Debt Ceiling Panic

[piasabird]

http://news.yahoo.com/treasury-39-lew-warns-u-default-could-happen-140809355--business.html

"Treasury's Lew warns that U.S. default could happen quickly!"

How long before the USA really cuts some real money from the current budget?

Feds crying wolf again.

Raise the debt ceiling or no tax returns.

 

[fskimospy]

http://news.yahoo.com/treasury-39-lew-warns-u-default-could-happen-140809355--business.html

"Treasury's Lew warns that U.S. default could happen quickly!"

How long before the USA really cuts some real money from the current budget?

Feds crying wolf again.

Raise the debt ceiling or no tax returns.

The debt ceiling is today, as it has always been, something that should be above partisan politics due to its severity. A responsible government would abolish it altogether.

It appears that after the last showdown this issue has been largely defused as even the current Republican Party is unwilling to cause a worldwide financial crisis in order to pass domestic policy. Do not allow stupid or unprincipled people to trick you into thinking that because we decided to avoid a financial meltdown that the debt ceiling isn't deadly serious.

 

[theeedude]

Just raise the debt ceiling, panic over.

 

[glenn1]

The debt ceiling is today, as it has always been, something that should be above partisan politics due to its severity. A responsible government would abolish it altogether.

It appears that after the last showdown this issue has been largely defused as even the current Republican Party is unwilling to cause a worldwide financial crisis in order to pass domestic policy. Do not allow stupid or unprincipled people to trick you into thinking that because we decided to avoid a financial meltdown that the debt ceiling isn't deadly serious.

No, abolishing it would be *irresponsible* government. A responsible government wouldn't need to have it raised because they wouldn't be deficit spending out the wazoo. But instead we have Bush followed by Obama in a race to see who can fuck over taxpayers and future generations the most.

 

[fskimospy]

No, abolishing it would be *irresponsible* government. A responsible government wouldn't need to have it raised because they wouldn't be deficit spending out the wazoo. But instead we have Bush followed by Obama in a race to see who can fuck over taxpayers and future generations the most.

This is a basic failure of understanding. The only responsible act is to abolish the debt ceiling. Full stop.

While economics 101 tells us that deficit spending is the responsible course of action right now, that's neither here nor there in regards to the debt ceiling. Even if you chose to abandon basic economics and cut spending in a depressed economy, the act of appropriations would be where you would undertake that fiscal 'responsibility', not with the debt ceiling.

Responsible governments do not default on their legal obligations. A system that routinely creates a situation where that could happen is the height of irresponsibility. People who actually ENDORSE doing that are both irresponsible and ignorant.

 

[rudeguy]

shut the mother effer down until the morons running it can do it using the money they have. We have ZERO need to be going into debt.

If they can't figure it out, fire them and bring in a fresh crop to do it.

 

[Genx87]

Just get rid of the debt ceiling all together is my opinion. Needless roadblock that allows for pointless grandstanding.

 

[glenn1]

This is a basic failure of understanding. The only responsible act is to abolish the debt ceiling. Full stop.

While economics 101 tells us that deficit spending is the responsible course of action right now, that's neither here nor there in regards to the debt ceiling. Even if you chose to abandon basic economics and cut spending in a depressed economy, the act of appropriations would be where you would undertake that fiscal 'responsibility', not with the debt ceiling.

Responsible governments do not default on their legal obligations. A system that routinely creates a situation where that could happen is the height of irresponsibility. People who actually ENDORSE doing that are both irresponsible and ignorant.

If Congress refuses to raise the budget ceiling to pay for previously budgeted spending, it's no longer a legal obligation since it would be a direct Congressional repudiation of that budget. Legally incurred debt would still be paid via Constitutional requirement of 14th Amendment. I would agree that Congress should pass an actual bill refusing to raise the debt ceiling rather than just letting it occur by inaction, however.

 

[fskimospy]

If Congress refuses to raise the budget ceiling to pay for previously budgeted spending, it's no longer a legal obligation since it would be a direct Congressional repudiation of that budget.

This is factually false and without legal basis. Not raising the debt ceiling does not implicitly refute or repeal lawfully enacted legislation. Full stop.

Legally incurred debt would still be paid via Constitutional requirement of 14th Amendment. I would agree that Congress should pass an actual bill refusing to raise the debt ceiling rather than just letting it occur by inaction, however.

