Random thoughts about the debt ceiling debate
Don Quixote on Jul 17 2011 at 5:36 am | Filed under: Uncategorized
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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I hear people, in person and on the radio, using the “millionaires and billionaires” phrase so often, and each one thinking that he or she has said something original, that it is clear that the media are doing their best to disseminate the Party line. We can not control the news about events, so we need to do things that produce the events.
Since Democrat Andrew Jackson drove Indians off their own land and onto the Trail of Tears, and then gave the land, developed farm land, mind you, to his political supporters and cronies, the Democrats have been buying votes. Maybe Republicans have gotten into it. Maybe they are really the Klueless Kiwanis from Kankakee, but, in either case, they have not succeeded in stopping this bad behavior.
They/we need to grow a spine, of course. We also need to be better chess players. They need to cave on the jet-depreciation. We are talking about three hundred million in extra revenue extracted from the economy. We are also talking about increasing unemployment in a small sector of the economy, beginning almost immediately. You won’t get a doleful piece on National Propaganda, nee Public, Radio, but the word will get out. We can not be blamed for worsening economic conditions that the Dims create.
Sure, they’ll make as much as they can about the Republicans’ obstruction of the noble O’s valiant efforts. Equally sure, they’ll run on about it, just as the rising unemployment figures in that segment of the aircraft industry are emerging. As soon as James O’Keefe graduates from law school, we need to get him into Congress. He knows how to play the Rope-a-Dope game, and the present, wonderful, straight shooters in the House and Senate, appear not to do so.
Don Quixote: Those on the far right argue against raising the debt ceiling at all.
The debt ceiling is a peculiar American tradition. It leads to the current fiscal contradiction. Perhaps it’s meant to be a good time to look at the books, but pretending you don’t have to raise the debt ceiling is fantasy.
Don Quixote: 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.)
There was an accusation of using “the federal checkbook to buy votes” to the exclusion of “any principled stand”. It was definitely accusatory, and not inclusive (such as Republicans and lower tax rates on the rich).
Don Quixote: 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.
The way to achieve that politically is through the perception of shared sacrifice. In other words, don’t ask someone to give up part of their Social Security check, but not asking the wealthiest to pay a little more.
Don Quixote: 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?
Yes, that is correct. It will lead to default, and a global economic catastrophe.
Don Quixote: 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.
That would be most of them. The U.S. had a surplus at the end of the Clinton Administration. Then the Bush Administration cut taxes during a war, and expanded Medicare without any regard for how to pay for it. Anybody who voted for the tax cuts or the tax cut extension without making sure there were associated spending cuts, was voting for deficits.
Don Quixote: The other day, Obama told the Congress to go find a solution and come back to him when it had one.
Obama has said he would be open to a $4 trillion dollar deficit reduction bill, including addressing entitlements.
Don Quixote: No one seems to have a politically feasible solution to the problem. I know I don’t.
The Americans people would accept shared sacrifice.
Don Quixote: You might be interested in this very short, but effective, comment on the problem:
Dan Mitchell: If my math is correct, that means deficits averaged almost 2 percent of GDP over that period.
To simplify:
Over the historical period we have 18% revenues and 20% spending. Over the projected period we have 18% revenues and 23% spending. The Clinton Administration increased taxes to close the historical gap, and the U.S. experienced one of the longest economic expansions in its history. Current spending, as a percentage of GDP, is partly due to the recession and its aftermaths on U.S. productivity. However, deficits are unsustainable. Closing the gap around the 20% figure seems reasonable. That means modest tax increases and substantial cuts.
Mitchell’s point is that the problem is not caused by tax reductions. Taxes, as a percentage of GNP are right at historic levels. Spending is above historic levels. Unless you believe that taxes (and spending) should both be above historic levels, you must agree that the entire problem is caused by the increase in spending, not the decrease in taxes. AsI understand your answer, youare saying that taxes should be raised from the historic level of 18% to 20% and that spending should be reduced to the historic 20% level.
