Debt Ceiling: Worst-Case Scenario

[Toro]

Fixed the link. Thanks.

No. I do not expect that sort of growth. Nevertheless, we will have the revenue needed to service the debt and major entitlements for the short term should we not raise the debt ceiling. The idea here is not to cover the entire budget year.

Look, it's unlikely, despite all the wrangling that the ceiling won't get raised before the 2nd, but if we don't (and I don't think we should), there will be enough revenue to pressure a more serious agreement, which includes real cuts and reforms, the sort that the Democrats have no intention of making. Not now, not ever! We should not raise taxes. Period. Spending is the problem, and that point needs to be driven home to the Democrats. The majority of the people, including 38% of Democrats, do not want the debt ceiling raised and they do not want an increase in taxes. The people are right. Washington had better listen.

Sure, we have enough cash to pay the interest as long as the cash coming in is enough to pay what we owe when it is due. THAT'S the issue. If we are to generate $2.6 trillion next fiscal year, we don't get $7.1 billion flowing into the Treasury smoothly each and every day. Some days we will get $20 billion and some days we will get $5 billion. On August 3, we will generate about half what we need to pay just SS alone, let alone everything else.

The other thing no one is talking about is what this will do to the economy. Every Macroeconomics 101 student has seen this equation.

GDP=C+I+G+NX.

G is government spending, and includes deficit spending. No more deficits means the government has to contract immediately. The deficit is about 10% of GDP. That means the economy will start contracting at about a 10% annualized rate. During the worst of the Financial Crisis, we contracted at a rate of 6.8%, at least over the quarter. That means we have to have somewhere else to pick up the slack? Consumption (C) is 70% of GDP, is it going to grow 10%? No. Is investment (I) - which is 15% of GDP - going to double next quarter to make up the difference? Of course not. Hey, maybe the dollar will absolutely collapse and we can quadruple our exports (NX)! We haven't had a 10% GDP growth since the 70s, and generally, the times when we have had double digit growth was bouncing hard after coming out of a deep recession. There isn't an economist on earth who thinks we can do that this year.

 

[hortysir]

I am begining to believe the republicans want us to go into a depression.

Misery loves company.

I've been depressed for 2 1/2 years

 

[Toro]

The US Federal Government's debt obligations make up 15% of it's annual revenues. That is a fact, and it is a fact that isn't being said often enough.

There is a reason all polls have shown that the American people are not buying anymore of this crisis fear-mongering. Everything since 2008 has been a crisis.

The fact is America will not default if the debt limit isn't raised. There are some honest politicians, sincere in their desire to cut spending, that have come out to speak the truth: The government can service the debt, social security, & military on it's current monthly budget.

Not giving into the debt limit will force the government to cut it or shut it.

The leftists on this board have blindly bought Timmy the tax cheat's threats of doom wholeheartedly. If social security checks aren't issued it will be because of Obama's willful budget decisions that it wasn't important enough, because revenues will still be coming in and that is a GD fact.

It is a lie, and all of this default fear-mongering needs to be corrected.

You know whose threats of doom and fear-mongering I believe? I believe the guys who run billion dollar bond funds when I talk to them. Those are the guys whom I believe. And there are lots of Republicans in that group.

But they don't think we'll default. They can't believe we'd be that stupid. But they also can't believe that we are going through this nonsense either.

Oh, I'm sure you are hobnobbing with the masters of the universe, and yes they want the debt ceiling raised too. Wall Street is all for it. The Goldman Sacs types have done well under this administration, I guess that is why they have donated so much.

What is nonsense is thinking it is okay to let politician spend $200 billion dollars more than the budget month after month.

Your side is losing this. Obama is on full speed, using class warfare, doom threats, and still 63% of American's side with the Republicans.

Will you riot when Obama loses in 2012?

