Debt ceiling

[chicago81]

My question remains: Why is there a need for a shutdown in the first place?

Because all government spending that goes beyond tax revenue is eventually funded through currency devaluation.

+1 Gold Star for this post.

[Chad]

Republicans have had ample opportunities in my life time to cut debt and haven't done it (not that the Democrats are much better). I just don't believe it. They, as all current politicians do, are just looking for a "win", as opposed to doing what's right.

Pretty much... Some of them would happily cut entitlements deeply. But most of them would freak out and regurgitate a bunch of nationalist, mostly fictitious nonsense about terrorists if the "defense" budget was threatened.

Yeah, that's why any time a Republican talks about fiscal responsibility I just roll my eyes. Democrats aren't fiscally responsible either, but at least it isn't one of their "pillar beliefs" or goals they fail to meet.

On a side note, and I don't want derail the discussion, so this is just for informational purposes. This is the kind of thing we should be considering more often and not just on the defense side:

http://www.cnn.com/2013/09/17/tech/inno ... index.html

[JohnnyH]

On a side note, and I don't want derail the discussion, so this is just for informational purposes. This is the kind of thing we should be considering more often and not just on the defense side:

http://www.cnn.com/2013/09/17/tech/inno ... index.html

Aren't piloted jets basically obsolete?... Here's a very anti-PC and cynical take:
http://fredoneverything.net/RabidBat.shtml

[jacob]

@Felix -

Or in the parallel perception universe the positive effects on the economy would get better month by month.

Hypothetically ... if dollars are removed month by month, the value of the remaining dollars relative to goods would increase, interest rates would increase, and it would become real clear real fast who is creditworthy and who isn't. Consequentially no money will be lent to wasteful mickey mouse projects, banks would delever, and debtors would get their act straight. As the purchasing power of money goes up, demand for productive investments will increase because the desire to work to create products and services to sell for cash becomes stronger. The economy will grow more productive as a result and tax rates could be decreased.

With the government money being maintained at a constant level, the future is easy to predict and banks can lower their rates because they no longer need a risk premium. The yield curve would become flatter.

And they lived happily ever after.

Seriously though, there's no way to predict what will happen either way.

[Felix]

@jacob:

I think Dalio's video I linked to on the first page of the thread explains my thinking pretty well.
I think we disagree on the paradox of thrift again.

[GandK]

My congressman (Boehner) is the one leading this round of ridiculous nonsense, albeit because he feels obliged to pander to the party's base. Wasting time passing resolutions in one chamber that mathematically cannot pass in another is grossly incompetent, and a deliberate waste of the taxpayer resources that they claim to want to protect.

[workathome]

because he feels obliged to pander to the party's base.

Isn't that what elected "representatives" are supposed to do?

[JohnnyH]

Wasting time passing resolutions in one chamber that mathematically cannot pass in another is grossly incompetent, and a deliberate waste of the taxpayer resources that they claim to want to protect.

I'm guessing the bold does not apply to the Senate in your view, however.

Why is this view so prevalent? Not passing unread bills at lightning speed = wasting taxpayer resources? These are checks and balances; the system working... There is nothing "incompetent" about not rolling over... Can you imagine no situation where you would want your representative to be as obstructionist as possible?

[Spartan_Warrior]

Isn't that what elected "representatives" are supposed to do?

Not really. To borrow terminology from another recent thread, they're supposed to be working "coopetitively" in the best interests of the American people--competing for votes, but also cooperating like adults to actually pass legislation*. Instead the two parties work "coopetitively" in their own best interests--cooperating only when it consolidates government or party power, competing over everything else.

*"Symbolic votes" don't count. Such behavior truly is best summed up as "pandering" and "wasting tax payer resources".

[jennypenny]

Isn't that what elected "representatives" are supposed to do?

