This Whole Debt Limit Thing

[mhaze]

That's not how it works. The debt limit has to be raised. ....

No, it does not have to be raised. I can see how some people would think it is nice to keep the party going. I can see that.

I like parties.

Your logic leads to an inescapable point of no return in one to three years, where the US cannot pay even the interest on it's debt, and must actually default.

My logic pays the interest on the debt, requires the government to operate on 60% of the money it has been spending, eg, the actual amount that it has. My logic provides the only way out of the fiscal trap.

Yours leads to disaster.

But yours does keep the party going. Hey who knows, maybe near the end of the party we could have another war or something. That'd fool all those stupid ordinary people.

Would it?

 

[BenBurch]

No, it does not have to be raised. I can see how some people would think it is nice to keep the party going. I can see that.

I like parties.

<SNIP>

Yes, it does HAVE to be raised.

Unless you are the sort of person who thinks it is OK to not pay bills?

We have obligations.

Now, you can argue about whether we ought to tax as little as we do while spending as much as we do, and you certainly should, but this insane plan to default on the debt doesn't even bear up to the most trivial consideration.

 

[icerat]

Your logic leads to an inescapable point of no return in one to three years, where the US cannot pay even the interest on it's debt, and must actually default.

And your logic is getting lost in it's own logic.

Failing to pay debt, including interest on debt, will inevitably result in that interest being increased, thus increasing the debt.

The debt limit needs to be raised to cover those obligations

Now that doesn't mean steps don't have to be taken to fix things, but when you've got nothing but bad choices you have to choose the least bad one.

Pretty obviously that includes increasing revenues, but for some reason the supposed traditional party of business now believes ledgers only have one column where improvements can be made.

 

[BobTheDonkey]

So, latest is news is that some bipartisan "gang of six" has come up with "a plan" that Obama is endorsing.

Sometimes I just don't get american politics -

At the Capitol, the bipartisan group led by Republican Senator Saxby Chambliss of Georgia and Senator Mark Warner of Virginia pitched its plan for an immediate $500 billion in spending cuts followed by a longer-term effort to force bigger reductions and $1 trillion in tax increases. The plan would lower tax rates and limit the growth of entitlement programs such as Medicare and Social Security.

So they're going to lower tax rates and get a trillion more in increased tax ....

color me skeptical.

Yeah, because that's worked out so well before...

ETA: Read a bit more about the Gang of Six plan...apparently it reduces some tax breaks (increases taxes some areas) while decreasing the top personal income tax rate from 35% to 29% (or 28%?). Seems plausible, but it really depends on what tax breaks are eliminated. What I'd really like to see is where the cuts are actually coming from (how they're being set up). Sure, cutting 500B from Medicare/Medicaid is doable...but what services are being cut, exactly? And how much of the savings is coming from cuts in defense contracts?

ETA2: The downside I can see to eliminating breaks while decreasing top tax rate is the question of what breaks are eliminated. Depending on the breaks eliminated, the lower tax brackets may see a rise in taxes that accounts for the increased revenue while those in the upper tax bracket don't really even feel a sting.

 

[BobTheDonkey]

After reading a bit more about what tax breaks are being removed...

I can't say I'm too fond of the proposed deal. It lowers tax rates on the wealthy while raising them on everyone. Pass the buck down to the middle class taxpayer.

I don't see where this is a fair trade off. Higher income families pay less in taxes, middle class families pay more. I'd much prefer to see the top income tax rates stay where they are and remove the tax breaks... Not sure why the upper tax bracket had to be reduced to increase taxes for everyone...

 

[leftysergeant]

No, it does not have to be raised. I can see how some people would think it is nice to keep the party going. I can see that.

I like parties.

Your logic leads to an inescapable point of no return in one to three years, where the US cannot pay even the interest on it's debt, and must actually default.

Why? The money is there. The Republicons just gave it all to themselves and their friends.

We get a quick fix so that we do not have to default. The next election is centered on what the greed heads tried to do to real people at the behest of the corporations that own their deformed little souls.

