Random thoughts about the debt ceiling debate

Sadie suggested we discuss the debt ceiling.  I’m no expert and haven’t followed the matter that closely, but I have some random thoughts to get the conversation started.

1.  The budget is like a patient in need of a life-saving operation.  Those on the far right argue against raising the debt ceiling at all.  This is like saying, okay, you can have the operation, but without anesthesia, and you have to get off the operating table, walk out of the hospital and immediately resume your job.  Those on the far left argue for eliminating the ceiling completely or raising it very easily.  This is like saying don’t bother to have the operation at all, just increase your meds and hang around here in the hospital and see how it goes.  Maybe you miraculously will get better on your own.  The patient really does need the operation.  But it also needs time and a recovery plan.

2.  People most often vote their pocketbooks.  (Zach takes this as a racist statement when made about blacks, but that’s nonsense.  Most people vote their pocketbooks, and no group more so than the one I’m about to join — retirees.  That’s what makes the problem so difficult to solve.)  Democrats, and quite often Republicans, have very simply bought votes with debts our children will have to pay.  Actually moving toward balancing the budget means demanding that the politicians quit buying votes and the people receiving the payments to accept reducing or eliminating them for the good of the country.  It’s like asking a vulture to become a vegetarian.

3.  We are being told that if the debt ceiling is not raised the government will not be able to pay half of its bills.   Really?  The government is paying out two dollars for every one it takes in?  The immorality of this leaves me speechless.  Any Republican who voted for this madness should be kicked out of the party.

4.  The other day, Obama told the Congress to go find a solution and come back to him when it had one.  This ideally positions Obama to take credit if a solution is found and to place blame squarely on Congress if it is not.  Obama is more clever than we give him credit for.

5.  No one seems to have a politically feasible solution to the problem.  I know I don’t.  Do you?

UPDATE:  You might be interested in this very short, but effective, comment on the problem: http://biggovernment.com/dmitchell/2011/07/16/mr-president-heres-that-balanced-approach-you-keep-demanding/.

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Comments

  1. says

    Charles Martel: You’ll that the poll does not define “significant, which undercuts the power of this link as an answer to my question. 

    Your question concerned the meaning of “most Americans” and “a certain level of services”. Perhaps you’re quibbling over “certain level,” but it’s apparent Americans want a social safety net, especially for the elderly, diabled and for children. That costs money, and having decided on having that social safety net, they need to gather the taxes necessary to support such programs.

    Charles Martel: Perhaps you could provide us wqith some examples of the services (versus entitlements) that the Federal Government provides that we just can’t get along without? 

    Many Americans support food and drug inspections, the military, homeland security, environmental protection, guaranteed home, student and small business loans, the FBI, federal prisons, museums, national parks, unemployment insurance, child healthcare, scientific investment, etc.

  2. Charles Martel says

    Zach, thank you. I love it when you create lists that are supposed to overwhelm us as definitive answers to specific questions. Since your evasiveness here is now a tradition, I’ll be more specific:

    —Why did you change your language from “most Americans” to “many Americans?”

    —I notice that you avoided addressing the departments of Educaton and Energy. Why is that?

    —Please tell us how the EPA provides “environmental protections” to Americans when most of its actions seem designed to throttle economic activity.

    —Why should the government guarantee any loans for home purchases, college or small business? You are aware, of course, that the “government” is us, and that if said lendees default, we pay for it? (Yes, yes, I know you’re not a Yank, so don’t care.) Why should any of us here pay for some kids to party for four years, or for unqualified buyers to live in houses that are beyond their means? (Also, you might note that the current “surplus” of houses over would-be buyers has reached 2.5 million properties. Remind us why somebody would need a guranteed loan in a buyers’ market?)

    —Unemployment insurance. . . hmmmm. Is that part of the vaunted Keynesian stimulus? Or part of the huge rise in federal expenditures that you assure us is not happening? How long should we pay people who aren’t working with money that doesn’t exist? Another year? Up till the 2012 election? Surely you can link to a URL that will give us an answer? 

  3. SADIE says

    “the Democrats in Congress made a doozy of a miscalculation”
     
    One more time:  THE DEMOCRATS IN CONGRESS MADE A DOOZY OF A MISCALCULATION.






     
     

  4. says

     

    Charles Martel—Why did you change your language from “most Americans” to “many Americans?”

    Because exact polling may not be available for each of the programs. However, there was sufficient support so as to enact the programs. 
     
    Charles Martel—I notice that you avoided addressing the departments of Educaton and Energy. Why is that?

    Energy and Education are important national concerns, and many Americans support some sort of national investment. 
     
    Charles Martel:  —Please tell us how the EPA provides “environmental protections” to Americans when most of its actions seem designed to throttle economic activity.