Why would I riot? I'm doing fine thanks. Plus, I'm not on any side. I'm on the Sane Side, which you apparently aren't. I don't know who I'm going to support in 2012. I supported Rubio last year. Maybe I'll support President Romney. But you drink that kool-aid! I'll make money either way. Hope you'll be OK!

 

[cutter]

I am begining to believe the republicans want us to go into a depression.

Misery loves company.

I've been depressed for 2 1/2 years

Is it possible to spend our way out of a depression using credit? Or will it just make the depression worse? Spending our way out with credit just doesn't make sense to me. It;s kind of like trying to spend your way out of bankruptcy using credit.

 

[Ravi]

You know whose threats of doom and fear-mongering I believe? I believe the guys who run billion dollar bond funds when I talk to them. Those are the guys whom I believe. And there are lots of Republicans in that group.

But they don't think we'll default. They can't believe we'd be that stupid. But they also can't believe that we are going through this nonsense either.

They can't pick and choose who they pay, correct? So that means they pay the most pressing bills, and SS is not that pressing I'm guessing since it will trigger no lawsuits for defaulting.

Please enlighten me as to what these more pressing matters are?

Enlighten me as to how much of the record breaking $223 billion monthly deficit spending--let me stop here because I am convinced liberals on this board don't know what a deficit is:

def·i·cit –noun
1.
the amount by which a sum of money falls short of the required amount.
2.
the amount by which expenditures or liabilities exceed income or assets.
3.
a lack or shortage; deficiency.

How much of $223 billion over the damn budget is more pressing than social security.

If you are so far up Obama's ass that you actually believe this there isn't any point in trying.

Money that we owe.

 

[Google]

Fixed the link. Thanks.

No. I do not expect that sort of growth. Nevertheless, we will have the revenue needed to service the debt and major entitlements for the short term should we not raise the debt ceiling. The idea here is not to cover the entire budget year.

Look, it's unlikely, despite all the wrangling that the ceiling won't get raised before the 2nd, but if we don't (and I don't think we should), there will be enough revenue to pressure a more serious agreement, which includes real cuts and reforms, the sort that the Democrats have no intention of making. Not now, not ever! We should not raise taxes. Period. Spending is the problem, and that point needs to be driven home to the Democrats. The majority of the people, including 38% of Democrats, do not want the debt ceiling raised and they do not want an increase in taxes. The people are right. Washington had better listen.

Sure, we have enough cash to pay the interest as long as the cash coming in is enough to pay what we owe when it is due. THAT'S the issue. If we are to generate $2.6 trillion next fiscal year, we don't get $7.1 billion flowing into the Treasury smoothly each and every day. Some days we will get $20 billion and some days we will get $5 billion. On August 3, we will generate about half what we need to pay just SS alone, let alone everything else.

The other thing no one is talking about is what this will do to the economy. Every Macroeconomics 101 student has seen this equation.

GDP=C+I+G+NX.

G is government spending, and includes deficit spending. No more deficits means the government has to contract immediately. The deficit is about 10% of GDP. That means the economy will start contracting at about a 10% annualized rate. During the worst of the Financial Crisis, we contracted at a rate of 6.8%, at least over the quarter. That means we have to have somewhere else to pick up the slack? Consumption (C) is 70% of GDP, is it going to grow 10%? No. Is investment (I) - which is 15% of GDP - going to double next quarter to make up the difference? Of course not. Hey, maybe the dollar will absolutely collapse and we can quadruple our exports (NX)! We haven't had a 10% GDP growth since the 70s, and generally, the times when we have had double digit growth was bouncing hard after coming out of a deep recession. There isn't an economist on earth who thinks we can do that this year.

Yeah screw it you're right. Lets raise the debt limit and believe that the government will address the budget before we hit the debt ceiling once again. The public sector can not grow faster than the private sector, and hell you don't even have to take a macroeconomics to understand that.

You are demonstrating why the Republicans are, despite being rather mute, winning on this issue. Tell me if I am wrong in saying servicing the debt would take 15% of the government's revenue?

