New "Grand Bargain" deal emerging on debt ceiling talks

[matt0611]

It's not a 'belief', it's backed up by empirical evidence.

You're just repeating yourself though. The US government has large numbers of obligations outside of simply servicing its debt. It is highly likely that bond markets will note the failure of the US government to meet its other obligations as a sign of increased future risk, and we face considerably higher rates because of this. Not only that, but the removal of so much cash from the US economy all at once would certainly trigger a catastrophic economic chain reaction.

It's nice to see that you're a constitutional scholar and all so that you can answer with such certainty that question that is dividing actual constitutional scholars, but I more mean that in this case it's sort of irrelevant as to whether it's Constitutional or not, because the Republicans would have no way to stop him.

Presidents have frequently acted in ways that are likely outside their constitutional authority in the past to protect America from threats that they deem to be dire enough. The effects of this would likely be far more severe than any terrorist attack, and so taking a constitutionally controversial position on this case might just be what Obama needs to do to save the US from the insane people in the House. That's what I meant about taking one for the team.

Yeah, sure it is. Like I said, we'll see how long it takes to get out of this.

Obama should tell the bond markets that they will never default on the debt, because there really isn't any reason to.

And Obama takes an unconstitutional view on a lot things. It wouldn't surprise me one bit if he did that.

 

[the DRIZZLE]

It's not a 'belief', it's backed up by empirical evidence.

You're just repeating yourself though. The US government has large numbers of obligations outside of simply servicing its debt. It is highly likely that bond markets will note the failure of the US government to meet its other obligations as a sign of increased future risk, and we face considerably higher rates because of this. Not only that, but the removal of so much cash from the US economy all at once would certainly trigger a catastrophic economic chain reaction.

It's nice to see that you're a constitutional scholar and all so that you can answer with such certainty that question that is dividing actual constitutional scholars, but I more mean that in this case it's sort of irrelevant as to whether it's Constitutional or not, because the Republicans would have no way to stop him.

Presidents have frequently acted in ways that are likely outside their constitutional authority in the past to protect America from threats that they deem to be dire enough. The effects of this would likely be far more severe than any terrorist attack, and so taking a constitutionally controversial position on this case might just be what Obama needs to do to save the US from the insane people in the House. That's what I meant about taking one for the team.

You are one of the smarter posters on here. I'm disappointed that you would would advocate Obama going around the Constitution. You can't compare this with something like Lincoln suspending habius corpus in the middle of the a civil war.

 

[Balt]

And no, there is no constitutional authority to go around the debt limit.

That is one way to phrase it, yes. Another would be that there is no constitutional authority to impose a debt limit.

 

[IronWing]

Doesn't Obama have the power to direct funding once we hit the ceiling?

No. Presidents do not have the authority to redirect appropriated funds from their intended purposes. There is some spending flexibility granted to Presidents but not sufficient to move defense or highway funds to debt service. Appropriations laws are like any other laws and can't lawfully be ignored.

 

[fskimospy]

Yeah, sure it is. Like I said, we'll see how long it takes to get out of this.

Obama should tell the bond markets that they will never default on the debt, because there really isn't any reason to.

And Obama takes an unconstitutional view on a lot things. It wouldn't surprise me one bit if he did that.

I've said it twice now, but I will say it a third time. The US has obligations that extend beyond the bond markets. Failure to meet those will likely also have an effect on them. Strangely enough, just having the president say 'don't sweat it' won't actually work.

Usually when someone says something is unconstitutional it's because they 1.) don't like it and want it to be somehow, magically illegal. and 2.) they don't understand the Constitution.

If the Republicans insist on putting the country in such a dire situation, they definitely substantially raise the possibility of getting absolutely nothing out of the deal when Obama just goes over their head. Someone has to govern responsibly here and if the Republicans won't do it, then the government might need to do it without them.

 

[Doppel]

I continue to be entertained by the mere notion of default. Some are speaking of this entirely inconceivable event as a real possibility.

The US very well may default, but only under the same conditions that have put Greece into de facto default: The markets force it. It will never be because a bunch of professional actors in Washington have any kind of moral or principled stand that brings it about prematurely.

If anybody with any real holdings felt like the country would start defaulting in August they'd be selling bonds hand over fist and yields would already have skyrocketed.

Oh, looky, what's this?

http://www.treasury.gov/resource-ce.../Pages/TextView.aspx?data=yieldYear&year=2011

Is that really the yield rates lower now than at the start of the year? Yep.