As for “shared sacrifice,” what does that mean? The “rich” share the sacrifice by paying even more than they are already paying? The “poor” or “entitled” share the sacrifice by taking less from the rich than they have been? Let’s see what this means. Say I’m stealing 50% of your income to keep for myself. I say, let’s make a deal to share the sacrifice. I’ll only steal 45% if you give an additional 10% to pay our debts. I guess you could call that shared sacrifice, but can you understand why those who are already being victimized by the theft might oppose “sharing”the sacrifice by allowing themselves to be even more ripped off?
It looks more and more like Obama is going to self-destruct the nation by blowing up the economy and stretching the military to the breaking point by redeploying it to several dozen or more so war fronts (probably saving that for later when there’s a good excuse in the UN for it).
Poor nations are relatively easier to take over using totalitarian Communist tactics.
“Since Democrat Andrew Jackson drove Indians off their own land and onto the Trail of Tears, and then gave the land, developed farm land, mind you, to his political supporters and cronies, the Democrats have been buying votes.”
That’s not what happened. Andrew Jackson is someone the South can be proud of both in the individual sense as well as the political sense. He was right on the INdian issue, right on the black-slave issue, and right on the white farmer issue as well.
As soon as James O’Keefe graduates from law school, we need to get him into Congress.
That’d be interesting to see. Who’d pay to view that one?
Obama talks a great deal about a need for more revenues…but as this post points out, he has been pursuing energy policies which constrain the royalty REVENUES from public lands to a lower level than they could be.
Obama is going to try to break the system, to usher in his “transformation” of America. That’s the one thing he isn’t lazy about, probably because something really motivates him ideologically there.
Just a few points of note:
1) Obama has never proposed a serious budget. His last attempt was laughed off even by the Democrats. The Democrat Congress hasn’t submitted budgets in two years.
2) Obama’s deficits in two years exceed the total deficits accumulated by Bush during eight years.
3) In March 2006, every single Democrat Senator, including Obama, voted against letting the Bush Administration raise the debt limit.
4) Arguments of “shared sacrifice” are sheer nonsense: this is about taking disproportionate amounts of money from people that produce wealth and shoving into the pockets of protected classes and special interests (green energy investors, labor unions, universities, community organizers, railroad boondoggles, environmental agitator groups, etc.).
5) Obama never said that he would put $4b in cuts and entitlements reviews on the table: this was only claimed as “leaks to the press” with zero details of what, when, how much and where. Same old, same old. But then, he’s a serial lier, isn’t he!
6) The pharmaceutical benefit in health care was ill-conceived. Bush developed the pharmaceutical benefit in order to fulfill a campaign promise. The Democrats wanted a much bigger program that stuck it to a) pharmaceutical companies and b) insurance companies. The final bill was opposed by many Republicans, supported by many Democrats, and it barely passed. It’s cost are estimated at $55b per year, or about 3% of the Obama /Democrat’s 2010 deficit. This is not what is bankrupting the country.
7) The Clinton Administration enjoyed record revenues during the tech boom, while at the same time dismantling our military while ignoring as much as possible the rising terrorist threats. This led to temporary (not structural) surpluses. This came to an end when a) the tech boom crashed and b) the military had to be rebuilt during 9/11.
Don Quixote: Taxes, as a percentage of GNP are right at historic levels. Spending is above historic levels.
Yes, and spending has historically been 2% over revenues.
Don Quixote: Unless you believe that taxes (and spending) should both be above historic levels, you must agree that the entire problem is caused by the increase in spending, not the decrease in taxes.
The Obama Administration didn’t increase spending significantly, other than the stimulus, which was a one-time expenditure. Wars, recession, tax cuts, the demographic bulge, and the broken health care system have left the U.S. budget out of whack. Even if you want to return to historical spending levels, that still leaves a significant deficit.