Default isn't the crisis, the coming crisis is what is going to happen very soon and will be hastened by raising the debt limit.

What happens when no one buys American Treasury bonds? When government growth outpaces economic growth, where it derives its revenues, it undermines the value of the currency and our T-bills. China has already dumped large amounts. The Federal Reserve is the only one talking about buying significant amounts. What happens when the government goes to auction those T-bills and they can't raise the revenue to account for the deficit spending passing the debt ceiling.

debt

–noun
1.
something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.
a liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.
the condition of being under such an obligation: His gambling losses put him deeply in debt.

ceil·ing

–noun
1.
the overhead interior surface of a room.
2.
the top limit imposed by law on the amount of money that can be charged or spent or the quantity of goods that can be produced or sold.

Those two words aren't a bad thing. What's the point in having a debt ceiling if the government isn't going to stop or even attempt to stop before it hits it?

 

[Toro]

Fixed the link. Thanks.

No. I do not expect that sort of growth. Nevertheless, we will have the revenue needed to service the debt and major entitlements for the short term should we not raise the debt ceiling. The idea here is not to cover the entire budget year.

Look, it's unlikely, despite all the wrangling that the ceiling won't get raised before the 2nd, but if we don't (and I don't think we should), there will be enough revenue to pressure a more serious agreement, which includes real cuts and reforms, the sort that the Democrats have no intention of making. Not now, not ever! We should not raise taxes. Period. Spending is the problem, and that point needs to be driven home to the Democrats. The majority of the people, including 38% of Democrats, do not want the debt ceiling raised and they do not want an increase in taxes. The people are right. Washington had better listen.

Sure, we have enough cash to pay the interest as long as the cash coming in is enough to pay what we owe when it is due. THAT'S the issue. If we are to generate $2.6 trillion next fiscal year, we don't get $7.1 billion flowing into the Treasury smoothly each and every day. Some days we will get $20 billion and some days we will get $5 billion. On August 3, we will generate about half what we need to pay just SS alone, let alone everything else.

The other thing no one is talking about is what this will do to the economy. Every Macroeconomics 101 student has seen this equation.

GDP=C+I+G+NX.

G is government spending, and includes deficit spending. No more deficits means the government has to contract immediately. The deficit is about 10% of GDP. That means the economy will start contracting at about a 10% annualized rate. During the worst of the Financial Crisis, we contracted at a rate of 6.8%, at least over the quarter. That means we have to have somewhere else to pick up the slack? Consumption (C) is 70% of GDP, is it going to grow 10%? No. Is investment (I) - which is 15% of GDP - going to double next quarter to make up the difference? Of course not. Hey, maybe the dollar will absolutely collapse and we can quadruple our exports (NX)! We haven't had a 10% GDP growth since the 70s, and generally, the times when we have had double digit growth was bouncing hard after coming out of a deep recession. There isn't an economist on earth who thinks we can do that this year.

Yeah screw it you're right. Lets raise the debt limit and believe that the government will address the budget before we hit the debt ceiling once again. The public sector can not grow faster than the private sector, and hell you don't even have to take a macroeconomics to understand that.

You are demonstrating why the Republicans are, despite being rather mute, winning on this issue. Tell me if I am wrong in saying servicing the debt would take 15% of the government's revenue?

Default isn't the crisis, the coming crisis is what is going to happen very soon and will be hastened by raising the debt limit.

What happens when no one buys American Treasury bonds? When government growth outpaces economic growth, where it derives its revenues, it undermines the value of the currency and our T-bills. China has already dumped large amounts. The Federal Reserve is the only one talking about buying significant amounts. What happens when the government goes to auction those T-bills and they can't raise the revenue to account for the deficit spending passing the debt ceiling.

debt

–noun
1.
something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.
a liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.
the condition of being under such an obligation: His gambling losses put him deeply in debt.

ceil·ing

–noun
1.
the overhead interior surface of a room.
2.
the top limit imposed by law on the amount of money that can be charged or spent or the quantity of goods that can be produced or sold.