    There is usually an economic trade-off, which is one of the parameters the EPA considers. It is quite possible to have economic growth while minimizing pollution, and the American public supports such efforts. 
    http://coyotegulch.wordpress.com/2011/02/25/colorado-college-releases-conservation-in-the-west-survey-westerners-favor-environmental-protection/

    Charles Martel—Why should the government guarantee any loans for home purchases, college or small business? 

    Apparently because the Americans think it helps people and develops their economy. Guaranteed loans, such as FHA, date to the 1930’s. The GI Bill, which provides home and student loan guarantees is credited by economists with the growth of the American middle-class during the post-WWII period. 
     
    Charles MartelWhy should any of us here pay for some kids to party for four years, or for unqualified buyers to live in houses that are beyond their means?

    If they are unqualified, they shouldn’t be lent money. Most government loan programs have always been full-doc loans, by the way. 
     
    Charles Martel—Unemployment insurance. . . hmmmm. Is that part of the vaunted Keynesian stimulus? Or part of the huge rise in federal expenditures that you assure us is not happening? 
     
    Still confused, we see. Federal expenditures have risen, including due to fiscal stimulus. The stimulus is temporary, but there is still a long-term structural deficit. 

     

  5. Charles Martel says

    Zach, thank you for demonstrating the classic display of evasiveness I was hoping my questions would evoke. I’m sure all those unseen readers you are so certain are being persuaded by it will now start dropping in to lend their support to you.

  6. Danny Lemieux says

    Zach: “Your question concerned the meaning of “most Americans” and “a certain level of services”. Perhaps you’re quibbling over “certain level,” but it’s apparent Americans want a social safety net, especially for the elderly, diabled and for children. That costs money, and having decided on having that social safety net, they need to gather the taxes necessary to support such programs.”

    Silly people, all of us…we just don’t get it. Here, let me try to provide an example:

    Recent Poll: A recent survey indicates that many Americans who cut themselves want ready access to bandages.

    Zach: this is definitive proof that Americans want Obamacare.

    Charles Martel: —I notice that you avoided addressing the departments of Education and Energy. Why is that?
    Zach: Energy and Education are important national concerns, and many Americans support some sort of national investment. 

    Charles Martel: I noticed that many people like dogs while others like cats. 

    Zach: It is quite clear that 97% of all Americans (a consensus!) support government funded pet adoption programs managed through the Federal Dept. of Companion Animal Housing & Urban Development. 

  7. SADIE says

    Henny Youngman had style – at least it made me laugh.
     
    A man goes to a psychiatrist. “Nobody listens to me!” The doctor says, “Next!”

  8. says

    Recent Poll: A recent survey indicates that many Americans who cut themselves want ready access to bandages.
      
    Zachrielthis is definitive proof that Americans want Obamacare.

    In fact, that or the other example wouldn’t follow. There may be many solutions for ready access to bandages or pet adoption. In the case of Social Security and Medicare, polls show support for the specific programs and goals. 

     
     

  9. jj says

    Don – a fast – fast-fast-fast – overview – the tractor’s outside idling and I have hay to mow.  (And a very good cigar to smoke while doing it.)
     
    Concepts first: Obama loves to blur these things, and they don’t blur.  Unless you’re a democrat, a member of the media, or an idiot.  Fill in your own Mark Twain quote.  Raising the debt ceiling is about taking on more debt.  What “default” means is not being able to pay off existing debt.  These are two entirely different and unrelated concepts.  The federal government has more than enough revenue coming in every month to pay interest.  As long as we run a deficit, however, that revenue can’t be used to pay down principal.  So we roll it over, selling new bonds to pay off old bonds.  As long as we stay current with the interest on our old debt,and as long as rates remain about where they are, (so we can afford them), default is not a problem.  We are paying the interest, which will keep the debt rolling, replacing old bonds with new ones.  There is no issue, absolutely none, with default.
     
    The problem, insofar as there is one, comes in when you take on new debt.
     
    The media, which knows somewhat less than Obama himself does, creates, either deliberately or through its abundant supply of ignorance, a gigantic lie when it talks about “paying the bills,” and conflates things like Soc-Sec payments with interest on the debt.  Obama does this to terrify the oldsters – but they are, again: two different things.  And by the way, the supreme court has long since shot down the idea that government benefits, even the so-called “entitlements” (love that word) represent contractual obligations.  (They did so in Flemming v. Nestor, 363 US 603 (1960)).  So that stuff could be blown right off, and that would be just tough.  Though Obama will not ever do that – nor will anyone else.  Roosevelt carved that crap into stone, and there it stays.
     
    The December date is somewhat arbitrary, it originates with Doug Holtz-Eakin, former CBO boss, who posits that the payments can be juggled, until about the end of the year, when real decisions will have to be made.  But from the word “go,” default or not default is, as I said, wholly Obama’s own decision.  It is not automatic or inevitable without raising the debt ceiling, and August 2nd as a date means little.  If anything.  Holtz-Eakin is also a believer in the idea that the debt ceiling should be raised, though not on account of any mythological “default.”  There will be no default.  He posits raising it for the very simple reason that current revenues produce about 60% of what’s needed – not half, as seems somehow to be the idea to have gained traction – and there’s no way congress is going to cut 40% of the government before August.  But, the government need not default on its obligations unless that’s the choice Obama makes.
     
