Clean, honest facts/debate about the debt ceiling.

[jwoodie]

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.

We already have the tax increases; where are the cuts to social programs?

P.S. Since this is the Clean Debate Zone, I will refrain from commenting on the "radical fiscal right" canard.

 

[RetiredGySgt]

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.

And the Democrats in the Senate and the President REFUSE to make ANY CUTS. The Republicans agreed to more taxes though. As for the military? It is actually a power of Congress and has been cut enough. It is something like 20 percent of the budget, if we actually had one. meanwhile Obama wants more money for more programs.

Partisan? You want to talk about partisan and fail to mention that the republicans agreed to more taxes and the Democrats REFUSE to make any cuts?

 

[PaulS1950]

The debt that is carried by our government will only affect the people of the nation and not those who are spending the money. They have no vested interest in paying it down or even leveling it off.
It will ultimately be the cause of the downfall of the USA.
The first dictator that comes along to say, "a chicken in every pot and a husband for every woman" will take over. (The quote is from Hitler in his campaigning days.)

 

[Underhill]

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.

We already have the tax increases; where are the cuts to social programs?

P.S. Since this is the Clean Debate Zone, I will refrain from commenting on the "radical fiscal right" canard.

The tax increase was pathetic. It was actually simply the end of a cut that never should have been put in place in 2009.

As for social programs, I am all for it. But they can't be cut by a whole hell of a lot and certainly not during a recession. The military could certainly be cut, but again, that will mean job losses when we can least afford them.

So we are in a lose lose situation. Cut and I suspect we end up in a downward spiral of cuts, lob losses, lost tax revenue, so more cuts... this is what we saw in Europe with many of the countries forced into massive cuts. Or don't cut and we keep running up a bill we can barely, if at all, afford.

 

[JEQuidam]

If you want to send a message to freeze spending by freezing the debt ceiling, there is a petition on WhiteHouse.gov - but I cannot post the link - it rhymes with: http ://wh.gov/ UpGJ (remove spaces)

 

[UseCaution]

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.

Typically in budgets when passed. Are allocated funds directly to pay toward borrowed money. From the previous budget authorize to borrow money that that budget where short.

As for our current state with funding gov't programs. In most of the approved laws that appropriate funds when you look deep down in the language there are automatic renewal language set and place to at least provide for said programs to be funded in the laws that are passed. This was a simple statement in its a little more complicated but that's should answer the more money to pay interest question.

 

[PredFan]

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?

You are starting from the false belief that if we don't raise the ceiling, we'll default on our debts.

 

[1Templar]

???

 

[Underhill]

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.

And the Democrats in the Senate and the President REFUSE to make ANY CUTS. The Republicans agreed to more taxes though. As for the military? It is actually a power of Congress and has been cut enough. It is something like 20 percent of the budget, if we actually had one. meanwhile Obama wants more money for more programs.

Partisan? You want to talk about partisan and fail to mention that the republicans agreed to more taxes and the Democrats REFUSE to make any cuts?

That isn't true. Obama agreed to cuts. They just haven't gotten to that discussion yet.

And the tax increases you talk about are pathetic. It's basically removing the miniscule cut that Obama put in place in 2009 and increasing the rate on the rich 3%, which is worthless since none of them pay anything close to that rate anyway. None of the loopholes are gone. So the real increase will be negligible.

 

[Intense]

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.

At what cost?

Maybe the Administration needs to focus less on Government Worker/Contractor Salaries, Raises, Expanded Benefits, and Expanded Retirement perks, while the rest of us are taking hits. Sometimes it seems that every time the cycle quiets down, It's raise time for Government Workers, which starts it all up again.

 

[Underhill]

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?

You are starting from the false belief that if we don't raise the ceiling, we'll default on our debts.

If we don't raise the debt ceiling we will be screwed. Here is a fairly accurate description..

"-We will almost certainly pay the interest on our national debt, military payrolls, VA benefits, and Social Security. That is going to leave precious little money for anything else.

-Standard & Poor will downgrade our bonds. Fitch and Moody's, however, are not going to downgrade us unless we actually default--which, as I've said, I don't think we'll do.