Those two words aren't a bad thing. What's the point in having a debt ceiling if the government isn't going to stop or even attempt to stop before it hits it?

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

 

[Google]

They can't pick and choose who they pay, correct? So that means they pay the most pressing bills, and SS is not that pressing I'm guessing since it will trigger no lawsuits for defaulting.

Please enlighten me as to what these more pressing matters are?

Enlighten me as to how much of the record breaking $223 billion monthly deficit spending--let me stop here because I am convinced liberals on this board don't know what a deficit is:

def·i·cit –noun
1.
the amount by which a sum of money falls short of the required amount.
2.
the amount by which expenditures or liabilities exceed income or assets.
3.
a lack or shortage; deficiency.

How much of $223 billion over the damn budget is more pressing than social security.

If you are so far up Obama's ass that you actually believe this there isn't any point in trying.

Money that we owe.

Do you not fully read my posts before you respond? I have said a few times that servicing the US Federal government's debt obligations takes 15% of its annual revenues. Is that incorrect? If it is please correct me.

Taking that into account you are incorrect in stating that of the roughly $200 billion monthly the federal government spends over budget would not cause the sky to fall if cut. Nor would it cause the suing of the federal government. Who by the way is going to be taking litigation against the federal government again?

Do you understand where this magical-money, that you seem to believe the government can simply conjure up it with no repercussions, comes from?

 

[Google]

Sure, we have enough cash to pay the interest as long as the cash coming in is enough to pay what we owe when it is due. THAT'S the issue. If we are to generate $2.6 trillion next fiscal year, we don't get $7.1 billion flowing into the Treasury smoothly each and every day. Some days we will get $20 billion and some days we will get $5 billion. On August 3, we will generate about half what we need to pay just SS alone, let alone everything else.

The other thing no one is talking about is what this will do to the economy. Every Macroeconomics 101 student has seen this equation.

GDP=C+I+G+NX.

G is government spending, and includes deficit spending. No more deficits means the government has to contract immediately. The deficit is about 10% of GDP. That means the economy will start contracting at about a 10% annualized rate. During the worst of the Financial Crisis, we contracted at a rate of 6.8%, at least over the quarter. That means we have to have somewhere else to pick up the slack? Consumption (C) is 70% of GDP, is it going to grow 10%? No. Is investment (I) - which is 15% of GDP - going to double next quarter to make up the difference? Of course not. Hey, maybe the dollar will absolutely collapse and we can quadruple our exports (NX)! We haven't had a 10% GDP growth since the 70s, and generally, the times when we have had double digit growth was bouncing hard after coming out of a deep recession. There isn't an economist on earth who thinks we can do that this year.

Yeah screw it you're right. Lets raise the debt limit and believe that the government will address the budget before we hit the debt ceiling once again. The public sector can not grow faster than the private sector, and hell you don't even have to take a macroeconomics to understand that.

You are demonstrating why the Republicans are, despite being rather mute, winning on this issue. Tell me if I am wrong in saying servicing the debt would take 15% of the government's revenue?

Default isn't the crisis, the coming crisis is what is going to happen very soon and will be hastened by raising the debt limit.

What happens when no one buys American Treasury bonds? When government growth outpaces economic growth, where it derives its revenues, it undermines the value of the currency and our T-bills. China has already dumped large amounts. The Federal Reserve is the only one talking about buying significant amounts. What happens when the government goes to auction those T-bills and they can't raise the revenue to account for the deficit spending passing the debt ceiling.

debt

–noun
1.
something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.
a liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.
the condition of being under such an obligation: His gambling losses put him deeply in debt.

ceil·ing

–noun
1.
the overhead interior surface of a room.
2.
the top limit imposed by law on the amount of money that can be charged or spent or the quantity of goods that can be produced or sold.