    August federal government revenues are expected to be $172.4 billion,and spending will amount to $306.7 billion.  The shortfall is, obviously, $134 billion.  (Annualized, this shortfall represents a shortfall of $1.6 trillion – right in line with the last two years.)  So, a straightforward look at what things cost  Everything above the line we can pay – no problem, no default, nothing.  We’ll be a couple hundred million short.  Below the line, we can’t pay for. (The far right column, if I can make columns here, is the running total):
    Inflows:     $172.4 billion
    Outflows:                    $306.7 billion
    August bills
    Interest on Treasury Securities                              29.0 b        
    Soc-Sec Benefits                                                 49.2 b               78.2 b
    Medicare/Medicaid                                              50.0 b               128.2 b
    Defense/Vendor Payments                                   31.7 b              159.9 b
    Unemployment Insurance benefits                        12.8 b              172.7 b
    ====================================================================
     
    Military Active Duty Pay                                         2.9 b              175.6 b
    Veterans Affairs programs                                     2.9 b              178.5 b
    IRS Refunds                                                        3.9 b             182.4 b
    Food/Nutrition Svces + TANF                                  9.3 b              191.7 b
    Federal Salaries and Benefits                               14.2 b              205.9 b
    SBA                                                                   0.3 b                206.2 b
    Education boondoggle BS                                     20.2 b              226.4 b
    HUD                                                                    6.7 b              233.1 b
    Other Assorted Bullshit                                          72.9 b            306.7
     
    There it is, the whole of the federal budget.  Everything above the line can be paid, and there will be no default.  The top line, Interest on Treasury Securities all by itself insures that there will be no default.   The question for Obama to decide is, how about the rest of it?  When he’s asked at a press conference, as he was day before yesterday, “can you guarantee that the Soc-Sec checks will go out?” and he answers with anything other than “yes,” which he did, then he’s just trying to frighten the old, the credulous, the uneducated, and the stupid.  He’s trying to take advantage of what he perceives as a crisis of which to take advantage.  Those checks will go out – unless he chooses that they don’t, in order to pay something else.  He may decide it’s more important to fund the Federal Salaries/benefits line, and screw the old folks for a month.  He has the freedom to do that.  He won’t – it’s an election year – but he could.
     
    So I grow weary of hearing about this “default” stuff.  We only “default” if he wants us to, and chooses not to pay the interest on Treasury securities.  That would lead to other countries not being willing to buy them, and then there’s be trouble.  As long as we can keep the debt rolling – which we effortlessly  can with what comes in right now – then no problem.  If t’were me, I’d go ahead and raise the debt ceiling by some amount “X,” and as a condition of that, by the end of the year cut the same exact amount “X” out of the budget.  I agree with Holtz-Eakin: there’s no way to cut 40% of the government by the end of the month – but there isn’t much stops it, except political will, from being done by the end of the year.
     
    But default?  On August 2?  No slightest chance, there being no slightest reason for it.
     
    Off I go.
                    
          

  10. Charles Martel says

    “In fact, that or the other example wouldn’t follow. There may be many solutions for ready access to bandages or pet adoption. In the case of Social Security and Medicare, polls show support for the specific programs and goals.”

    When a humorless man begins to parody himself, we truly are at the end of days!

  11. says

    The End of Days, Mart. The End of Days.

    On that totally off topic note,

    http://ymarsakar.wordpress.com/2011/07/19/buying-japanese-styled-katanas/

    Through research, I’ve found an interesting place to buy those from. For those that were thinking about practicing with the sword, you may find it useful.

    I’m buying an iaito first because there are things I need to do in training that if I made a mistake with, would cut a piece of my body off if I was using a shinken, a live razor sharp blade. Best not to have that happen.

     I do plan on buying a sharp wakizashi since I can actually use that in Georgia, if the length isn’t too long, and be considered “legal carry”. You can draw those short swords in very tight places and run people through with em, without the draw getting caught in the tight spaces.

     Btw, is it me or are all the live blade enthusiasts either in SCA (which people still seem to think is hippy country although I’m not too sure about that any more), the South, or certain other major cities? I’ve even seen people start forging Damascene blades in their own backyard forges for heaven’s sake…

     

  12. Charles Martel says

    The humorlessness does tend to imply a Teutonic mindset. Also, the deep lack of concern for black Americans (except to score a political point)—very European.  

  13. says

    Btw, I’m still waiting for Z to go bonkers and clown crazy over Zhombre’s “pikes on a head” line. And waiting and waiting…

    How long am I going to have to wait, do ya think Mart? 

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