Don Quixote: Say I’m stealing 50% of your income to keep for myself. I say, let’s make a deal to share the sacrifice. I’ll only steal 45% if you give an additional 10% to pay our debts.
Taxing in a representative democracy is not “stealing”. There are a number of tax loopholes that benefit the wealthy that are completely unnecessary. In any case, the rich have the most to gain and the most to lose from a stable society. High income earners are paying historically low rates. They pay a somewhat higher tax rate, but nearly everyone pays something. The federal tax burden is not nearly as progressive as is often repeated. We’ve pointed this out before, but it never seems to stick.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456
Danny Lemieux: Obama’s deficits in two years exceed the total deficits accumulated by Bush during eight years.
FY2009 was proposed by Bush, not Obama. In any case, the precipitous drop in revenues due to the recession caused much of the deficits.
Danny Lemieux: Arguments of “shared sacrifice” are sheer nonsense:
Which is why the U.S. is on the brink of financial disaster. In wartime, in the aftermath of the greatest economic calamity since the Great Depression, the U.S. refuses to ask its most privileged members to contribute a bit more. A great nation goes shopping.
Z says…”the U.S. refuses to ask its most privileged members to contribute a bit more”….but ignores the fact that many of the MOST privileged members of the society…elected officials, senior bureaucrats, university presidents, executives of pseudo-public orgnizations such as Fannie/Freddie, executives and employees of various “nonprofits”…profit considerably, in both financial and power/ego terms, from the expansion of government power and spending.
A great nation went shopping and bought a government it can’t afford. You link does show the regressive nature of social security, caused by the income lid. I’ve never understood why there is not more pressure to lift that lid.
http://www.usdebtclock.org/
The debt clock and Medicare/Medicaid (the biggie).
http://www.cagw.org/
The link above briefly examines the waste – a polite term for theft, crime and negligence by the Feds.
Where exactly was the ‘shared sacrifice’ (oh, how I just detest that turn of phrase) while the Feds were cutting checks?
What, if any, safeguards are in place for …heaven help us, Obamacare?
The debt exists not for lack of revenue, but for lack of credibility and accounting practices [read that as Fannie and Freddie] the Bonnie & Clyde of mortgage industry polluters. What’s the point in raising the debt ceiling when we already know they’ll over-dose themselves with more money.
“The budget is like a patient in need of a life-saving operation….”
…but the surgeon is a quack, who hasn’t even bothered to scrub up before surgery. By sheer luck, the doctor didn’t kill the patient on the table. The patient later discovered that he has gangrene and is going to loose a limb. Patient (us) is outraged and angry and tries to sue (stop) the quack from any further medical tricks, only to find out since the quack was not a ‘real’ doctor because there was no ‘real’ liability.
DQ, your point #1 simply baffles me. Operation without anethestic? How so? My analaygy would be something like, if you are heading for the cliff and there is not room to stop, you probably should put on the brakes, and steer toward safer terrain. Of course the Democrats are like the fighter pilot who says, “I am in deep… trouble.. so, I better do a 360 (turn) and get the hell out of here”.
Z, as usual, is all over the map. Of course the U.S. has to raise the debt ceiling since we have boxed ourselves in. What the GOP is saying, and he well knows it, is that we cannot continue toward the cliff without taking serious action. However, it appears that Z did not read Danny’s comment. I have seen the official voting record. NO, none, zip, nada Democrat voted to raise the debt ceiling when Bush was President. That included Senator Barack Hussein Obama. Tell me Z, why is it more critical now than it was then? Why is default a bigger issue now than it was then?
The standard whine of why not ask our most privileged to pay more is simply more meaningless rhetoric. Every literate person knows that increasing taxes on millionaires and billionaires is simply a meaningless sop to the Leftist base. There are not enough of them to make a damn bit of difference in our revenue stream. So, the Leftists are playing to the illiterate with their harping on this.