Those two words aren't a bad thing. What's the point in having a debt ceiling if the government isn't going to stop or even attempt to stop before it hits it?

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

I am convinced that some people on this board work for the Obama administration, and that wouldn't surprise me at all.

Who are these guys you know that lend the US government crazy? How many bonds are they buying? And when they mature do they normally roll them over? What happens when they decide its not safe, because of inflation and unrestrained spending--the Democrats are out there saying we need another stimulus act and you think the budget will be addressed promptly after raising the debt limit--what happens when significant numbers do not roll them over and instead demand their money? Any idea?

What do those fat cats you hang out with think?

 

[NYcarbineer]

Just on the news, Moody's has put the US triple A bond rating under review.

 

[Google]

Sure, we have enough cash to pay the interest as long as the cash coming in is enough to pay what we owe when it is due. THAT'S the issue. If we are to generate $2.6 trillion next fiscal year, we don't get $7.1 billion flowing into the Treasury smoothly each and every day. Some days we will get $20 billion and some days we will get $5 billion. On August 3, we will generate about half what we need to pay just SS alone, let alone everything else.

The other thing no one is talking about is what this will do to the economy. Every Macroeconomics 101 student has seen this equation.

GDP=C+I+G+NX.

G is government spending, and includes deficit spending. No more deficits means the government has to contract immediately. The deficit is about 10% of GDP. That means the economy will start contracting at about a 10% annualized rate. During the worst of the Financial Crisis, we contracted at a rate of 6.8%, at least over the quarter. That means we have to have somewhere else to pick up the slack? Consumption (C) is 70% of GDP, is it going to grow 10%? No. Is investment (I) - which is 15% of GDP - going to double next quarter to make up the difference? Of course not. Hey, maybe the dollar will absolutely collapse and we can quadruple our exports (NX)! We haven't had a 10% GDP growth since the 70s, and generally, the times when we have had double digit growth was bouncing hard after coming out of a deep recession. There isn't an economist on earth who thinks we can do that this year.

Yeah screw it you're right. Lets raise the debt limit and believe that the government will address the budget before we hit the debt ceiling once again. The public sector can not grow faster than the private sector, and hell you don't even have to take a macroeconomics to understand that.

You are demonstrating why the Republicans are, despite being rather mute, winning on this issue. Tell me if I am wrong in saying servicing the debt would take 15% of the government's revenue?

Default isn't the crisis, the coming crisis is what is going to happen very soon and will be hastened by raising the debt limit.

What happens when no one buys American Treasury bonds? When government growth outpaces economic growth, where it derives its revenues, it undermines the value of the currency and our T-bills. China has already dumped large amounts. The Federal Reserve is the only one talking about buying significant amounts. What happens when the government goes to auction those T-bills and they can't raise the revenue to account for the deficit spending passing the debt ceiling.

debt

–noun
1.
something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.
a liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.
the condition of being under such an obligation: His gambling losses put him deeply in debt.

ceil·ing

–noun
1.
the overhead interior surface of a room.
2.
the top limit imposed by law on the amount of money that can be charged or spent or the quantity of goods that can be produced or sold.

Those two words aren't a bad thing. What's the point in having a debt ceiling if the government isn't going to stop or even attempt to stop before it hits it?

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

Listen Wall Street is already in the Obama camp. You and Gordon Geko can vote for whomever you'd like.

Have you noticed that I have not tried to invoke the thoughts or feelings of supposed people to try and prove a point?

You have yet to explain to me why default is an unavoidable consequence to not raising the debt limit.

 

[Google]

Just on the news, Moody's has put the US triple A bond rating under review.

I'm sick of this argument that not raising the debt limit is doing something to threaten the country's credit rating.

Think about it: Greece's debt, spread evenly to ever family, would be a burden of $40,000. Here in America it would be $45,000, and the left and Obama want us to believe that not increasing that number to $50,000 would hurt the country's credit yeah right. 63% of Americans, over 50% on all polls, the plurality of America is against this president.

