Clean, honest facts/debate about the debt ceiling.

Discussion in 'Clean Debate Zone' started by PredFan, Jan 18, 2013.

  1. PredFan
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    PredFan Gold Member

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    Can we do this?

    I'm no economist, one only has to look at how I spend my money to know that. So I don't understand all I hear about it.

    These things are what I see as the situation, correct me if I'm wrong here:

    1. The Debt Ceiling is a self-imposed maximum amount that the government is allowed to borrow.
    2. If we've reached the debt ceiling, we cannot borrow any more money.
    3. If we cannot borrow more money, we have to live within our budget.
    4. The debt ceiling law/policy/whatever, does not specify what income currently received goes where.
    5. Obama saying that if we don't raise the debt ceiling, the elderly will suffer, etc., is nothing more than a ploy to push the public into putting pressure on their congresscritters to give obama what he wants.

    Have at it.
     
  2. TNHarley
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    TNHarley Gold Member

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    I read this morning that the GOP was considering doing a temporary raise. I do no treally understand what that would accomplish? Have to go through the same shit again?
     
  3. WillowTree
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    WillowTree Diamond Member

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    obama has also said that "raising the debt ceiling is a sign of failed leadership" that's the one time in the history that I can say I agree with the divider.
     
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  4. pinqy
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    pinqy Gold Member

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    True

    True

    Not quite. The borrowing is to fund the budget in effect...spending the government has already committed to. If we can't borrow more money we can't spend the budget, we have to spend less than the budget.


    Correct.

    Incorrect. Not raising the debt ceiling means the US will not have the money to pay for many government programs including Social Security, Medicare, Military pensions, etc.

    It works like this. The President submits a Budget based on expected outlays and revenues. Congress approves it. If it turns out that revenue is not sufficient to cover the spending then the Treasury is authorized to borrow up to $X (the debt ceiling) to pay for the expenditures. If the amount the government needs to borrow ends up as higher than the debt ceiling, either the debt ceiling gets raised or the government has to cut back on spending...spending it already agreed to and budgeted for and planned for.
     
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  5. Katzndogz
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    Katzndogz Diamond Member

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    It is not correct that if the debt ceiling is not raised social security, medicare or military pensions will be cut. It is true that the government will have to allocate its expenditures better. If this were your household budget instead of the government, you would be deciding whether to go on a cruise or pay the electric bill. The intelligent person would pay the electric bill and defer the cruise. obama pays for the cruise and looks around for a new credit card to use on the electric bill.

    Raising the debt ceiling to borrow more money isn't so the government can meet its obligations. It is to pay the interest on the money it previously borrowed. The government has revenue every day. It just doesn't wisely allocate that money. An important component of not wisely allocating expenditures is not having a budget to follow. There hasn't been a budget since obama was elected. If we had a budget, there might be things we could cut and reallocate elsewhere.
     
  6. PredFan
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    PredFan Gold Member

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  7. PredFan
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    PredFan Gold Member

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    This is the part that I don't understand. Borrowing money to pay interest? That makes no sense to me. Paying the interest wasn't part of the budget? What kind of budget is that? Use the money coming in to pay the interest and cut from government spending.

    I've heard it said, by obama too, that if we don't raise the debt limit, we can't pay the interest. This makes no sense to me. Yes we can, we just have to cut somewhere else.
     
  8. TNHarley
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    TNHarley Gold Member

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    I thought that was what the income tax was for?
     
  9. pinqy
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    pinqy Gold Member

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    Those expenditures include social security medicare etd.

    Except the tickets for the cruise were already purchased and are non-refundable.

    That is an obligation. But beyond that....latest numbers 3rd quarter 2012, Federal expenditures for interest payments (seasonally adjusted annual rate) was 288.1 Billion. Deficit was 1.2 Trillion ($1,189,800,000,000) So, no, borrowing is not just for interest payments. Net deficit was 4 times what was paid in interest.

    Let's look at where the money goes...(again, 3rd quarter 2012 seasonally adjusted annual rate, numbers in Billions):
    Current Receipts: $2,176.3
    Consumption Expenditures: $1,086.3
    Social Benefits: $1,796.2
    Other transfer payments (to states, foreign governments etc) $529.9
    Interest payments: $288.1
    Subsidies: $60.1

    And I won't even go into investments, capital transfer payments, consumption of capital goods. I'm not sure what you think could be cut without touching social benefits that would be the equivalent of only cutting "luxury spending" like your metaphorical cruise.

    Oh, there have been budgets...they just haven't been approved by Congress.
     
  10. Scorpion
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    Obama and his administration don't want to curtail even government spending because it could lead to another recession/depression.
    Government tossing money out at any project is considered stimulative no matter how little merit the project may have to most sensible people.
    That's also why they promote food stamps so much. Those funds are pumped directly into the economy.
     
    Last edited: Jan 18, 2013

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