Big Democratic landslide. Taxes go back to what they should have been all along and we get to the business of fixing what that moron from California did to us thirty-odd years ago.

But yours does keep the party going. Hey who knows, maybe near the end of the party we could have another war or something. That'd fool all those stupid ordinary people.

Wars cost money. They do not make money unless your country is into outright piracy.

Better to just make the bankster thugs pay back what they swindled working people out of.

 

[HoverBoarder]

After reading a bit more about what tax breaks are being removed...

I can't say I'm too fond of the proposed deal. It lowers tax rates on the wealthy while raising them on everyone. Pass the buck down to the middle class taxpayer.

I don't see where this is a fair trade off. Higher income families pay less in taxes, middle class families pay more. I'd much prefer to see the top income tax rates stay where they are and remove the tax breaks... Not sure why the upper tax bracket had to be reduced to increase taxes for everyone...

I REALLY hope we are not going to be dumb enough to do that.

 

[Magyar]

Exactly.

If you are living beyond your means, charging stuff to credit cards beyond what your income will support, eventually, you'll run up to the limit of your credit cards, and you'll have no choice but to bring your spending down to what your income will support.

EXACTLY and therefore ONLY a class warefare, let me get mine and screw everyone else republican could say with a straight face that at a time like this THEY should be able to keep the tax cuts that got passed in the forst place as TEMPORARY should be extended for them at the expense of people who are making decisions between food and medicine on a daily basis.


Come back when you can muster just a weee bit of integrity

 

[BeAChooser]

Now here's a spot on analysis of the Debt Limit Thing.

http://newmediajournal.us/indx.php/item/2310

If Debt Is the Enemy Then There Are Traitors Among Us

… snip …

July 22, 2011

The so-called “debt ceiling default crisis” continues to loom, with enough Progressive-Leftist demagoguery in the air to choke a horse, or, in this case, kill an economy. I roll my eyes at the term “debt ceiling default crisis” because the honest man – an increasingly rare species in federal government – understands that there can only be a crisis should President Obama choose to create one. … snip …

According to the Daily Treasury Statements, approximately sixty percent of every dollar gleaned by the US government comes to it in the form of revenue generated by taxes. This amounts to roughly $200 billion a month. Given that the debt interest due per month is approximately $29 billion, even a third grader from an under-achieving inner-city Atlanta public school can deduce that there is absolutely no possibility of the United States defaulting on its debt interest payments. The “debt ceiling default crisis” is not so much; it is a ruse, a canard, a fallacy…it is a lie.

I think that's clear enough. And why, he spells it out:

Doing some simple math – again, at a level understood by an Atlanta public school third grader – we subtract $29 billion from $200 billion to find that we have $171 billion a month left over with which to pay off other debts, liabilities and operational costs incurred by the federal government.

Now, according to the Bipartisan Policy Center, during any given month, Social Security outlays equal approximately $49.2 billion, and Medicare and Medicaid payments total about $50 billion. Subtracted from the $171 billion remaining after payment on debt interest, that leaves the federal government, each month, with $71.8 billion left to spend.

So, if the government employs a prioritized debt payment schedule – which, pathetically and due completely to political opportunism, they do not – there should be absolutely no chance of the federal government defaulting on debt interest payments, Social Security payments or Medicare and Medicaid payments. With this understood we can safely declare that a fiscally responsible administration would have no reason – other than political gain – to deny seniors and Social Security recipients their payments.

That's clear thinking, too. And so is this:

The federally elected spendthrifts can pay $2.9 billion in active military salaries and another $2.9 billion for Veteran’s Affairs and still have $66 billion on hand. From there they can pick any number of liabilities to fund: IRS refunds, food stamps and welfare, unemployment benefits, the Department of Education, the EPA, etc.

So, with this sourced and understood as fact, not only is there no possible way for the United States government to default on its debt interest payments, it would be impossible – but for politically motivated action initiated by President Obama himself – not to be able to pay Social Security, Medicare and Medicaid payments.