The country gets this mythical, magical money from T-bill holders and there aren't that many out there anymore.

 

[Richard-H]

Yeah screw it you're right. Lets raise the debt limit and believe that the government will address the budget before we hit the debt ceiling once again. The public sector can not grow faster than the private sector, and hell you don't even have to take a macroeconomics to understand that.

You are demonstrating why the Republicans are, despite being rather mute, winning on this issue. Tell me if I am wrong in saying servicing the debt would take 15% of the government's revenue?

Default isn't the crisis, the coming crisis is what is going to happen very soon and will be hastened by raising the debt limit.

What happens when no one buys American Treasury bonds? When government growth outpaces economic growth, where it derives its revenues, it undermines the value of the currency and our T-bills. China has already dumped large amounts. The Federal Reserve is the only one talking about buying significant amounts. What happens when the government goes to auction those T-bills and they can't raise the revenue to account for the deficit spending passing the debt ceiling.

debt

–noun
1.
something that is owed or that one is bound to pay to or perform for another: a debt of $50.
2.
a liability or obligation to pay or render something: My debt to her for advice is not to be discharged easily.
3.
the condition of being under such an obligation: His gambling losses put him deeply in debt.

ceil·ing

–noun
1.
the overhead interior surface of a room.
2.
the top limit imposed by law on the amount of money that can be charged or spent or the quantity of goods that can be produced or sold.

Those two words aren't a bad thing. What's the point in having a debt ceiling if the government isn't going to stop or even attempt to stop before it hits it?

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

Listen Wall Street is already in the Obama camp. You and Gordon Geko can vote for whomever you'd like.

Have you noticed that I have not tried to invoke the thoughts or feelings of supposed people to try and prove a point?

You have yet to explain to me why default is an unavoidable consequence to not raising the debt limit.

First, if you believe that Wall St. is now or ever has been pro-democrat, you know absolutely nothing about Wall St. Wall St. is as Republican as Republican gets.

Second, if you have to ask why not raising the debt ceiling will cause a default, then you know nothing about what the debt celing is and/or what a default is.

Why don't you lay off of politics and go watch Oprah or American idol or something. They seem to be more on your level.

 

[martybegan]

From the article:



We wouldn't default on the debt unless Obama ordered the Treasury Dept. not to pay on it.

Also see: Debt Outlook Stark

First, your link isn't the link to the article you posted. That article in the link was to me by email. I know Malpass. He came to my office when he was at Bear.

The problem with that analysis is that it is based on forecasted growth of, if I recall correctly, 3.5%. Maybe that will happen, maybe it won't. That forecast expects a surge in economic growth. Are you expecting that? Fiscal year 2011 is expected to have revenues of approximately $2.2 trillion, so tax revenues are forecasted to grow 15%-20%. Really? You think so? Total spending this year is expected to be $3.8 trillion. The forecast is for it to drop. That may happen if we get strong economic growth. But what if we get 2.5%? I doubt tax revenues will grow that much. This fiscal year, we are expected to pay out approximately $800 billion each in defense, Medicare and Medicaid and SS. Interest costs are expected to be $200 billion. That's $2.6 trillion in spending right there. Assuming growth is low, we are going to have lop off $400 billion from one of those three from somewhere, assuming we pay all our interest payments.

But you didn't answer my question. I'm not talking annual numbers. I'm talking right here, right now. We have a $23 billion SS payment due on August 3. Total tax revenues on August 3 are expected to be $12 billion. Where will the money come from? Also, given that we expect $170 billion to come in during August and expect to spend $300 billion, we are going to be getting $80-$90 billion in tax revenues in the first half of the month. We know that on August 15, we have to pay $56 billion in interest and principle payments. We also have four Treasury refundings scheduled between Aug 3 and Aug 15. The last two fundings on August 11 were for $33 billion. What are the funding amounts for the four fundings, and what are our cash inflows for those dates?