I will also say that Z, and all other Leftists/Statists, try to equate differences in tax rates to differential in taxes actually paid. By this tactic they hope to paint a false picture of “fairness”. But, it really doesn’t take much to compute a couple of examples that put the lie to their mantra. A rich couple, by Obama’s standards, with $250,000 taxable income, pays about nine times as much in taxes as someone with a $50,000 taxable income; even though their effective tax rates are less than 13% different. A million dollar taxable income pays 13 times as much as a $130,000 one, with about the same difference in effective tax rates as the previous example. Simply comparing tax rates presents a completely distorted picture–which is the intent, of course. Note also that the difference in taxes paid dwarfs the difference in actual income. By about 5 times. But, they never talk about the differences in actual dollars paid, that is not the narrative. Don’t like my examples? Compute a few of your own.
Oldflyer, they can’t be trusted. The more you learn about how they behave, the less they can be trusted.
It’s pretty simple.
There have been more than one war fought due to distrust in human history.
“The Obama Administration didn’t increase spending significantly, other than the stimulus, which was a one-time expenditure. Wars, recession, tax cuts, the demographic bulge, and the broken health care system have left the U.S. budget out of whack.”
Are you KIDDING? So Obama didn’t increase spending 28% (without including the “one time” stimulus, which has now effectively become part of the baseline budget)? So I guess when he increased the EPA’s budget by over 100%, that didn’t actually involve any spending? Neat trick that.
Bush was no fiscal conservative and you won’t find me defending him on spending – but Obama has spent more money in 2 years than Bush did in 8. So far Obama’s average deficits have each been record breakers in WORLD history, not just U.S. history. Bush averaged 410 Billion a year in deficits, Obama? He’s averaging $1.413. Amazing how he did that without increasing spending.
http://www.npr.org/2011/01/25/133211508/the-weekly-standard-obama-vs-bush-on-debt
http://spectator.org/archives/2011/06/01/the-democrats-big-government-b#
Flyer is right, we could tax the “wealthy” 100% on their earnings AND their wealth, and it wouldn’t be a drop in the bucket. Ok, maybe a drop. And the democrats just want to keep on spending!
More and more I’m thinking perhaps we should just hold the line and NOT increase the debt limit. We take in roughly 200 Billion a month. Interest on our debt is about 15% of that, so we will NOT default. We could pay that, Social Security, Medicare and the troops and still have 30 Billion+ to go. At that point tough choices would have to be made and the government would HAVE to shrink (would that be such a bad thing?). Perhaps our President would then tear himself away from the golf course, bring the little misses back from her latest taxpayer funded lavish vacation, and actually lead for once. You know, LEAD, the thing he was nominally elected to do? Perhaps he could actually publicly suggest a plan for once (I seem to remember someone mention transparency, perhaps on the way to his next closed door meeting) and show us he can be put on the record for a specific position rather than class warfare platitudes and claptrap.
The fact is, every statistic that’s supposed to be going down is going up, every one that should be going up is going down. You can try to blame Bush, demographics, wars (excluding Libya I’m sure) etc, but in the end of the day, the buck stops at the Resolute desk.
Regardless, at the end of the day, Obama has a record now and by no one’s measure is it a good one!
DQ
Thanks for taking my suggestion and running with it. We’re four days out from hell, fire and brimstone if you believe what you’re reading or hearing. The majority of citizens DO NOT want to raise the debt ceiling.
Stay tuned for results to find out ‘if’ anyone in the Beltway is listening. Do we end up with the Incredible Hulk (over-fed bureaucrazy) or the Incredible Shrinking Man (some belt-tightening at the source).
David Foster, your point about who are the privileged members of U.S. society is well made and well taken. The problem here, as everybody now knows, is that Zach scrupulously avoids contending with any arguments that take down his own. Now that you’ve poked a pretty gaping hole into the “privileged member” argument, do not expect him to respond. He will pretend that you never wrote it.
