New "Grand Bargain" deal emerging on debt ceiling talks

[IronWing]

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.

Once again, there is no legal authority for the President to divert appropriated funds from one purpose to another on the scale you suggest. It is flat out illegal. Diverting funds in this manner requires an act of Congress, essentially a do over on this year's budget. Given that this Congress can't agree to borrow the money they already agreed to borrow I can't see this type of funds diversion passing this Congress at all let alone passing in the next week. The House passed a budget for FY11 which contained deficit spending. Now the same folks who passed this deficit spending law are trying to eat their cake and have it too.

 

[Craig234]

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

There is a risk of a man-made financial disaster.

The credit rating of the US is already in jeopardy, for one thing; ask the rating agencies.

 

[theeedude]

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.

It is going to be a long and slow recovery. Cutting prematurely will make it even longer,slower, and MORE expensive. Patience is a virtue.

 

[OneOfTheseDays]

Are Republicans on this board really that forgetful?

Do you REALLY think your party is about spending cuts, saving money, and fiscal responsibility? Do you want to rewind the clock about 8 years and see what hell they unleashed on this country with their fiscal irresponsibility?

Can Republicans really be this stupid? How can you not see that your party is NOTHING more than a shill for big business? The whole conservative social agenda is a PLOY to get you morons to vote R. Make the big bad socialist, leftist, progressive the bogey man and the moronic mass of Republicans will follow. Scare them with abortion and gay marriage and they will continue to vote AGAINST their interest time and time again.

It's truly pathetic how stupid the majority of the Republican party is and how woefully misled they are about their party's real intentions.

 

[theeedude]

Are Republicans on this board really that forgetful?

Do you REALLY think your party is about spending cuts, saving money, and fiscal responsibility? Do you want to rewind the clock about 8 years and see what hell they unleashed on this country with their fiscal irresponsibility?

Can Republicans really be this stupid? How can you not see that your party is NOTHING more than a shill for big business? The whole conservative social agenda is a PLOY to get you morons to vote R. Make the big bad socialist, leftist, progressive the bogey man and the moronic mass of Republicans will follow. Scare them with abortion and gay marriage and they will continue to vote AGAINST their interest time and time again.

It's truly pathetic how stupid the majority of the Republican party is and how woefully misled they are about their party's real intentions.

Do you even have to ask?

 

[Darwin333]

Once again, there is no legal authority for the President to divert appropriated funds from one purpose to another on the scale you suggest. It is flat out illegal. Diverting funds in this manner requires an act of Congress, essentially a do over on this year's budget. Given that this Congress can't agree to borrow the money they already agreed to borrow I can't see this type of funds diversion passing this Congress at all let alone passing in the next week. The House passed a budget for FY11 which contained deficit spending. Now the same folks who passed this deficit spending law are trying to eat their cake and have it too.

14th amendment.

And frankly I disagree with you, unless you can show me actual black letter law that states the President when faced with not having enough money to cover expenditures must.... I don't know what you are suggesting. Are you suggesting that he can not, by law, pay anything because he can't pay one thing and not the other?

Are you suggesting that on Aug. 2nd that the lights in the White House will get shut off because he can not, by law, divert funds to the electric bill because he can not pay all of the expenditures in the budget? Or is there some lawful limit that he can divert but the rest must be put into a piggy bank?

Your argument is simply absurd. The only thing he can possibly do is to divert funds to the highest priority items. Period. Both Obama and Geithner have already threatened to do exactly that so obviously they don't think it is against the law or they have publicly conspired to break the law. Which is it?

 

[Darwin333]

It is going to be a long and slow recovery. Cutting prematurely will make it even longer,slower, and MORE expensive. Patience is a virtue.

You answered none of my questions.

How much more false prosperity do you think we need for the next 5ish years and how do you intend to remove that false prosperity when it is no longer needed?

 

[theeedude]

You answered none of my questions.

How much more false prosperity do you think we need for the next 5ish years and how do you intend to remove that false prosperity when it is no longer needed?