And then he identifies the REAL problem:

All of this is contingent on the federal government prioritizing their expenditures. The key word here is “prioritizing,” something that, as I stated earlier, the political class in Washington does not want to do.

 

[Cobalt]

And your solution? None. I've not heard anything from the "Right" that could even have a prayer of undoing the damage you guys caused.

And here's the fundamental problem with politics today. It appears nobody gives a flying **** about the country as long as you can blame the other guy.

Get over it, maybe even learn to work together! Baby steps.

 

[Kestrel]

And here's the fundamental problem with politics today. It appears nobody gives a flying **** about the country as long as you can blame the other guy.

Get over it, maybe even learn to work together! Baby steps.

The Speaker of the House stormed out of the meetings. It's hard to work together when someone takes his ball and goes home.

 

[Darth Rotor]

This thread is a fine example of an old JREF axiom:

The politics forum - where skepticism goes to die.

 

[Nosi]

This thread is a fine example of an old JREF axiom:

The politics forum - where skepticism goes to die.

Politics, the land of 10% educated opinion and 90% raw emotion and .

This is the case among the governed and the governing. All trotting about the outhouse like foxes.

 

[BenBurch]

This thread is a fine example of an old JREF axiom:

The politics forum - where skepticism goes to die.

Amen.

 

[Drysdale]

The Speaker of the House stormed out of the meetings. It's hard to work together when someone takes his ball and goes home.

I have a vague memory of Obama doing that before also I think.

 

[Bri]

Now here's a spot on analysis of the Debt Limit Thing.

http://newmediajournal.us/indx.php/item/2310

From your source:

Given that the debt interest due per month is approximately $29 billion, even a third grader from an under-achieving inner-city Atlanta public school can deduce that there is absolutely no possibility of the United States defaulting on its debt interest payments. The “debt ceiling default crisis” is not so much; it is a ruse, a canard, a fallacy…it is a lie.​

That seems to be a straw man. The "debt ceiling default crisis" isn't just about the United Stated defaulting on its debt interest payments. There are many other obligations besides debt interest, Social Security, Medicare, and Medicaid. If the debt ceiling isn't raised, the United States will very likely default on some of its obligations, which would almost certainly have negative consequences on its credit rating.

-Bri

 

[BeAChooser]

obligations

Define obligations?

I can list a whole lot of things the government does that aren't "obligations".

Not according to the US Constitution and the various State Constitutions.

 

[Bri]

Define obligations?

I can list a whole lot of things the government does that aren't "obligations".

Not according to the US Constitution and the various State Constitutions.

The spending mentioned in the article is less than half the total spending.

The article you cited conveniently ignores mandatory programs including federal civilian and military retirement benefits, food stamps, unemployment compensation and veterans benefits. It also ignores non-security discretionary spending including food and drug safety and air traffic control. And it ignores military and homeland security spending.

In order to avoid default in the categories mentioned in your article, we would very likely have to default elsewhere.

-Bri

 

[BobTheDonkey]

The spending mentioned in the article is less than half the total spending.

The article you cited conveniently ignores mandatory programs including federal civilian and military retirement benefits, food stamps, unemployment compensation and veterans benefits. It also ignores non-security discretionary spending including food and drug safety and air traffic control. And it ignores military and homeland security spending.

In order to avoid default in the categories mentioned in your article, we would very likely have to default elsewhere.

-Bri

I do believe BaC is going to argue that those are not Constitutional obligations.

I, of course, disagree. I do believe they fall under the designation of "Common Defense" and "General Welfare".

 

[Bri]

I do believe BaC is going to argue that those are not Constitutional obligations.

I, of course, disagree. I do believe they fall under the designation of "Common Defense" and "General Welfare".

Whether or not they are Constitutional obligations is irrelevant. Not paying any obligation is default, and would very likely lower our credit rating. That's what "debt ceiling default crisis" means.

-Bri