Because the rest of us here don’t have his Orwellian sensibility (“If I pretend you never said it then you never said it”), I just wanted you to know that you made a good point.
nahab: So Obama didn’t increase spending 28% (without including the “one time” stimulus, which has now effectively become part of the baseline budget)?
Most of the increase is due to growth in entitlements.
http://www.heritage.org/budgetchartbook/mandatory-discretionary-spending
Because of the recession, federal revenues have decreased, while entitlements have continued to grow. Also, keep in mind that the FY2009 budget was proposed by Bush, as your own cite points out.
nahab: So I guess when he increased the EPA’s budget by over 100%, that didn’t actually involve any spending?
Most of which was one-time stimulus spending.
nahab: Obama has spent more money in 2 years than Bush did in 8.
Um, no.
nahab: Bush averaged 410 Billion a year in deficits, Obama? He’s averaging $1.413.
Structural deficits are on the order of $600 billion, or roughly 4% of GDP. The recession that ensued from the financial meltdown at the end of the Bush Administration cost the U.S. trillions of dollars. The ‘profits’ during the Bush Administration were ephemeral.
nahab: Flyer is right, we could tax the “wealthy” 100% on their earnings AND their wealth, and it wouldn’t be a drop in the bucket.
That wasn’t what we suggested, of course. As noted above, historical spending is 20%, and historical revenues have been around 18%. It seems reasonable to increase revenues to 20%, and decrease spending to 20%. If additional spending is desired, then a conversation should be had concerning how to pay for it.
nahab: Interest on our debt is about 15% of that, so we will NOT default.
Interest is not the only U.S. financial obligation. If the U.S. stops paying its bills, it will be in default.
SADIE: The majority of citizens DO NOT want to raise the debt ceiling.
Nobody likes to pay bills, but if the U.S. does not raise the debt ceiling, it will lead to default. And that will have catastrophic consequences for the U.S. and global economies.
Charles Foster: Z says…”the U.S. refuses to ask its most privileged members to contribute a bit more”….but ignores the fact that many of the MOST privileged members of the society…elected officials, senior bureaucrats, university presidents, executives of pseudo-public orgnizations such as Fannie/Freddie, executives and employees of various “nonprofits”…profit considerably, in both financial and power/ego terms, from the expansion of government power and spending.
Most people would think the heads of the investment banks are rather privileged, making in many cases millions of dollars every year, even while their companies lose money. In any case, any university president or bureaucrat making oodles of money should probably pay a bit more in taxes.
Oldflyer: “I have seen the official voting record. NO, none, zip, nada Democrat voted to raise the debt ceiling when Bush was President. That included Senator Barack Hussein Obama. Tell me Z, why is it more critical now than it was then? Why is default a bigger issue now than it was then?”
CM: “The problem here, as everybody now knows, is that Zach scrupulously avoids contending with any arguments that take down his own.”
Charles, you nailed it.
The problem is, Z’s proud of where Obama is leading our nation. Maybe that’s cause Z doesn’t see it as his problem.
Z also thinks “uhh, no” is a sound argument. Then again, Z thinks cutting and pasting a sound bite quote from various historical figures substitutes for sound argument, so it fits the trend.
So if you have found Z’s responses to be short and unsatisfying, you aren’t alone in that tar pit.
Moose: Tell me Z, why is it more critical now than it was then? Why is default a bigger issue now than it was then?”
The debt ceiling vote is sometimes called the “burden of the majority”. Whichever party controls the House has traditionally had the responsibility for passing the increase with the other party voting against in order to score political points. In this case, the majority won’t vote for the increase, putting the economy at risk.
Several snips from Moody’s and questions:
*Is Moody’s contributing to the economic malaise?
*Does anyone foresee the orderly conclusion (their words not mine) of the housing mess.
*Eliminate America’s debt ceiling up to 60% of GDP, while noting that other governments ‘often’ not seldom do not.
Ratings agency Moody’s on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders.
“We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty,”
It also cited the example of the Maastricht criteria in Europe, which determines that the ratio of government debt to GDP should not exceed 60 percent.
