Clean, honest facts/debate about the debt ceiling.

[PredFan]

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.

 

[TNHarley]

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?

 

[WillowTree]

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.

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.

 

[pinqy]

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.

True

2. If we've reached the debt ceiling, we cannot borrow any more money.

True

3. If we cannot borrow more money, we have to live within our budget.

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.

4. The debt ceiling law/policy/whatever, does not specify what income currently received goes where.

Correct.

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.

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.

 

[Katzndogz]

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.

 

[PredFan]

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.

I see.

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.

But it doesn't have to be those "hot button" issues does it? That is not all that the government spends it's budget on.

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.

Unfortunately, the government hasn't had a budget in 6 or 7 years.

 

[PredFan]

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.

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.

 

[TNHarley]

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.

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.

I thought that was what the income tax was for?

 

[pinqy]

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.

Those expenditures include social security medicare etd.

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.

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

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.

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.

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.

Oh, there have been budgets...they just haven't been approved by Congress.

 

[Scorpion]

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.

 

[Wiseacre]

What we have here IMHO is an opportunity for the minority party to bitch about the majority party's prolifigate spending; the Dems did it against Bush, the repubs are doing it against Obama, and both were right. I do think this periodic squabble should be unneeded and really serves no useful purpose other than highlighting the fiscal irresponsibility that both parties have exhibited over the years. There are other opportunities for either party to make noise about taxes and spending, i.e., the budget process. However, since the budget process hasn't been working lately, it seems to me to be somewhat relevant to address the debt issue if needed.

If it's me, I would continue the law that requires a debt ceiling adjustment; what I would like to see is some changes though, like perhaps an automatic increase in the ceiling for specific named purposes. For instance, we don't need to be arguing over servicing our debt or paying the military, or sending out Social Security checks. The law could be changed so that part is not up for debate. Congress can decide what gets haggled over, that's really their job. And they should be able to extend the debt ceiling as part of any budget deal for the next 12 months, so that this process wouldn't be necessary in the first place. If it does become necessary then that means we blew out the budget, and that oughta be talked about.

 

[zeke]

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.

Those expenditures include social security medicare etd.

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.

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

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.

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.

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.

Oh, there have been budgets...they just haven't been approved by Congress.

A voice of sanity? and reason? Where the hell am I? OZ?????? Where've you been? You are gonna be a big hit. LOL. Trying to talk sense. I didn't click on the "politics" site. Did I.

On the good side. If you have investment's in bonds, watch them carefully. Interest rates will rise when we default on our debts and bonds will take a bad beating. Just the threat of default should push rates somewhat higher. A down grade in credit worthiness will really hurt rates. Then the borrowing costs of the government will rise and the debt will increase and rethugs just can't seem to figue shit out.

 

[zeke]

Hey it'll be cool. We will be the richest nation in the world to have downgraded credit. Isn't that special?

And as I have asked often, just what harm will the debt do to the nation over the next 12 months as compared to the harm defaulting on our debts and obligations will do over the next 12 months.

How will a recession with its lower economic activity and lower tax receipts be in our countries favor.

Anyone?

 

[Rozman]

I heard on a radio station in NYC today that the GOP
was not going to do anything in regard to spending cuts
with this debt ceiling deal....

They are willing to "kick the can" down the road, so to speak again.....
They will be willing to deal with cuts 3 months from now....

Is it ever going to be the correct time to deal with this shit?....

 

[Wiseacre]

I heard on a radio station in NYC today that the GOP
was not going to do anything in regard to spending cuts
with this debt ceiling deal....

They are willing to "kick the can" down the road, so to speak again.....
They will be willing to deal with cuts 3 months from now....

Is it ever going to be the correct time to deal with this shit?....

On March 1 the sequestration takes effect; by law, $1.2 trillion in spending cuts will take place. Half of which is in defense spending, which has already cut some $480 billion. So this time there ain't going to be no cankicking, spending cuts are going to take place. It's just a question of whether it's the sequestration cuts or alternative cuts, probably the same amount but spread differently across the various gov't functions and depts.

Further, we also have the Budget and Continuing Resolutions on March 27. I would expect some further cuts to whatever budget is agreed to, this is where the GOP can negotiate for cuts now rather than down the road. I dunno if the more extreme right want a balanced budget right away, some will be agitating for as much as possible. I think that is a bad idea some might say we should get the pain over with but I suspect most of those people won't be the ones experiencing the most pain. If the Budget process fails and a CR is not agreed to, the gov't could shut down for awhile, and some people would be all for that. But I think it would be best of neither side overplayed their hands; I think the president already did that over the Bush Tax Cuts, we'll see if the repubs make the same mistake.

 

[jwoodie]

Isn't it better to negotiate UPWARDS from Sequestration than DOWNWARDS from Continuing Resolutions?

How else are we going to prioritize spending money we don't have?