-Economics of Contempt argues that this will actually have less impact on markets than people are predicting, because most contracts and regulations that require institutions to buy AAA rated securities do not force those institutions to sell unless two out of three of the agencies have downgraded. As long as Fitch and Moody's hold the line, we won't see the absolute chaos that would follow a downgrade of the US short-term credit rating from all three.

-Nonetheless, there will be considerable disruption in markets, less because of the direct regulatory problem, than because markets--like the rest of us--like to believe that there is some sheriff in town. The level of political instability implied by a congress that does not raise the debt ceiling is a level of political instability that makes all financial transactions riskier. The willingness of people--foreigners especially, but also Americans--to hold our debt will be permanently impaired. That will be expensive. Also, voters are going to be unhappy when their 401(k) portfolios start behaving like a manic depressive coke addict in detox.

-We also don't know if Fitch and Moody's will hold the line. They're telling reporters they will--but how will they feel in a month? Who knows? If they downgraded us significantly, the resulting sell-off just from money market funds could feel a lot like a replay of 2008. Only this time, it's not clear that anyone in the government has the authority to step in and stop a run on the money markets; the issue was left conspicuously unaddressed by Dodd-Frank.

-Geithner will not take the 14th amendment route, not only because its legality is dubious, but also because it would trigger an even deeper political crisis, and quite possibly end with President Obama being impeached.

-Geithner may have some other gimmick up his sleeve, like minting $2 trillion platinum coins, swapping Social Security treasuries for public debt, or selling our gold reserves. (Good riddance!) If so, expect screaming from the left (he's raiding the social security trust fund!) or the right (plundering our nation's vital stores of precious metal), and the thing may drag on for months.

-If he does not have these tricks up his sleeve, many things people like--a lot!--will probably stop.

-Whatever happens will not last long. The constituencies which make up the tea party do not necessarily understand how much of their life is underwritten by the government. But they will. When the market starts convulsing, and checks stop coming, and states have to do emergency property tax hikes to make up for lost federal revenue, angry constituents are going to mob their congressmen. About five minutes after the first doctor tells a senior citizen that he can't treat any more Medicare patients until he gets paid, the tea party caucus is going to crawl back to Capitol Hill and beg to pass whatever will make it stop.

-In the aftermath, we will, over the long term, pay more to borrow money. At least some of that is going to be paid for with higher taxes.

-Everyone else is probably going to pay more to borrow money, too. The US is a net borrower, and this sort of instability means paying more to attract capital. And a whole lot of debt, including fixed-rate debt, is priced off of treasuries.

- Consumer confidence, already shaky, will take a blow. It's hard to say how much this matters, but it certainly matters some; like markets, consumers want to think that there's someone in charge.

-This also raises the regulatory risk that the GOP says they care about. A mildly bad rule that's stable is better for business than a good rule that changes every two years.

-The political situation in DC will get even worse. The last two decades have been market by one party doing something kind of raw to the other party, who then goes even further because after all, look what they did . . . If the Tea Party, and the GOP, precipitate a crisis, then the GOP, and the Tea Party, will pay for it eventually."

What Happens if We Don't Raise the Debt Ceiling? - Megan McArdle - The Atlantic

 

[ReallyMeow]

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.

Cant you see the contradiction you are posing? No budget has been passed, that means no large adjustments have been made, we are pretty much right on the course bush left us at. revenues simply imploded and unemployment claims skyrocketed under bush. that is what a broken economy looks like, which is precisely why you want the economy well regulated; so that people arnt running around committing fraud as if there were no consequences for it. sure, obama spent some money on things like the bridges bush had neglected for the better part of a decade, but that hardly compares to bushs strategy of giving the banks wheelbarrows full of money so their leadership could pay it to themselves as a bonus.

2009 United States federal budget - Wikipedia, the free encyclopedia

Deficit $407 billion (estimated) $1.413 trillion (actual)

Since then, obama has whittled the size of the deficit down by about 100 billion dollars a year. For the last 30 years, deficits go up under red presidents and down under blue presidents.

We already have the tax increases; where are the cuts to social programs?