The US has numerous fiscal obligations enshrined in law on the books that a debt ceiling breach would result in default of. Those who wish to not raise the debt ceiling as a way to stop federal spending instead of actually simply stopping federal spending at the appropriations level do not understand financial markets, public policy, or the basic functioning of our government.

I feel like ignorance HAS to be the answer here as I can't believe that anyone would be so dumb or so ideologically blind as to think that breaching the debt ceiling is a good idea on the merits. Nobody can be that foolish or irresponsible, right?

 

[theeedude]

If Congress refuses to raise the budget ceiling to pay for previously budgeted spending, it's no longer a legal obligation since it would be a direct Congressional repudiation of that budget. Legally incurred debt would still be paid via Constitutional requirement of 14th Amendment. I would agree that Congress should pass an actual bill refusing to raise the debt ceiling rather than just letting it occur by inaction, however.

We could make that law. But the interest rate on our debt would reflect the optionality of payments and ability of Congress to repudiate them.

 

[glenn1]

We could make that law. But the interest rate on our debt would reflect the optionality of payments and ability of Congress to repudiate them.

I'm fine with that since the USG and Fed and its actions have been taking actions to artificially supress interest rates to reduce the cost of U.S. debt and devalue our currency for years anyway. I'd rather budgetary rigor be reinstated via Congressional discipline and good spending habits rather than imposed by the market, but the later is going to happen sooner or later in any event. And aside from Treasury debt, there is absolutely *no* budget line item which could not be repudiated by Congress, including "mandatory" spending on entitlements. Hell, the Congress has spent the so-called "assets" of the SS Trust fund and used the income streams of the Social Security system for their own piggy bank for years anyway, why not go all the way and just tell future seniors "Sorry, no more SS for you."

 

[fskimospy]

I'm fine with that since the USG and Fed and its actions have been taking actions to artificially supress interest rates to reduce the cost of U.S. debt and devalue our currency for years anyway.

That is not why the USG and the Fed have taken those actions.

I'd rather budgetary rigor be reinstated via Congressional discipline and good spending habits rather than imposed by the market, but the later is going to happen sooner or later in any event. And aside from Treasury debt, there is absolutely *no* budget line item which could not be repudiated by Congress, including "mandatory" spending on entitlements. Hell, the Congress has spent the so-called "assets" of the SS Trust fund and used the income streams of the Social Security system for their own piggy bank for years anyway, why not go all the way and just tell future seniors "Sorry, no more SS for you."

Ooh, the bond vigilantes argument is making another pass! I like how the fact that this has been wrong year after year after year never stops people from repeating it. US bond rates will go up when the US economy improves, not before then. This is one of the fundamental misunderstandings that conservatives made about economics from the beginning of this crisis and it's one of the biggest reasons why they have been wrong so often.

 

[glenn1]

That is not why the USG and the Fed have taken those actions.

Ooh, the bond vigilantes argument is making another pass! I like how the fact that this has been wrong year after year after year never stops people from repeating it. US bond rates will go up when the US economy improves, not before then. This is one of the fundamental misunderstandings that conservatives made about economics from the beginning of this crisis and it's one of the biggest reasons why they have been wrong so often.

Funny, I thought the Keynesian arguments of having the USG spend trillions in stimulus was supposed to save us all, but here we are with a shitty Obama economy. But I'm sure you'll be here in moments to excuse it away by blaming Bush and "it was so bad, if Obama hadn't been there to save us all then we would all by dead by now."

BTW, if we applied the Greenspan-Guidoitti Rule the U.S. is already insolvent.

 

[Jaskalas]

Just get rid of the debt ceiling all together is my opinion. Needless roadblock that allows for pointless grandstanding.

100% agreed.

Fight over the budget, not the debt.

 

[fskimospy]

Funny, I thought the Keynesian arguments of having the USG spend trillions in stimulus was supposed to save us all, but here we are with a shitty Obama economy. But I'm sure you'll be here in moments to excuse it away by blaming Bush and "it was so bad, if Obama hadn't been there to save us all then we would all by dead by now."

Now that you've been backed into a corner you're resorting to hyperbole. Keynesian arguments are that spending on stimulative projects would yield better outcomes than not. Comparing the experiences of industrialized countries that have pursued varying levels of austerity makes this theory hold up really well. This was about as conclusive a natural experiment as you're ever going to see, and Keynesian analysis knocked it out of the park.

BTW, if we applied the Greenspan-Guidoitti Rule the U.S. is already insolvent.