By the way, the Senate hasn't passed a budget in four years. Ask Harry Reid about that...

 

[catatomic]

Forgive me if I sound partisan, but I found the president's inaugural address to be right on the money. I'd be happy to debate some things in it.

 

[Underhill]

What we have here IMHO is an opportunity for the minority party to bitch about the majority party's prolifigate spending; the Dems did it against Bush, the repubs are doing it against Obama, and both were right. I do think this periodic squabble should be unneeded and really serves no useful purpose other than highlighting the fiscal irresponsibility that both parties have exhibited over the years. There are other opportunities for either party to make noise about taxes and spending, i.e., the budget process. However, since the budget process hasn't been working lately, it seems to me to be somewhat relevant to address the debt issue if needed.

If it's me, I would continue the law that requires a debt ceiling adjustment; what I would like to see is some changes though, like perhaps an automatic increase in the ceiling for specific named purposes. For instance, we don't need to be arguing over servicing our debt or paying the military, or sending out Social Security checks. The law could be changed so that part is not up for debate. Congress can decide what gets haggled over, that's really their job. And they should be able to extend the debt ceiling as part of any budget deal for the next 12 months, so that this process wouldn't be necessary in the first place. If it does become necessary then that means we blew out the budget, and that oughta be talked about.

I understand the sentiment, but I would say that there is no reasonable solution to our debt problems that doesn't involve cutting the military or social services. They are just too large a part of the budget.

The debt ceiling debate is absurd. These are not optional. It has to be raised. And anyone who knows anything about the economics of the problem knows this, including most in congress.

It's a game where republicans try to make democrats look bad (and the inverse when Bush was in office). But it accomplishes nothing.

Macro-economic theory is not rocket science. The problem is that we started a new policy in the 80's that said deficit spending is not limited to times of economic trouble. And it continued (with a slight blip under Clinton and the republican congress) until today. We could be out of this recovery by now if the previous politicians in the white house and congress had simply cut spending and/or increased taxes during the good years. And we've had quite a few good years.

Instead we spent like a kid in a candy store on everything. And in 2008, when this recession started, our credit cards were maxed and we couldn't spend our way out of it. Oh they tried but it was a zero sum game. We passed a stimulus and the response wasn't, 'oh good, more jobs'. It was, 'oh shit, can we afford this'? So what little growth there was fizzled.

We are in a game of chicken at the moment. Will we create enough of a recovery in time to start paying down the debt in time? Or will we find ourselves mired in this situation until recovery is no longer an option and the dollar tanks?

It's not an easy question to answer. It's possible to pay off our debts, we did it after WW2 with a similar debt load. But it is a different country now, much more divided and less inclined to work together for the common good.

So the short answer is, I have no idea. And I doubt anyone does. But I can tell you that getting out of this will not be easy. It will require cuts to everything, across the board. And tax increases for virtually anyone with a halfway decent job.

I doubt our government, all of them, have the will to do what is necessary. It's not really what the people want. So, what I suspect will happen is the economy will continue limping along for another decade or two until finally inflation starts seriously catching up with us. At that point, inflation will be our most hated friend, weakening the dollar and causing all kinds of chaos, but allowing us to pay off our debt for pennies on the dollar.

We will eventually recover, but it will be a long road.

We shall see.

 

[RetiredGySgt]

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.

True

2. If we've reached the debt ceiling, we cannot borrow any more money.

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.

4. The debt ceiling law/policy/whatever, does not specify what income currently received goes where.

Correct.

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.

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.

We haven't had a budget since mid 2009. We have had a trillion dollar deficit EVERY year under Obama. That is 1 trillion dollars plus some we had to borrow each year to pay for the programs that the Government claims we need.

As to Social Security and Retired benefits,read the 14th Amendment. The Social Security program is a legally acquired DEBT. The Government spent the surplus and replaced it with Bonds. That means just like the interest on the borrowed money, this debt MUST be paid with existing moneys.

As to Pensions, again read the 14th, it specifically states that pensions MUST be paid , especially to military retirees.

Now on to the claim the Budget must be paid for.... According to the 14th Amendment the only thing that MUST be paid is debt and pensions. Further the Constitution specifically leaves to Congress the raising of the debt allowed by the Nation. If Congress can not agree on a new debt ceiling then the Government must exist with in the frame work of existing taxation and revenue. Except they must pay the interest on the debt, Social Security, Pensions and any other legally binding DEBT.

Running a Government office is NOT debt. Running a Government program is not debt.

 

[C_Clayton_Jones]

The clean, honest fact is the ‘debt ceiling’ is a political contrivance, best done away with.

And unfortunately it’s become a political weapon used by the radical fiscal right (TPM) to hold the Nation hostage for extreme, unrealistic, and ultimately harmful concessions.

An honest debate would involve the acknowledgement by all parties involved that serious, meaningful debt reduction can only take place with tax increases, cuts to social programs, and cuts to the military.