And the Democrats in the Senate and the President REFUSE to make ANY CUTS. The Republicans agreed to more taxes though. As for the military? It is actually a power of Congress and has been cut enough. It is something like 20 percent of the budget, if we actually had one. meanwhile Obama wants more money for more programs.
Partisan? You want to talk about partisan and fail to mention that the republicans agreed to more taxes and the Democrats REFUSE to make any cuts?

We already have cuts to social programs:
President Obama's Record and Proposals for Cutting Spending | The White House

A tax cut that was scheduled to expire expiring does not qualify as a tax hike, mom told you that you could have some icecream, not infinite icecream forever. Income tax rates were at 94% on the equivalent of todays 1mil, we should reinstate the same until this $16t in debt thing blows over.

 

[merrill]

What Happens If the Debt Ceiling Isn't Raised?

As the debt approaches the ceiling, Treasury can stop issuing Treasury notes, and borrow from some retirement funds (but not Social Security or Medicare). Normally, it can withdraw around $800 billion it keeps at the Federal Reserve bank.


Between 2008-2010, the Fed vastly increased the amount of Treasury notes it held, a policy known as Quantitative Easing. Congressman Ron Paul (R-Texas), Chair of the Fed Oversight Committee, has suggested that the Fed could forgive the $1.6 trillion in debt it owns.

This would postpone the need to raise the debt ceiling. BUSHCO economics put the country in a serious situation. One that no other president has been confronted with. This will require some quite creative economic steps therefore let's move forward.


Once the debt ceiling is reached, Treasury cannot auction new Treasury notes. It must rely on incoming revenue to pay ongoing Federal government expenses. This happened in 1996, and Treasury announced it could not send out Social Security checks.

Competing Federal regulations make it unclear how Treasury could decide which bills to pay, and which to delay. Owners of the debt would get concerned that they may not get paid.


If Treasury did actually default on its interest payments, three things would happen.

--- First, the federal government could no longer pay any its employees' salaries or benefits. All those receiving Social Security, Medicare, and Medicaid payments would go without. Federal buildings, and services, would close.

--- Second, the yields of Treasury notes sold on the secondary market would rise. This would create higher interest rates, increasing the cost of doing business and buying a home. This would slow economic growth.

--- Third, foreigners would dump their holdings. This would cause the dollar to plummet, probably removing its status as the world's reserve currency. The standard of living in America would decline. This would make it highly unlikely that the U.S. could ever repay its debt.

For all these reasons, Congress shouldn't monkey around with raising the debt ceiling. If members are concerned with government spending, they should get serious about adopting a more conservative fiscal policy long before the debt ceiling needs to be raised.

 

[merrill]

Some thinking that perhaps should be included when discussing the debt ceiling.

PUT 25 MILLION unemployed back to work at no less than $17.50 per hour! Pronto!

3. Sign on to a People's budget

A Peoples Budget does everything this country needs = Smart Economics
* Reduces Debt by $10 trillion
* Creates good-paying jobs
* Fully maintains our social safety net
* Invests in education
* Ends our costly wars
* Closes the tax loopholes that have made offshoring jobs profitable
* Ends oil and gas subsidies that pollute our country at taxpayer expense
* Creates a national infrastructure investment bank to help us make intelligent investments for the future

A fiscally responsible budget represents the future we believe in as Americans.

This is one of those occasions we all hope we'll live to see. We really can make a difference right now if we speak up loudly with one voice.

This fiscally responsible budget represents not just common sense; it represented the will of the American people.

These aren't just words on a page or numbers in a table—these dollars and cents mean lives helped or hurt, people succeeding or falling by the wayside, and families lifted up or dragged down.


--- What this budget does very specifically:

Congressional Progressive Caucus : The People's Budget

The Nation: Obama Should Fight For 'People's Budget' : NPR

While Obama Touts Compromise with GOP, Progressive Lawmakers Unveil "People?s Budget"

Fighting for a People's Budget | The Nation

 

[PaulS1950]

You do realize that we are talking about the DEBT and not the budget deficit, right?
We are talking about a debt that already owes more than 4,000,000,000,000 dollars to Social Security and more than 12,000,000,000,000 dollars to other countries.
This isn't about unemployment or even a small minority of folks who won't be able to feed themselves. This is about the death of the nation - NO GOVERNMENT programs - at all. The government won't have any money. No army, navy, marines, airforce, no welfare, no medicare, medicaid, no foodstams or sosial security. NOTHING!