I wish that was the case, but that's not how it was designed. If you study* the Constitutional Convention and read Madison's and Hamilton's notes in particular, you'll see they were trying to come up with a system that would elect the elite, whom they thought would know best how to govern. Local districts would give their representatives and senators the power to do as they wish. There were supposed to be checks and balances in the system to prevent someone from voting for something that would directly enhance their district. Obviously, they don't work that well (although I'm not sure how you vote on national issues with it affecting your own state).

The government was designed to be run by the wealthy elite who were free to decide how best to govern with little regard for the opinions of those they represented. Sound familiar?


* Sorry, that came off as uppity and I didn't mean it that way. I'm sure I'm the only ubergeek here who's actually done that.

[Riggerjack]

Well speaking from the represented minority, obstruction is my best case scenario from Congress. If they get Nothing done, that's a win!

Seriously, pass a budget, then we can talk about more legislation. If they can't pull that off, there's nothing they should be doing in the meantime.

Felix, you are aware that there's a difference between not increasing the debt, and default on the debt interest, right?

[Felix]

Yup.

[Chad]

Isn't that what elected "representatives" are supposed to do?

I wish that was the case, but that's not how it was designed. If you study* the Constitutional Convention and read Madison's and Hamilton's notes in particular, you'll see they were trying to come up with a system that would elect the elite, whom they thought would know best how to govern. Local districts would give their representatives and senators the power to do as they wish. There were supposed to be checks and balances in the system to prevent someone from voting for something that would directly enhance their district. Obviously, they don't work that well (although I'm not sure how you vote on national issues with it affecting your own state).

The government was designed to be run by the wealthy elite who were free to decide how best to govern with little regard for the opinions of those they represented. Sound familiar?


* Sorry, that came off as uppity and I didn't mean it that way. I'm sure I'm the only ubergeek here who's actually done that.

No, I've done that class/study. Congress is designed to be slow, which is a good. There are other issues like gerrymandering that really screw up congress.

It was also a great idea to restrict it too elites at the time. Of course, at the time the elites were probably more elite ability wise and more connected to the people they represent. I don't think our elites run for office anymore, as it has too much baggage and not enough power.

[JohnnyH]

Congress is designed to be slow, which is a good. There are other issues like gerrymandering that really screw up congress.

It was also a great idea to restrict it too elites at the time. Of course, at the time the elites were probably more elite ability wise and more connected to the people they represent. I don't think our elites run for office anymore, as it has too much baggage and not enough power.

Agreed, slow is good... The shortsightedness of speeding up Congress (say filibuster "reform") is staggering.

Bills are written by the new elite, corporations and special interests... I can think of dozens of monster bills passed in the last 12 years I would love to see reversed.

[Felix]

Just one last question about the debt ceiling: When are they going to decide about this exactly?

[JohnnyH]

Just one last question about the debt ceiling: When are they going to decide about this exactly?

Fiscal Year[s] (FY) in US end on 30 September... Temporary measures extended funding while the "debate" continues are a very safe bet historically.

[Riggerjack]

Ideally, 2017, or so.

[vivacious]

I hope I get all these quotes right but I'm going to try to go through some points here.

I've always been baffled by people who are so individually financially responsible, who advocate the their governments going as financially insane as they want.

Debts are exploding, wages and taxes going down, projections are rosy nonsense...

Sorry but this is very dull. The economics of governments and persons are very, very different. You can't really compare them at all.

What most people don't realize, including probably a good chunk of the people on this board, is that the deficit is much, much lower than it was. And it mostly happened as a result of spending. The stimulus programs worked, we headed off more long term problems, and now it's starting to balance again. Tax revenues are greatly increasing naturally from the economy coming back. Plus the sequester cut a little spending. And the tax deal that resulted in the raise in taxes for people making $400,000 a year, I believe a holiday on part of the payroll tax ended, and a bunch of other little tinkering. Plus low interest rates encourage spending and economic activity which brings in more taxes. And some other little factors.

The biggest factor out of that though was spending which actually is shoring up the yearly situation, not to mention helped to get the economy back on track.

