New "Grand Bargain" deal emerging on debt ceiling talks

[Fern]

For most of the 18 months, until very recently, the markets were pretty sure the debt ceiling would be raised. Now they know that it's not a sure thing and contingent on Republicans coming to their senses, which is far from assured. So a temporary increase going to result in months of uncertainty with businesses and credit agencies sitting on their thumbs waiting to see how it plays out. Unless we lock in ability of government to finance its spending for the foreseeable future to allow markets to regain confidence, our credit rating is toast. Putting the full faith and credit of the US up to election year politics is not what AAA rated borrowers do.

I understand back in 1995, despite warning from Rubin that failure to raise the debt ceiling would damage the market for Treasuries for at least 20 years, we went 5 months PAST the deadline.

What happened? NOTHING.

As I have repeatedly said, I am unconcerned about the debt ceiling issue. It's phoney scare tactics.

What is not phoney is the market's concern over our ever increasing debt. Again budgets are ALWAYS 12 month deals, don't see any way 12 months would suddenly be a problem now.

Fern

 

[theeedude]

How is counting as a cut not spending the hypothetical cost of extending the Iraq war past its scheduled end NOT a gimmick?

Why not count the cost of shuttle operations as a cut? Yeah, we hadn't planned on operating more shuttle flights, so let's just add that much to each year's projected spending and then cut it! Hell, pretty soon we'll be running a surplus!

Ryan plan counted it. Are you saying the Republican budget plan is nothing but a bunch of gimmicks?

 

[theeedude]

I understand back in 1995, despite warning from Rubin that failure to raise the debt ceiling would damage the market for Treasuries for at least 20 years, we went 5 months PAST the deadline.

What happened? NOTHING.

As I have repeatedly said, I am unconcerned about the debt ceiling issue. It's phoney scare tactics.

What is not phoney is the market's concern over our ever increasing debt. Again budgets are ALWAYS 12 month deals, don't see any way 12 months would suddenly be a problem now.

Fern

Debt ceiling =/= budget. This is full faith and credit of US on the line for another 12 months into a political season. AAA rated borrowers don't play these games.

 

[werepossum]

Ryan plan counted it. Are you saying the Republican budget plan is nothing but a bunch of gimmicks?

It probably is. This is D.C. - on almost any given issue there is not a right side and a wrong side, but either two almost identical sides or a wrong side and a perhaps not quite so wrong side.

 

[Doppel]

Calls the proposed custs a gimmicks

He's basically right.

Since it appears as we are destined for a default now or 6mos from now

Not that soon. The US on its current trajectory can play these stupid ass games for a few years yet, I think. 🙂

Now they know that it's not a sure thing and contingent on Republicans coming to their senses, which is far from assured.

On the contrary it was always a sure thing then and it is now. The markets know this. If they felt any differently they'd be moving negative. And I don't mean less than 1% like they did today, the same amount they move when Kirstie Alley farts.

I think Democrats should just let the debt ceiling kick in and immediately cut spending 40% like the Republicans want. See for how long the Republicans still want it.

Both parties would be led out of Washington in a great big chain gang, there's no way anybody would let either party off.

This is full faith and credit of US on the line for another 12 months into a political season.

It has never been on the line. Reason? See your next sentence when you call these "games". That's exactly what these are, it's just political grandstanding and belly aching. There was never a risk that the US would willfully default on its debt. Never, ever, ever, ever.

 

[theeedude]

It probably is. This is D.C. - on almost any given issue there is not a right side and a wrong side, but either two almost identical sides or a wrong side and a perhaps not quite so wrong side.

So why is the side that counts these savings themselves bashing another side for counting them?

 

[AstroManLuca]

There was never a risk that the US would willfully default on its debt. Never, ever, ever, ever.

There is now.

 

[theeedude]

Both parties would be led out of Washington in a great big chain gang, there's no way anybody would let either party off.

Last shutdown didn't work out that great for the GOP. Plus even if both parties get blamed, it will no longer be Obama's economy. It will be both Obama's and Republicans' economy. Net political win for the Democrats.

 

[Doppel]

There is now.

You're wrong. I guess I can't say it any plainer. When we wake up on August 3 and the sky is not torn asunder under a thousand nuclear explosions it will be clear even to the non-believers that there was never any belief by a single senator that there would be a defaulting of US debt as a direct unwillingness of them to not support an increase in the debt ceiling.