It noted, however, that such a rule is often breached by the governments.
http://www.cnbc.com/id/43790768
And Moody’s take on Bonnie & Clyde way back in the time machine- 2 years ago.
“This is not bad news for Fannie Mae and Freddie Mac bondholders as the US government has become entwined with these companies and the creation of a new entity to support housing finance likely means the orderly conclusion of Fannie Mae and Freddie Mac,” the report reads, in part. http://www.housingwire.com/2009/08/05/moodys-says-us-may-wind-down-fannie-freddie
So Moose. Did you get anything from Z’s supposed answer?
Ymar, it’s pretty obvious that Zach, as is his wont, picked up some boilerplate from somewhere so that he could pretend he was answering Moose’s question. It’s getting old, isn’t it?
Y, the question still stands.
Moose: Y, the question still stands.
We answered your question, but we’ll elaborate.
Moose: Tell me Z, why is it more critical now than it was then?
The tradition is that the party controlling the Congress is responsible for the debt limit increase. That’s because the majority controls the Congress, including committees and bills. The minority party, then, gets to play cheap politics, and blame the majority for deficits. Obama played cheap politics when he was in the Congress, but there was no danger of the debt limit not being raised.
Moose:Why is default a bigger issue now than it was then?”
Raising the debt limit is essential to avoid a default. Traditionally, the majority makes sure it gets done one way or another. In this case, the majority has decided to take the economy hostage and try to wring concessions. By all reports, it has failed to do anything but worry America’s creditors.
Moose, now you know! There cannot possibly be any other explanation than the one you’ve been given.
Rest easy, amigo, the world is a simple place now that Zach is here to explain it!
Mart, it’s long past that. I think it first got old when the Leftists told us the US should not go to war with Germany. The Soviets were allied with Germany at the time, so they had valid reasons to lobby for the pacifist, anti-war angle. Then… the Nazi pigs invaded Soviet Motherland…. guess what happened then. The anti-warp eeps turned PRO WAR suddenly… as if they were taking their marching orders from someone.
And Obama was anti-war in 2006-8 and pro Libyan war in 2008-2011. Wow. Things have changed so much. It’s almost as if the Left is only anti war when the war is up against them, their allies, or their Communist masters.
Martel, it is long past the “getting old stage” by now.
So, let me get this stright: it’s the Republican’s “turn?”
You have GOT to be kidding me. That’s the reason? It’s their turn? Can you not see what this makes our gov’ment look like and why we want to reduce it?
I have this *tune that keeps floating around my head. Anyone have a suggestion how to make it goes away?
*Pop! Goes the weasel.
Moose: You have GOT to be kidding me. That’s the reason? It’s their turn? Can you not see what this makes our gov’ment look like …
Yes. It does make your government look rather silly. Don’t feel too bad. Hugh Grant is England’s moral compass.
http://www.businessinsider.com/rupert-murdoch-news-of-theworld-daily-show-jon-stewart-video-2011-7
Moose: …. and why we want to reduce it?
Not sure that makes sense. You want to get rid of Congress?
Z: “You want to get rid of Congress?”
Hmmmm. That’s a start.
Moose
Don’t ya just marvel at the bait n’ switch with a less than subtle link and swipe at Murdoch, which translated into progressive English means Fox News. Not to fret, they have the ever so charming, Julian Assange and Bradley Manning, which only translates into treason.
Moose, let me suggest two answers as to why the debt ceiling is a bigger deal now. First, the deficit is so large now that the negative impact of not raising the ceiling would occur much faster and be much more severe. Second, because we have split leadership (Republicans in the house and Democrats in the Senate and the White House) there is a real possibility of the ceiling not being raised on time. So long as one party is in control the other party gets a shot a playing “cheap politics” knowing full well that the majority will, in the end, raise the ceiling.
Since this problem is an American problem, and Z has no relationship with America, why should it matter what Z thinks about how we should do things? Talk about governing from afar.