See, I have no idea. If we have $56 billion due on August 15 and have to pay out $23 billion in SS on Aug 3, that's $79 billion. Our tax revenues may be $80 billion in total, that is assuming the economy doesn't fall off a cliff in the first half of Aug. How do you know that we won't default during that time? I don't know. A default is when you don't pay your interest payments on time. It could be that there is a mistiming of inflows and outflows which causes a default.

IOW how can you be so sure we won't default? Maybe we will be fine, I don't know. But the point is, I don't know. How do you know?

I met with a 20-year veteran Wall Street bond investor this morning. He told me that we won't default. He didn't tell me why, other than that the Treasury has ways of moving around money to meet payments. Maybe he's right. I hope so, because a default might be catastrophic. And no, that's not scare-mongering.

The Social Security Trust Fund has 2.4trillion in IOUs from the federal government that the gov. borrowed over the last 30 or so years when Social Security had a surplus. How about we just cash in those IOUs( they are in the form of treasury bonds I believe) and SS is fine. How long will 2.4trillion fund SS? A while I think.

And just where does the money to pay back those bonds come from? Guess?

Answer: The federal budget.

 

[Richard-H]

Once again I'd like to point out that Repugs couldn't give a damn about the government debt when there's a Repug in the White House, but as soon as there's a Dem in the White House they pitch fits.

To the Repugs this is all about politics and control - America be damned!

 

[Google]

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

Listen Wall Street is already in the Obama camp. You and Gordon Geko can vote for whomever you'd like.

Have you noticed that I have not tried to invoke the thoughts or feelings of supposed people to try and prove a point?

You have yet to explain to me why default is an unavoidable consequence to not raising the debt limit.

First, if you believe that Wall St. is now or ever has been pro-democrat, you know absolutely nothing about Wall St. Wall St. is as Republican as Republican gets.

Second, if you have to ask why not raising the debt ceiling will cause a default, then you know nothing about what the debt celing is and/or what a default is.

Why don't you lay off of politics and go watch Oprah or American idol or something. They seem to be more on your level.

I suppose it doesn't surprise me you don't know how close the Obama administration is with Wall Street. Who else but Goldman Sacs has managed to benefit and flourish in these bleak economic times, like fungus on shit.

You have this idea that has been propagated through popular media that it is the Republicans that pal around with Gordon Geko--let's use him for a representation of Goldman Sacs types.

"Goldman Sachs partner Gary Gensler is Obama’s Commodity Futures Trading Commission head. He was confirmed despite heated congressional grilling over his role, as Reuters described it, “as a high-level Treasury official in a 2000 law that exempted the $58 trillion credit default swap market from oversight. The financial instruments have been blamed for amplifying global financial turmoil.” Gensler said he was sorry — hey, it worked for tax cheat Treasury Secretary Tim Geithner — and was quickly installed to guard the henhouse."

"oldman Sachs kept White House Chief of Staff Rahm Emanuel on a $3,000 monthly retainer while he worked as Clinton’s chief fundraiser, as first reported by Washington Examiner columnist Tim Carney. The financial titans threw in another $50,000 to become the Clinton primary campaign’s top funder. Emanuel received nearly $80,000 in cash from Goldman Sachs during his four terms in Congress — investments that have reaped untold rewards, as Emanuel assumed a leading role championing the trillion-dollar TARP banking bailout law."

"Former Goldman Sachs lobbyist Mark Patterson serves under Geithner as his top deputy and overseer of TARP bailout — $10 billion of which went to Goldman Sachs. Left-leaning government watchdog Melanie Sloan of the Citizens for Responsibility and Ethics in Washington responded: “It makes it appear that they are saying one thing and doing another.” Paul Blumenthal of the Sunlight Foundation noted that, while at Goldman Sachs, Patterson lobbied against executive pay limits that Obama had crusaded for as senator (before, that is, his administration carved out exemptions for AIG). While Patterson agreed to recuse himself on any Goldman Sachs-related issues or related policy concerns, Blumenthal wrote, it “still creates a serious conflict for Geithner, as Treasury is being partly managed by a former Goldman lobbyist. Geithner is also placed in a tough position considering that his chief of staff is limited in the areas in which he can work (supposedly).”