 

[IronWing]

That is one way to phrase it, yes. Another would be that there is no constitutional authority to impose a debt limit.

This hasn't been tested yet and Obama doesn't seem inclined to try this tack. As he stated ""I don't think we should even get to the constitutional issue,...".

 

[GuitarDaddy]

I continue to be entertained by the mere notion of default. Some are speaking of this entirely inconceivable event as a real possibility.

The US very well may default, but only under the same conditions that have put Greece into de facto default: The markets force it. It will never be because a bunch of professional actors in Washington have any kind of moral or principled stand that brings it about prematurely.

If anybody with any real holdings felt like the country would start defaulting in August they'd be selling bonds hand over fist and yields would already have skyrocketed.

Oh, looky, what's this?

http://www.treasury.gov/resource-ce.../Pages/TextView.aspx?data=yieldYear&year=2011

Is that really the yield rates lower now than at the start of the year? Yep.

You seem to pretend that treasury bonds are the only type of debt that the government has Failure to pay any of the US soveriegn debts can be considered a default, wether it is interest payments on bonds, government or military salaries, SS or medicare payments or payments to government contractors, unemployment payments, etc, etc.

 

[Doppel]

You seem to pretend that treasury bonds are the only type of debt that the government has Failure to pay any of the US soveriegn debts can be considered a default, wether it is interest payments on bonds, government or military salaries, SS or medicare payments or payments to government contractors, unemployment payments, etc, etc.

Whether SS is considered "debt" or not, with the first round of checks that don't go out there will be torches and pitchforks in the capital so it will be solved then (while interest payments continue to be made). The theater majors right now are preaching that the US could default and have an immediate increase in lending rates. The bond market does not agree with this demagoguery.

They have always raised the debt ceiling.
They will raise the debt ceiling again.

There will be NO missed interest payments in August. There will be NO checks that fail to go out for Medicare, SS, etc.

 

[matt0611]

I've said it twice now, but I will say it a third time. The US has obligations that extend beyond the bond markets. Failure to meet those will likely also have an effect on them. Strangely enough, just having the president say 'don't sweat it' won't actually work.

Usually when someone says something is unconstitutional it's because they 1.) don't like it and want it to be somehow, magically illegal. and 2.) they don't understand the Constitution.

If the Republicans insist on putting the country in such a dire situation, they definitely substantially raise the possibility of getting absolutely nothing out of the deal when Obama just goes over their head. Someone has to govern responsibly here and if the Republicans won't do it, then the government might need to do it without them.

Or it could be 3) it really is unconstitutional

Liberals love to twist any word in the constitution to feed their desires. Everyone knows this.

 

[GuitarDaddy]

Whether SS is considered "debt" or not, with the first round of checks that don't go out there will be torches and pitchforks in the capital so it will be solved then (while interest payments continue to be made). The theater majors right now are preaching that the US could default and have an immediate increase in lending rates. The bond market does not agree with this demagoguery.

They have always raised the debt ceiling.
They will raise the debt ceiling again.

There will be NO missed interest payments in August. There will be NO checks that fail to go out for Medicare, SS, etc.

If your so confident please tell us how it will happen, what will the deal look like?

And since you seem to be the all seeing oracle can you PM me with the winning numbers for the next powerball lotto?

 

[Darwin333]

I've said it twice now, but I will say it a third time. The US has obligations that extend beyond the bond markets. Failure to meet those will likely also have an effect on them. Strangely enough, just having the president say 'don't sweat it' won't actually work.

You seem awfully concerned about something that you think might happen but not concerned at all about something the people that actually decide the ratings have already stated.

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.

… Despite these exceptional strengths, we note the U.S.’s fiscal profile has deteriorated steadily during the past decade and, in our view, has worsened further as a result of the recent financial crisis and ensuing recession. Moreover, more than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on a strategy to reverse recent fiscal deterioration or address longer-term fiscal pressures.

In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.

Strangely enough, having the president say "don't sweat our deficits" won't work either as has been implicitly stated by the people that decide if little things like, oh I dunno, most mutual funds can invest in US bonds.

Losing our AAA rating will cause immensely more harm then the bond market "thinking" we might screw them after we prove we are willing to screw our own people to continue paying our debt service.

 

[feralkid]

Or it could be 3) it really is unconstitutional

http://www.theonion.com/articles/area-man-passionate-defender-of-what-he-imagines-c,2849/

 

[Darwin333]

If your so confident please tell us how it will happen, what will the deal look like?

