How about the military. You will have to pull back to 20's isolation mode. Are your ready for that. That would also mean you will eliminate all Income Security and All Medicare and likely still come up short.

That doesn't account for any changes in the interest rate. If rates rise only 5% which would be modest increase with our current level of debt it would add $676,440M more than the total discretionary budget. At this point we would have no choice but to default on the debt or eliminate Medicare or Social Security.

BTW, those are old numbers. The debt isnt even $14 trillion in those stats.

 

[shintao]

What sacrifies do you think we can make?

I can understand not knowing the niceties of it but the general numbers simply make not raising the debt limit impossible. It has to be raised.

It sounds like you are saying I better buy a wheel barrow to hold enough worthless cash to go buy dinner on? Are you saying I can expect the USD to become equal to the Mexican peso, IF we don't raise the debt limit?

 

[NYcarbineer]

It's costs X amount of dollars every day, or week or month, etc., to run the US government.

Y amount of dollars come in every day, week, or month, etc., to pay for X.

When the amount of Y is less than X, i.e., the ongoing cost of the government can't be meet by ongoing receipt of revenue,

then money must be borrowed to make up the difference.

Each time money is borrowed the accumulated debt figure goes higher. When it reaches the debt ceiling limit, borrowing can no longer occur.

At that point, the next time Y is less than X, something in X has to go unpaid.

THIS IS NOT ABOUT NEW SPENDING. This is about spending already in place.

 

[Robert]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

My thinking is we will still have all of our regular revenue coming in. We can pay interest only on the debt to keep it from growing while the "country debates what, where and how to cut" to find the extra cash we need to start paying the principle down. There are lots of areas where we, both republicans and democrats, could sacrifice to get back to a balanced budget. I might even go so far as to say minor across the board (every tax payer) temporary tax increases could be considered as long as serious, permanent and MASSIVE cuts are included. End loopholes, all subsidies and most non life threatening foreign aid. Institute a flat tax or a vat tax to even the contributions to the treasury among ALL Americans.

These are not my core beliefs or desires but they are things I would consider reasonable IF WE DIDN'T RAISE THE DEBT LIMIT and intended to do what's right.

Who is right? I don't know who to believe because nearly everyone plays politics with this situation. Bush had me convinced Tarp was right but now I feel it was mostly a complete waste.

HONESTLY CAN WE RIGHT THIS SHIP WITHOUT GOING DEEPER IN DEBT?

For those that respond seriously, thank you.

By not increasing the Cap we basically signal to the rest of the world that our debt will not be paid which of course will cause a cascade of events in the world markets.

The problem here is that this Nation above all others has always been known to be credit worthy thus the reason that the dollar is the reserve currency or it was it is no longer.

The issue is not one of raising the debt limit that must happen but what can't happen is a continuance of insane spending that this administration has been on we must without fail make massive cut's across the board

 

[Synthaholic]

What happens if you do not pay your (say, 11.9%) credit card? They jack your rates up to 19.9% or higher. You then end up paying much more in interest to pay off your debt. But what if you were able to borrow money to pay that credit card? Your rate would be unchanged.


That's the debt ceiling. If we do not extend it, interest rates will go up and creditors like China will end up getting billions more of YOUR MONEY, for free. And it will put America deeper in the hole.

 

[cbirch2]

What sacrifies do you think we can make?

I can understand not knowing the niceties of it but the general numbers simply make not raising the debt limit impossible. It has to be raised.

It sounds like you are saying I better buy a wheel barrow to hold enough worthless cash to go buy dinner on? Are you saying I can expect the USD to become equal to the Mexican peso, IF we don't raise the debt limit?

No because its not a real default. I mean it is...but the treasury still has money. It didnt default because it ran out of money, it was just the result of a refusal to spend more. So i think whatever economic shock there is would be caused by creditors having to worry about when they would get their money rather than if they would get it. So the dollar might drop, our credit rating would be cut to junk, and interest rates might go up, but all that would definitely be temporary and certainly less severe than if we actually ran out of money. But during that small time period banks and businesses are going to suffer from increased prices for goods and increased prices for borrowing, and substantially so for at least some time.

What i would really say is that all this talk about the debt limit is really useless. Because in the long run what is astonishing is that right now were paying off our grandparents' debt and for the rest of our lives we'll be paying off our debt as well as our childrens. The numbers are mind boggling. Cut spending, raise taxes, all those debates are pointless. Because the time needed to erase the entire debt is going to span administration after administration, policy after policy, and generation after generation.

 

[Sactowndog]

The problem is that if the market perceives that US debt is no longer a safe investment it will become harder for banks to borrow, therefore harder for us to borrow. Banks will raise interest rates and everything will become more expensive.