" Obama’s close hometown crony, campaign finance chief and senior adviser Penny Pritzker was head of Superior Bank of Chicago, a subprime specialist that went bust in 2001, leaving more than 1,400 people stripped of their savings after bank officials falsified profit reports. Pritzker’s lawyer at O’Melveny and Myers, Tom Donilon, is now Obama’s deputy national security adviser. He earned just shy of $4 million representing her and other high-profile meltdown clients including Goldman Sachs."

 

[Google]

Once again I'd like to point out that Repugs couldn't give a damn about the government debt when there's a Repug in the White House, but as soon as there's a Dem in the White House they pitch fits.

To the Repugs this is all about politics and control - America be damned!

Are you high?

 

[Google]

I agree that we have to do something about the budget deficit. Doing something about it in this way is absolutely fucking insane. Its like playing Russian Roulette with five loaded chambers.

We ran surpluses in the 90s and we didn't go through this bullshit. Nor were we living through the aftermath of two massive asset bubble collapses. To say this is the only way to deal with the deficit is utterly crazy. And the people whom I know who buy Treasury bonds in size - the guys who lend to the US government - think its crazy too. I've had Republicans in the investment business tell me that if the debt ceiling doesn't get done, they won't vote Republican again.

Listen Wall Street is already in the Obama camp. You and Gordon Geko can vote for whomever you'd like.

Have you noticed that I have not tried to invoke the thoughts or feelings of supposed people to try and prove a point?

You have yet to explain to me why default is an unavoidable consequence to not raising the debt limit.

First, if you believe that Wall St. is now or ever has been pro-democrat, you know absolutely nothing about Wall St. Wall St. is as Republican as Republican gets.

Second, if you have to ask why not raising the debt ceiling will cause a default, then you know nothing about what the debt celing is and/or what a default is.

Why don't you lay off of politics and go watch Oprah or American idol or something. They seem to be more on your level.

That is your response? Surely you can do better than that.

Please enlighten me as to why default is a unavoidable? Show me that incredible hippie insight. To service the annual debt obligations it would require 15% of annual revenues.

Enlighten me as to how much of the record breaking $223 billion monthly deficit spending--let me stop here because you are obviously impaired:

def·i·cit –noun
1.
the amount by which a sum of money falls short of the required amount.
2.
the amount by which expenditures or liabilities exceed income or assets.
3.
a lack or shortage; deficiency.

Break it down for me, because that response was lame.

 

[Lars]

If Obama did as the article suggests, he'd be pilloried from pillar to post and run out of town. Ain't happening, IMHO the real worst case if the debt ceiling is not raised is the effect it would have on our economy and around the world. Even if the US Gov't continues to pay the interest on it's debt, the fact that we could not find a way to raise the ceiling could be a serious blow. Look at how many more people, public AND private, would lose their jobs. I would say a double dip recession or even a depression could occur, or at least a risk thereof.

He's already fired a shot across the bow trying to put all the blame on the House:

Taxes, Social Security fears cited in debt ceiling talks - CNN.com

He's going for the "scare old people" tactic that democrats use so well.

The only one who has the power to stop social security checks from going out is Obama. He can either send the old their checks or leave them hanging and give the money to finance the expanding federal bureaucracy.

 

[mudwhistle]

Once again I'd like to point out that Repugs couldn't give a damn about the government debt when there's a Repug in the White House, but as soon as there's a Dem in the White House they pitch fits.

To the Repugs this is all about politics and control - America be damned!

Obama just said yesterday everyone on Social Security be damned.