Republicans have had ample opportunities in my life time to cut debt and haven't done it (not that the Democrats are much better). I just don't believe it. They, as all current politicians do, are just looking for a "win", as opposed to doing what's right.

Yeah, that's why any time a Republican talks about fiscal responsibility I just roll my eyes. Democrats aren't fiscally responsible either, but at least it isn't one of their "pillar beliefs" or goals they fail to meet.

Not true. After WWII I think all Republican presidents raised the national debt. Democrats either didn't raise it as much, kept it about the same, or lowered it.

Obama is a special situation because of the recession etc. Also, spending in real dollars each year is actually lower than what Bush left it at.

I am not aware of any scenario where the US government can not pay interest on existing bills unless they choose not to. Also none where existing bill holders can refuse payment in dollars. So no problem there. That's the advantage of controlling your own currency.

The scenario to consider is: What if nobody is willing to lend the government money anymore? What would that look like? How would the government get money then? Taxing? Printing?

Worse, what if on top of not being willing to accept future promises (bonds) none are willing to accept present promises (cash). How would the government then get services and stuff? Confiscation? Conscription?
...
Most arguments seem to be about different perceptions of where we are and different opinions of where we should be.

As you probably know the American government gets money from China, its own citizens, etc. The debt comes from a few different places. As the most powerful economy in the world there's no reason why it wouldn't be loaned money. You wouldn't have a situation of currency collapse like in South America or Africa that happens sometimes.

And as I noted before, partly because of petrodollars and other factors, America can take on much, much more debt than any other country.

There's nothing to worry about. It's a sham and fraud. You don't need to lose sleep wondering if the government will pay its debt. (I don't mean you personally. I know it sounded like you were mostly being hypothetical etc.)

You do somewhat need to worry about the reckless, gerrymandered House which can inflict blows on the economy and do very dangerous things. This isn't governance.

[Chad]

Republicans have had ample opportunities in my life time to cut debt and haven't done it (not that the Democrats are much better). I just don't believe it. They, as all current politicians do, are just looking for a "win", as opposed to doing what's right.

Yeah, that's why any time a Republican talks about fiscal responsibility I just roll my eyes. Democrats aren't fiscally responsible either, but at least it isn't one of their "pillar beliefs" or goals they fail to meet.

Not true. After WWII I think all Republican presidents raised the national debt. Democrats either didn't raise it as much, kept it about the same, or lowered it.

Obama is a special situation because of the recession etc. Also, spending in real dollars each year is actually lower than what Bush left it at.

Yes, true. I didn't say presidents, I said Republicans and Democrats. You have to take who controls congress into account and events.

Clinton had a Republican controlled congress for 6 of his 8 years, so they have to get a little credit (even if Gingrich is economically clueless).

Plus, You can't give Obama a pass and not give George Bush, Sr. a pass. Sr. increased the debt for a semi-valid war, but also raised taxes to help pay for it (this is what you do in war Bush Jr.).

What's not true is that all Republican presidents after WWII raised the national debt.

http://zfacts.com/p/318.html

Even Tricky Dick, who is a blatant criminal, didn't increase the national debt (neutral).

[GandK]

I'm guessing the bold does not apply to the Senate in your view, however.

Of course it does.

Why is this view so prevalent? Not passing unread bills at lightning speed = wasting taxpayer resources? These are checks and balances; the system working... There is nothing "incompetent" about not rolling over... Can you imagine no situation where you would want your representative to be as obstructionist as possible?

Benjamin Franklin once called politics "the art of the possible." There is a great difference between making a political point with the purpose of attempting to persuade others to change their minds; and the sort of political theater that is occurring today, where no one can be persuaded to change his opinions (but may perhaps be engaged to change his votes by means of expensive concessions), yet one-sided resolutions - deliberately worded so as to most antagonize the opposition - are continuously crafted in spite of this.

I am proud of my representative when he engages in persuasion, and ashamed of him when he spends his time pandering and making digs at his opponents.