When predicting behavior you must always underscore everything with motivation. No senator is incentivized whatsoever to cause a default and this is why you know they won't. Only insanity makes the incentive model fail, so insane senators (e.g. Ron Paul, who knows what he'd do) cannot have their behavior modeled as easily as a hungry dog for a leg of meat or a dung beetle sniffing a fresh pile.

 

[Fern]

Debt ceiling =/= budget. This is full faith and credit of US on the line for another 12 months into a political season. AAA rated borrowers don't play these games.

Yeah, and in 1995 it was a debt ceiling issue.

The last time Congress allowed the debt ceiling to elapse was November of 1995, when the Gingrich-led House attached cuts and conditions to a debt-ceiling increase that were unacceptable to the Clinton-led White House, The standoff continued for four months...

http://www.washingtonpost.com/blogs...-it-was-in-1995/2011/05/09/AFlJqp5G_blog.html

Fern

 

[theeedude]

Yeah, and in 1995 it was a debt ceiling issue.



http://www.washingtonpost.com/blogs...-it-was-in-1995/2011/05/09/AFlJqp5G_blog.html

Fern

If you want to make 2011 debt ceiling fight look like 1995, fine. Just don't be surprised if 2012 Presidential election looks like 1996.

 

[piasabird]

I hope the president does not send out any checks. I hope he acts the fool and starves grandma. Republicans will say they passed a bill and the senate refused to consider it. What will the president say? My guess is he or the senate will pass a bill at the last minute and force the republicans to vote on it at the last minute. I hope they all vote no.

No cuts, no debt ceiling.

Just get ready to buy some stock when all the prices fall!

 

[werepossum]

So why is the side that counts these savings themselves bashing another side for counting them?

Short answer, because it's D.C. Long answer, Ryan's budget was a budget; this debate is about cutting the budget to better fit our income, at least a tiny bit more closely.

Ought to be a rule; there are no savings in future years' budgets unless you're proposing that this budget replace future years. In practical terms this would be limited by the House's two-year terms. So each new Congress should pass a two year budget and count ONLY the savings over those two years. As it stands, both sides promise big savings or cuts down the road, but 2016's budget will be baselined on 2015 spending, NOT on the outline set out in 2011 or 2012. That's why we never realize the savings in those ten-year plans.

 

[theeedude]

Point is how you count is an arbitrary decision, just like not raising the debt ceiling, just like 1:1 ratio for cuts, just like no tax hikes. These are all arbitrary constraints not really dictated by anything than Republican desire to force a default.

 

[werepossum]

Point is how you count is an arbitrary decision, just like not raising the debt ceiling, just like 1:1 ratio for cuts, just like no tax hikes. These are all arbitrary constraints not really dictated by anything than Republican desire to force a default.

All such decisions are by definition arbitrary.

We have one side that says government can and should borrow and spend ever more, with no debt ceiling at all, else our country will get even worse. That side literally cannot conceive of government ever being unable to borrow more money each year. We have another side that says government is already spending way more than we can afford and we must cut, else our country will go bankrupt. From that viewpoint, this round of promises to cut spending in the future are just as worthless as were all the other promises to cut spending in the future. If we want to borrow more money NOW, we have to agree to spend less money NOW.

Promises to spend less in the future should be met with promises to borrow more money in the future.

 

[teiresias]

I hope the president does not send out any checks. I hope he acts the fool and starves grandma. Republicans will say they passed a bill and the senate refused to consider it.

Republicans will pass it? The Tea Partiers have rejected Boehners newest plan as of today, so that's not going anywhere with them.

 

[Engineer]

Republicans will pass it? The Tea Partiers have rejected Boehners newest plan as of today, so that's not going anywhere with them.

The "Cut, Cap and Balance" bull...er...bill has already been passed by the house.

 

[theeedude]

All such decisions are by definition arbitrary.

We have one side that says government can and should borrow and spend ever more, with no debt ceiling at all, else our country will get even worse. That side literally cannot conceive of government ever being unable to borrow more money each year. We have another side that says government is already spending way more than we can afford and we must cut, else our country will go bankrupt. From that viewpoint, this round of promises to cut spending in the future are just as worthless as were all the other promises to cut spending in the future. If we want to borrow more money NOW, we have to agree to spend less money NOW.