If the debt ceiling is not raised August 2nd, precisely nothing will happen. The revenue stream already in place will carry us for months before any decisions have to be made. At that point, which’ll be about December, the decisions will have to be taken about allocating said revenue, i.e., who gets paid. That’s a White House decision – God help us all, given that we have a President whose yet to have a fiscal thought, advised by a Treasury Secretary who can’t master Turbotax.
Obama will decide what to pay. We can pretty much guarantee that he will pay the bondholders, even he, dope that he is, isn’t going to allow anything like a default in an election year. And you can take to the financial institution of your choice that Soc-Sec and Medicare will be paid, they won’t not be: election year. So the country will assuredly not default, and the old goats will get paid.
After that it becomes trickier. The military will have to be paid and continue to be supplied and equipped, every single kid in uniform can swing a dozen votes between friends and family, and if they start to get starved or neglected they’ll swing a lot more than that – we don’t do that to our kids, and it’s an election year.
So he’ll have some tough choices – but they’ll be his choices. An outcome he is trying fiercely to avoid, he doesn’t want to take actual responsibility for anything, I’ve noticed. If Boehner holds his feet to the fire here, he’ll have to make some decisions, stand up and be counted, choose something and accept responsibility. All very strange to him.
But nothing happens in August. The bond-holders and Granny will continue to collect, no matter what. August 2nd is an arbitrary date with little-to-no-meaning.
“But nothing happens in August”
Not in Washington, DC – they suddenly become very French and leave town for vacation.
jj – #36 good post.
The one item niggling away at my guts is that the Dems have not brought forth a budget in two years plus. Oh sure there was a piece of paper that floated around the room, some months ago, that even the Dems ignored. The president has been most engaged regarding money but only while campaigning, which by my records has been non-stop since 2007. And finally the other one item …If the debt ceiling was a looming crisis, why wasn’t it looming 6 months ago, a year ago when the darlin’ Dems had control of all three houses.
Real sign on Truman’s Desk: The Buck Stops Here
A sign of Obama’s Desk: Pass the Buck
jj: If the debt ceiling is not raised August 2nd, precisely nothing will happen.
That is simply incorrect. The U.S. has many legal obligations. Failing to meet those obligations would be considered a default by lenders and would lead to serious economic consequences on a global scale.
US Treasury: “Legislation to ‘prioritize’ payments would simply represent default by another name.”
http://www.treasury.gov/initiatives/Documents/Debt%20Limit%20Myth%20v%20Fact%20FINAL.pdf
SADIE: If the debt ceiling was a looming crisis, why wasn’t it looming 6 months ago, a year ago when the darlin’ Dems had control of all three houses.
Funny story. It would have made sense to raise the debt ceiling as part of the tax deal last year. But by tradition, the majority takes the political hit for raising the debt ceiling, so the Democrats thought they would leave it for the new Republican House majority. As it is essential to raise the debt ceiling, and no one in their right mind would play chicken with the U.S. economy, that meant the Republicans would be left with the “burden of the majority” and have to take some political lumps—the privilege of governing. Who would have thought the Republicans would actually take the economy hostage? Well, a lot of people, but apparently the Democrats in Congress made a doozy of a miscalculation.
Z has some of the most horribly ridiculous lines in existence. Then again, I’ve researched and studied the Left for a decade now. Not much Leftist corruption surprises me any more.
Z ignores abortion, Leftist crimes against humanity, Democrat corruption, and government malfeasance, but Z wants to talk about Republicans now, eh…
As expected from the Leftist cannon fodder and propaganda fingers.
That is simply true; you simply don’t know what you’re talking about. However, when you notice that the world is still here on August 3rd, possibly you’ll wise up. At least in part. Or maybe you won’t. Obama will have the choice of what to pay, and I’ve already told you what he’ll do, it didn’t take a crystal ball.