And since you seem to be the all seeing oracle can you PM me with the winning numbers for the next powerball lotto?

He is making a very safe bet but a bet nonetheless.

It would be utter turmoil if the debt ceiling doesn't get raised. We will (as in almost all of us, both parties) run those bastards out on a rail as soon as the spending we like stops. That is just a fact of the world we live in, let social security checks stop for a month or so and see the shitstorm that follows. Let GDP contract by at least 12% virtually overnight with virtually no .gov safety nets and you will see true rioting in the street. That is simply the way it is, hungry people are not rational people and they tend to fuck shit up the hungrier they get.

Neither party will let that happen as it will end their careers. The only thing the vast majority of those assholes care about is getting reelected. Debt ceiling will get raised or some sort of gimmick will get done to keep most of the .gov operating as normal.


I don't have the powerball numbers but I am willing to make a personal wager that the following does not happen. No catastrophe, no doomsday, cats and dogs don't live together, no tanks, market may move a bit but nothing catastrophic, no one goes hungry, bond market doesn't bend us over, old folk aren't kicked out of their nursing home, etc... due to the debt ceiling issue.

How much you wanna bet?

 

[Doppel]

If your so confident please tell us how it will happen, what will the deal look like?

And since you seem to be the all seeing oracle can you PM me with the winning numbers for the next powerball lotto?

Strawman ftl. I have told you there will be no default. When there isn't you will remember I told you this. I don't know what their deal will look like. I also can tell you that the sun will rise on October 28th, 2025. Can I tell you exactly what time? No.

Debt ceiling will get raised or some sort of gimmick will get done to keep most of the .gov operating as normal.

Exactly. I can't believe there are actually people who think otherwise. There will either be a debt deal or if there isn't it won't matter as much as the politicians have claimed; there will be no default from this entire thing. No chance.

 

[halik]

He is making a very safe bet but a bet nonetheless.

It would be utter turmoil if the debt ceiling doesn't get raised. We will (as in almost all of us, both parties) run those bastards out on a rail as soon as the spending we like stops. That is just a fact of the world we live in, let social security checks stop for a month or so and see the shitstorm that follows. Let GDP contract by at least 12% virtually overnight with virtually no .gov safety nets and you will see true rioting in the street. That is simply the way it is, hungry people are not rational people and they tend to fuck shit up the hungrier they get.

Neither party will let that happen as it will end their careers. The only thing the vast majority of those assholes care about is getting reelected. Debt ceiling will get raised or some sort of gimmick will get done to keep most of the .gov operating as normal.


I don't have the powerball numbers but I am willing to make a personal wager that the following does not happen. No catastrophe, no doomsday, cats and dogs don't live together, no tanks, market may move a bit but nothing catastrophic, no one goes hungry, bond market doesn't bend us over, old folk aren't kicked out of their nursing home, etc... due to the debt ceiling issue.

How much you wanna bet?

This * infinity.

Letting the us default and having everyone take a hit on their 401Ks, social security payments, armed forces payrolls etc. etc. will engender the biggest shitstorm the 535+1 assholes have ever seen.

The end result of taxing us to the tune of billions of dollars because each and every one of them is looking out for their best election/political gain out of this will be the last thing they do as public officials.

 

[her209]

I don't have the powerball numbers but I am willing to make a personal wager that the following does not happen. No catastrophe, no doomsday, cats and dogs don't live together, no tanks, market may move a bit but nothing catastrophic, no one goes hungry, bond market doesn't bend us over, old folk aren't kicked out of their nursing home, etc... due to the debt ceiling issue.

How much you wanna bet?

spidey07 will take that bet. He believes "it" is coming and he's ready.

 

[Darwin333]

spidey07 will take that bet. He believes "it" is coming and he's ready.

"It" may or may not be coming (how the fuck am I supposed to know?) but "it" will not come in the form of the debt ceiling not being raised in a week or so.

At the VERY least some sort of short term clean debt ceiling increase will be passed to allow this political theater to continue another month or two. And that is all this is, political theater. Neither side has proposed any actual plans that even attempt to get us on a fiscally sustainable path. Sure they say they do but they are counting on the fact that most of us only read the first paragraph or two. Or that they really really mean it this time when they say they are going to make no cuts now and a fuckton of cuts in 8 years or some other bullshit like that.

 

[fskimospy]

You seem awfully concerned about something that you think might happen but not concerned at all about something the people that actually decide the ratings have already stated.