Promises to spend less in the future should be met with promises to borrow more money in the future.

Have you heard of the term "saving for a rainy day?"
Ever wonder why it's not "saving on a rainy day?"

 

[Darwin333]

You are correct, it doesn't make them expire immediately but it doesn't extend them permanently as the repulicans want, it doesn't address them at all so I would assume they will expire as planned. Another reason the repubs will probably reject the plan.

Things the repubs won't like
1. No cuts to entitlements
2. No permenant extension of bush cuts
3. Most of the cuts are future cuts targeted mostly at domestic programs, defense spending and fraud elimination and waste cutting measures

Over 1/3 of the "cuts" are from troop drawdowns in Iraq and Afghan that would have happened anyway. That is a friggen gimmick regardless of how you slice it.

OTOH, the Repubs don't really care about real deficit reduction either so I would have thought they would have taken the deal just for a political win.

 

[werepossum]

Have you heard of the term "saving for a rainy day?"
Ever wonder why it's not "saving on a rainy day?"

I have indeed heard of that, and I wish one side or the other had done so.

However, spending all one's money plus some borrowed for over half a century (the only exception being the Republican Congress under Clinton) puts one in a pretty deep hole. When one is in a deep hole and it begins to rain, deepening the hole even more quickly is not the smart thing to do. The smart thing to do is to look for ways out of the hole. There is no way out of a hole that begins with digging it deeper and faster. You don't come out in China, you merely hit the core and burn up.

 

[Darwin333]

Have you heard of the term "saving for a rainy day?"
Ever wonder why it's not "saving on a rainy day?"

You yourself admit that this is going to be a long and slow recovery. We are already propping the GDP up by 12%, how much would you like us to boost it for the next 5 years or so? 20%? 30%? What happens when you go to remove that 20 or 30% of GDP at some point in the future? (hint: GDP goes down by at least as much and very easily more)

It is simply more false prosperity that is and will hinder our future economy. This is simply a continuation of trying to cover up the dot com bust with .gov spending and policies which lead to the housing bubble which lead to our current bubble. We can't blow a bigger bubble to paper over this one when it does eventually bust.

 

[Darwin333]

There is now.

What is 2 trillion minus 200 billion? Tell you what, let me make it easy for you and remove some of the zeros, try this:

2,000
- 200
----------




Lots of things are at risk of not getting paid, the interest on our debt is not one of them as the above equation shows.

Would you like me to pull up the monthly numbers to show that Social Security, the interest on the debt, AND .mil paychecks (and then some) can all be paid for with the revenue they will make? Granted the Department of just about everything will be shut down along with a shitload of other .gov spending but the fact is and will remain, no matter how much you wish otherwise, regardless of the debt ceiling our interest payments will be made.

 

[Darwin333]

So why is the side that counts these savings themselves bashing another side for counting them?

Lol, I was thinking the same thing and I really hope the Dems seriously call them out on it. That is why I firmly believe this is all political theater. Both sides are using fuzzy math, bullshit numbers, backloaded (never going to happen) crap, or shit we are going to do regardless in their numbers. Pretty freaking funny that the Repubs are calling out the Dems for using the exact same numbers though. How the hell can you do that with a straight face?

For the record, I have been bashing both sides for counting bullshit items like drawdowns in Iraq and Afghan as "cuts".

 

[theeedude]

I have indeed heard of that, and I wish one side or the other had done so.

However, spending all one's money plus some borrowed for over half a century (the only exception being the Republican Congress under Clinton) puts one in a pretty deep hole. When one is in a deep hole and it begins to rain, deepening the hole even more quickly is not the smart thing to do. The smart thing to do is to look for ways out of the hole. There is no way out of a hole that begins with digging it deeper and faster. You don't come out in China, you merely hit the core and burn up.

Republicans failed to save for a rainy day. The answer to the problem is not to save on the rainy day. The answer is to wait for the rain to end and save for the rainy day then.
If someone runs up a huge credit card debt, doesn't save for an emergency, then gets into an accident, the time to start saving is not while you are in the ER paying for life saving care. It's after you recover.

 

[Darwin333]

Ryan plan counted it. Are you saying the Republican budget plan is nothing but a bunch of gimmicks?

Yes, absolutely unequivocally yes.