Z doesn’t care about whether America succeeds or not, so he’s hoping we fail and that’s what he is looking forward to. If it doesn’t happen, Z can always find something else to complain and kvetch about.
jj: That is simply true; you simply don’t know what you’re talking about.
Not an argument. In any case, if your point is that the U.S. will try to find a way to pay interest on the sovereign debt, then, yes. But the American people have incurred many financial obligations. Paying your mortgage while stiffing your plumber will still lead to a bad credit rating or worse.
Ymarsakar: Z doesn’t care about whether America succeeds or not, so he’s hoping we fail and that’s what he is looking forward to.
We would like to see a strong and prosperous United States. Refusing to raise the debt ceiling will not achieve those goals.
But, then, neither will raising taxes achieve the goal of a strong and prosperous United States. JJ, I am curious, what is your basis for your statement that all bills can be paid until December? The “revenue stream” is about half of the obligations that must be paid. Does the government have funds on hand to make up the difference for four months? What is your authority for that?
Don Quixote: But, then, neither will raising taxes achieve the goal of a strong and prosperous United States.
Not in and of itself, of course. But it is a fact that taxes are necessary, and that most Americans expect a certain level of services from their government which must be paid for.
It’s too bad your words can’t be trusted Z, and you only have yourself to blame on this score. Unless you have some buddies around you want to pass the buck to.
Does anybody here have any idea what “most Americans” and “a certain level of services” mean? Apparently they are self-explanatory.
Charles Martel: Does anybody here have any idea what “most Americans” and “a certain level of services” mean? Apparently they are self-explanatory.
“Less than a quarter of Americans support making significant cuts to Social Security or Medicare to tackle the country’s mounting deficit, …”
http://online.wsj.com/article/SB10001424052748704728004576176741120691736.html
Thank you, Zach. You’ll that the poll does not define “significant, which undercuts the power of this link as an answer to my question. However, respondents did indicate that they are open to changes in how SS is administered (for instance, the approval of a higher age threshhold for benefits), and support excluding wealthy people from SS and Medicare. Is this not a significant change, especially the exclusion of people from a government program on a class basis?
So we’re still left awaiting your explanation of “a certain level of services.” Does that expectation include, say, the services rendered by the departments of Energy or Education? 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?
You’ll that the poll = You’ll note that the poll
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.
Mart, since Z’s not invested in American concerns, how does he even know what most Americans think?
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?
“the Democrats in Congress made a doozy of a miscalculation”
One more time: THE DEMOCRATS IN CONGRESS MADE A DOOZY OF A MISCALCULATION.
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 Martel: 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?
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.
SADIE: One more time: THE DEMOCRATS IN CONGRESS MADE A DOOZY OF A MISCALCULATION.
Here’s an interesting article from back in December, with a warning.
“Why Democrats don’t want to tie the debt ceiling to the tax cuts”
http://voices.washingtonpost.com/ezra-klein/2010/12/why_democrats_dont_want_to_tie.html
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.
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.
Well, Danny, I think you’ve got the style down pat!
Henny Youngman had style – at least it made me laugh.
A man goes to a psychiatrist. “Nobody listens to me!” The doctor says, “Next!”
Recent Poll: A recent survey indicates that many Americans who cut themselves want ready access to bandages.
Zachriel: this 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.
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.
“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!
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…
Basically, Obama and people like Z will cut military spending to 10%, and redistribute the funds to social security and their own bank accounts. Count on it people.
I’m beginning to suspect that the Zach crew is a German university sophomore’s “American Studies 101″ project.
*snorts*
Didn’t you start doing that awhile ago, Danny? ; )
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.
So not only is he a Leftist, but he’s an anti-American or at least NON American Leftist telling us Americans how we should be doing things…. right
The Left, has no shame.
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?
Geez, guys, that’s an awful lot of abuse to heap on a guy for saying he want to raise federal taxes from 18% to 20%.
That’s impossible. Nobody can talk about raising taxes for the last several months alone. You know there’s more a human being does in that long a time.