Strangely enough, having the president say "don't sweat our deficits" won't work either as has been implicitly stated by the people that decide if little things like, oh I dunno, most mutual funds can invest in US bonds.

Losing our AAA rating will cause immensely more harm then the bond market "thinking" we might screw them after we prove we are willing to screw our own people to continue paying our debt service.

I have no idea why you think I believe that long term structural deficits aren't concerning. This would be directly contrary to what I've said many, many times. Please don't put words in my mouth.

I strongly support massively increased spending in the short term, and systemic reform of our health care system to address long term issues. (nearly all of our long term problems are health care related) The Republicans aren't actually interested in closing the deficit though. Nearly all credible experts say that the US will have to increase revenues in order to meet these long term budgetary challenges, something that the Republicans categorically oppose. This is part of their irresponsible behavior.

Losing our AAA rating would most certainly be bad, but you appear to think the issue of raising our debt ceiling and the reforms to ensure long term viability are related, when mostly these necessary reforms aren't even being discussed.

Hint to everyone: the Republicans don't actually care about the deficit. They hate social welfare spending and taxes, that's what they are going after. That's why they don't accept enormously favorable deficit reduction bargains.

 

[Doc Savage Fan]

The Republicans aren't actually interested in closing the deficit though.

Of course not.

 

[fskimospy]

Of course not.

Glad you agree.

 

[Darwin333]

I have no idea why you think I believe that long term structural deficits aren't concerning. This would be directly contrary to what I've said many, many times. Please don't put words in my mouth.

I am not putting words in your mouth. Lets take your next paragraph for example:

I strongly support massively increased spending in the short term, and systemic reform of our health care system to address long term issues.

The rating agencies, the very same that you are concerned with over the debt ceiling issue, have pretty much stated that any sort of "massively increased spending in the short term" would lead to a downgrade of our AAA rating. Hell, they have flat out stated that if we don't get our fiscal house in order and on a sustainable path by 2013 that we will be downgraded. Furthermore, as the last decade has shown us, there is rarely such a thing as short term spending increases. Most spending increases have been structural and not simply one time spending items.

If you were concerned in the least with our AAA rating and the severe consequences of losing it you would pay attention to those that set that rating. You do not.

(nearly all of our long term problems are health care related) The Republicans aren't actually interested in closing the deficit though. Nearly all credible experts say that the US will have to increase revenues in order to meet these long term budgetary challenges, something that the Republicans categorically oppose. This is part of their irresponsible behavior.

Agree with pretty much all of the above. I am sure we wildly disagree on the solutions but we do agree on most of the problems you listed. OTOH, I believe that your side is just as bad though.

We even agree on the revenue part. We need to get revenue back to 19ish% of GDP. If we can possibly get 20% on a sustainable basis that would be even better. OTOH, we need to cut spending to very close to that level as well. I don't believe that either will happen until we are forced to by external forces.

Losing our AAA rating would most certainly be bad, but you appear to think the issue of raising our debt ceiling and the reforms to ensure long term viability are related, when mostly these necessary reforms aren't even being discussed.

Well, they are related but you are right, most mid/long term reforms (that aren't complete bullshit) haven't really been discussed at all. Even the plans that say they reduce the deficit by Xtrillion in 10 years turn out to be bullshit backloaded plans that will most likely reduce the deficit by a fraction of what is claimed.

Hint to everyone: the Republicans don't actually care about the deficit. They hate social welfare spending and taxes, that's what they are going after. That's why they don't accept enormously favorable deficit reduction bargains.

Like the Democrats, they care about getting reelected. Thats about it.

Frankly, I believe this entire ordeal is political theater. Smoke and mirrors from both sides. They will both walk away saying "we won!!!" yet neither side will have actually solved a damn thing.

 

[Darwin333]

Of course not.

Can you show me a plan that the Republicans have put forth that would remove the 12% of GDP that is currently coming from Federal Gov deficit spending?

Thanks in advance.

 

[a777pilot]

The American markets just opened.

Is the world ending?

p.s., Have no fear Nibiru we solve our debt problems. The Mayans were right.

 

[Doc Savage Fan]

Can you show me a plan that the Republicans have put forth that would remove the 12% of GDP that is currently coming from Federal Gov deficit spending?

Thanks in advance.

I was commenting on a lie...which you've apparently misconstrued as a bash on Democrats. No need to get so defensive....or is there?