That does not apply to solvency, that refers to what they think emerging economies should hold in order to prevent speculative attacks on their debt holdings. What's fun is that it also turned out to be hilariously wrong in this circumstance. Go look at all the predictions of US default going back almost 5 years now, how many of them said soaring interest rates were in our future. lol.

 

[Jimzz]

Just get rid of the debt ceiling all together is my opinion. Needless roadblock that allows for pointless grandstanding.

This

 

[PokerGuy]

Technically, the correct way to fix it is to change the appropriations such that we spend within our means. However, the system in DC is so irreparably broken, and so many people simply can not understand basic logic of living within your means, that the debt ceiling has become the only way to effectively force spending cuts. I say don't raise it until spending concessions have been made by the drunken sailors. If they refuse, then default and let the system reboot.

 

[ElFenix]

http://news.yahoo.com/treasury-39-lew-warns-u-default-could-happen-140809355--business.html

"Treasury's Lew warns that U.S. default could happen quickly!"

How long before the USA really cuts some real money from the current budget?

Feds crying wolf again.

Raise the debt ceiling or no tax returns.

probably never

 

[fskimospy]

Technically, the correct way to fix it is to change the appropriations such that we spend within our means. However, the system in DC is so irreparably broken, and so many people simply can not understand basic logic of living within your means, that the debt ceiling has become the only way to effectively force spending cuts. I say don't raise it until spending concessions have been made by the drunken sailors. If they refuse, then default and let the system reboot.

http://en.wikipedia.org/wiki/Cutting_off_the_nose_to_spite_the_face

 

[piasabird]

This stuff is getting so old it is like the boy that cried wolf. The thing with the fed is that the only reason to buy bonds is that no one wants them. In other words, we may already be in default.

 

[rudeguy]

probably never

definitely never

Even the republitards who say they want to cut spending never really cut spending. Its all smoke and mirrors. Until the government is held to the same ethical and business standards as us common folk, our spending will never be under control.

And the sad part is, they have stopped even talking about paying it all back. Our kids and their kids and their kids' kids are going to be screwed.

 

[PokerGuy]

http://en.wikipedia.org/wiki/Cutting_off_the_nose_to_spite_the_face

If defaulting is so bad, then surely the drunken sailors would be willing to trade in some wasteful spending to avoid the default. If not, well then we get what we deserve by electing people who can't balance a checkbook - default. Default is inevitable on our present course anyway, it's just a matter of how long we can keep up the charade.

 

[theeedude]

The only ones panicking now are the Republicans. The political downside of forcing a default or partial shutdown in an election year is all on them. We've seen this movie.

 

[fskimospy]

If defaulting is so bad, then surely the drunken sailors would be willing to trade in some wasteful spending to avoid the default. If not, well then we get what we deserve by electing people who can't balance a checkbook - default. Default is inevitable on our present course anyway, it's just a matter of how long we can keep up the charade.

Nah, you just don't understand economics.

If you think our spending is so bad, then cut it during the spending appropriations process, where the amount of spending is set. It's simple.

And no, no responsible person would trade ANYTHING for a debt ceiling hike. The only way to govern is to make it absolutely clear that those attempting to blackmail the government with the threat of a financial crisis will get nothing for it. If you do give them something you are simply encouraging future congresses to routinely threaten the world financial system. That would be incredibly irresponsible, so naturally anyone interested effectively running a country would throw that option out instantly.

Gotta use your head and think long term, not just think how you can best get the policy toy you want now.

 

[PokerGuy]

Nah, you just don't understand economics.

I do, it's the idiots in DC that have shown that they don't.

If you think our spending is so bad, then cut it during the spending appropriations process, where the amount of spending is set. It's simple.

I've already stated that I agree that's how it should technically work, but the system is too broken so that mechanism won't work. Neither side is interested in actually cutting spending.

And no, no responsible person would trade ANYTHING for a debt ceiling hike.

Then clearly the results can't be as bad as default.... so default it is.

If you do give them something you are simply encouraging future congresses to routinely threaten the world financial system.

And... gulp.. maybe even cut spending to responsible levels! Ahhhh noooooo!

Gotta use your head and think long term, not just think how you can best get the policy toy you want now.

That's exactly what I'm doing. Long term, we need to live within our means. If the debt ceiling is the only way to achieve that, then use that mechanism, because we already know the other ones don't work.