The state goverments will collapse too because they are so dependent on federal money. Corporations will close down, businesses large and small will be gone because there will be no value to the money. We are talking about a debt that is so big it will take no less than hundreds of years to pay back and it could take tens of thousands of years to pay back.

That is what representative government has done to the generations of people that will follow us. They did it so some could have a "free" lunch and it is going to cost dearly.

Let me put it this way; Paying a million dollars a day - all year long doesn't begin to pay the INTEREST on this loan. Pay 1000 times that much each day ( $1,000,000,000) and it would pay all the interest each year plus a small amount of the debt IF WE DIDN'T BORROW MORE but it would take over 500 years to pay the debt off at that rate.

From my point of view we are already bankrupt - we just haven't quit borrowing yet and we probably won't until we file the bankruptcy papers.

 

[M14 Shooter]

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.

Exactly. Dishonest fearmongering, and nothing more.

 

[ReallyMeow]

We are talking about a debt that already owes more than 4,000,000,000,000 dollars to Social Security and more than 12,000,000,000,000 dollars to other countries.

No it doesnt.

As of July 2012, $5.3 trillion or approximately 48% of the debt held by the public was owned by foreign investors, the largest of which were China and Japan at just over $1.1 trillion each.

United States public debt - Wikipedia, the free encyclopedia

 

[PredFan]

What Happens If the Debt Ceiling Isn't Raised?

As the debt approaches the ceiling, Treasury can stop issuing Treasury notes, and borrow from some retirement funds (but not Social Security or Medicare). Normally, it can withdraw around $800 billion it keeps at the Federal Reserve bank.


Between 2008-2010, the Fed vastly increased the amount of Treasury notes it held, a policy known as Quantitative Easing. Congressman Ron Paul (R-Texas), Chair of the Fed Oversight Committee, has suggested that the Fed could forgive the $1.6 trillion in debt it owns.

This would postpone the need to raise the debt ceiling. BUSHCO economics put the country in a serious situation. One that no other president has been confronted with. This will require some quite creative economic steps therefore let's move forward.


Once the debt ceiling is reached, Treasury cannot auction new Treasury notes. It must rely on incoming revenue to pay ongoing Federal government expenses. This happened in 1996, and Treasury announced it could not send out Social Security checks.

Competing Federal regulations make it unclear how Treasury could decide which bills to pay, and which to delay. Owners of the debt would get concerned that they may not get paid.


If Treasury did actually default on its interest payments, three things would happen.

--- First, the federal government could no longer pay any its employees' salaries or benefits. All those receiving Social Security, Medicare, and Medicaid payments would go without. Federal buildings, and services, would close.

--- Second, the yields of Treasury notes sold on the secondary market would rise. This would create higher interest rates, increasing the cost of doing business and buying a home. This would slow economic growth.

--- Third, foreigners would dump their holdings. This would cause the dollar to plummet, probably removing its status as the world's reserve currency. The standard of living in America would decline. This would make it highly unlikely that the U.S. could ever repay its debt.

For all these reasons, Congress shouldn't monkey around with raising the debt ceiling. If members are concerned with government spending, they should get serious about adopting a more conservative fiscal policy long before the debt ceiling needs to be raised.

thanks, decent post if you ignore the anti-Bush nonsense.

 

[PaulS1950]

What is the debt in "public holdings" and it includes 48% of the debt that is owed to foreign governments?
The intra-governmental holdings include the debt to Socil Security.
Who is the "public" that holds the debt of the USA besides the foreign powers?

What happens to the government when they can't pay the interest on that $16,400,000,000,000 loan?

 

[Underhill]

What is the debt in "public holdings" and it includes 48% of the debt that is owed to foreign governments?
The intra-governmental holdings include the debt to Socil Security.
Who is the "public" that holds the debt of the USA besides the foreign powers?

What happens to the government when they can't pay the interest on that $16,400,000,000,000 loan?

Won't happen.

The government can literally pay off any amount of money at any time. It may not be healthy for our economy, but it can always pay. The real problem is the side affects of paying out all that money that they pull from their ass.

It hasn't proven to be much of a problem so far. But it could be if we continue on this path.