Grandpa here are the numbers

Total Debt: 13,528,807


2010 Total Deficit: 1,293,489
2010 Total Discretionary: 658,213
2010 Total Defense Discretionary: 688,955
2010 Total Income Security (minus federal Retirement): 426,699
2010 Total Health Medicaide: 303,668

So where are you going to cut. If you cut Discretionary completely you shut down the FBI, our court system, Customs, Patents, Air transportation, Hurricane Warning, Food and Drug Safety inspections. Basically the economy shuts down.

The Republicans have already stated the don't want to cut defense. But even if cut it completely you are only half way there.

Cut all welfare and Medicaide: Okay that gets you to $730,367M you are still $563,122M short.

All that is before I increase the interest on the debt from the result of a default. Because I can't turn this thing around on a dime and avoid default. Should we default and interest rates on the debt rise 5 percentage points (not unreasonable), the interest cost alone increases $676,440M (actually more because I haven't added 2011 deficit to the 2010 debt)

The interest increase alone will be more than the total discretionary expenses of the US government. Which means if you default chances are it will require significant changes or the end to Medicare and Social Security. Right wing Repubilcans know this fact which is why they are pushing this topic.

 

[Wiseacre]

Most of those gov't employees being laid off are not at the federal level, they're at the state and local levels cuz the public union benefits are so grotesque. I've seen stories in the news where public union X refused to accept cuts in return to keep more jobs, perhaps expecting a bailout of some sort. This is why he things that Repub governors are doing to curb collective bargaining for public unions is a good thing to eventually hold down costs and allow local officials more flexibility to provide essential services and education.

That said, if we do not raise the debt ceiling then a lot more gov't employees are going to lose their jobs at a time when it may not be in our best interests to do so. I'm all for smaller gov't and cutting spending, but doing it all at once right now is not the wisest course of action, not with the economy as fragile as it is.

There's no doubt we need a viable plan that will address the debt and deficits, but it's going to have to be a long term one. That isn't the only change we need: taxes, healthcare, regulations, energy and the environment, education, all these things need to be resolved to be financially acceptable and effective. Do it smart, do it in stages, do it so the economy doesn't go down the toilet. Eventually we do need to stop raising the debt limit, but I do not believe that now is that time.

 

[Contumacious]

Its a default. The united states has never defaulted before..

Incorrect.

The United States declared bankruptcy in 1935.

The Federal Reserve Board had issued to many notes whick back then were redeemable in Gold and Silver.

There were so many notes in circulation that the treasury could not redeem them. FDR forced SCOTUS to declare that fedgov didn't have to redeem the notes domestically.

.

 

[Sactowndog]

I consider myself fairly involved with most politics. But this debt limit thing has me really confused. This is not a joke thread or a political ploy. I really don't get why we can't just say no and force ourselves to live within our means.

I've heard the talking points of all sides involved so I'm not interested in one liners. Please be realistic and level headed with your responses.

Here is the data...


Total Debt: 13,528,807


Total Deficit: 1,293,489
Total Discretionary: 658,213
Total Military Discretionary: 688,955
Total Income Security (minus federal Retirement: 426,699
Total Health Medicare: 303,668

So do you cut total discretionary spending? Customs would shut down. Passports and immigration would shut down, the courts would shut down, food safety would shut down, the FDA would shut down, Air control towers would shut down, the FBI. How much of this do you really think you will cut?

How about the military. You will have to pull back to 20's isolation mode. Are your ready for that. That would also mean you will eliminate all Income Security and All Medicare and likely still come up short.

That doesn't account for any changes in the interest rate. If rates rise only 5% which would be modest increase with our current level of debt it would add $676,440M more than the total discretionary budget. At this point we would have no choice but to default on the debt or eliminate Medicare or Social Security.

BTW, those are old numbers. The debt isnt even $14 trillion in those stats.

Took them from the OMB FY-12 historical chart. Might have accidently copied the wrong number but double checked and don't think I did. Feel free to correct.

 

[Chris]

The debt ceiling has been raised 74 times.

It has never been an issue for the Republicans until they thought they could use it to defeat Obama in 2012.

Now they are willing to cause great harm to our economy in order to win an election.

The Republicans hate America.

 

[cbirch2]

Its a default. The united states has never defaulted before..

Incorrect.

The United States declared bankruptcy in 1935.

The Federal Reserve Board had issued to many notes whick back then were redeemable in Gold and Silver.

There were so many notes in circulation that the treasury could not redeem them. FDR forced SCOTUS to declare that fedgov didn't have to redeem the notes domestically.

.

Weve already discussed this you tool. That market decides a default. One or a few persons refusal to accept their form of reimbursement doesnt mean the entire market had judged the institution to be insolvent, which is the definition of a default.

Jesus christ your just pissed that the courts essentially gave congress control over the monetary system. No one lost any buying power, no one lost any wealth. Your like a little kid that wants to do everything his parents tell him he cant for no reason. "I want money backed by gold", well too damn bad you fucking loon.