It's not false prosperity.

 

[Darwin333]

There is a risk of a man-made financial disaster.

The credit rating of the US is already in jeopardy, for one thing; ask the rating agencies.

They have already spoken.

Directly from the rating agencies:

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.

I am sure they see this political theater as an issue but the real issue on their minds is our short/mid-term fiscal policy. At least that is how I read it, does your opinion on the above statement differ?

Unfortunately, neither side has a serious solution to the above problem regardless of the bullshit they try to feed to the rest of us. That is why I am of the firm belief that we be fucked. It won't be today or tomorrow or next month or even next year but eventually this train is coming off the tracks.

 

[Darwin333]

It's not false prosperity.

What do you call propping up GDP by anywhere from 3 to 12 percent for over a decade?

 

[theeedude]

What do you call propping up GDP by anywhere from 3 to 12 percent for over a decade?

Optimizing real GDP.

 

[Engineer]

They have already spoken.

Directly from the rating agencies:



I am sure they see this political theater as an issue but the real issue on their minds is our short/mid-term fiscal policy. At least that is how I read it, does your opinion on the above statement differ?

Unfortunately, neither side has a serious solution to the above problem regardless of the bullshit they try to feed to the rest of us. That is why I am of the firm belief that we be fucked. It won't be today or tomorrow or next month or even next year but eventually this train is coming off the tracks.

In other words, we've ripped the foundation (middle and lower classes) out from under the US by shipping their good paying, wealth creating jobs offshore and then, propping them up with debt. Now the credit card has been shredded and the foundation is collapsing again. The politicians are trying to keep the foundation by throwing more spending toward it but the cement (money) is stuck at the top of the building and not running down to the foundation. Only those with helicopters (jets or the like - i.e. those at the top) will survive when it all comes down and crashes. The rest will be roaming the streets looking for what was....

 

[the DRIZZLE]

It is going to be a long and slow recovery. Cutting prematurely will make it even longer,slower, and MORE expensive. Patience is a virtue.

Since patience is a virtue we should stop trying to stimulate the economy and let it recover on its own. At what level of deficits would more spending not be your solution?

 

[Doppel]

It's not false prosperity.

All the deficit-purchasing has not bought false prosperity, you're right; it's more accurately brought it forward from the future. And, like all interest-purchased goods or services the net gain is less than if it had of been paid for without the debt. The nation is quite literally and accurately borrowing from the future constantly, and at an accelerated rate. And this is not an investment in the future, it is not infrastructure, it is not education, it is simply cost of living like paying for booze that gives you nothing the next day.

Optimizing real GDP.

Wow, I think you are serious, but it's actually what I just called it 🙂 Optimizing GDP is what I said the nation isn't doing--which would be to use this debt to purchase equipment, build roads, power plants, invest in alternate energy (don't you dare find some pitiful little investment and say but look we are!). Most of the debt is going into gone today gone tomorrow expenses, from hip replacements to smart bombs.

 

[theeedude]

Since patience is a virtue we should stop trying to stimulate the economy and let it recover on its own. At what level of deficits would more spending not be your solution?

5% unemployment.

 

[theeedude]

All the deficit-purchasing has not bought false prosperity, you're right; it's more accurately brought it forward from the future. And, like all interest-purchased goods or services the net gain is less than if it had of been paid for without the debt. The nation is quite literally and accurately borrowing from the future constantly, and at an accelerated rate. And this is not an investment in the future, it is not infrastructure, it is not education, it is simply cost of living like paying for booze that gives you nothing the next day.Wow, I think you are serious, but it's actually what I just called it 🙂 Optimizing GDP is what I said the nation isn't doing--which would be to use this debt to purchase equipment, build roads, power plants, invest in alternate energy (don't you dare find some pitiful little investment and say but look we are!). Most of the debt is going into gone today gone tomorrow expenses, from hip replacements to smart bombs.

It's OK to borrow from the future if you use the money to build things that will make the future better. No one is complaining that we borrowed money to win WW2, because it made the future a lot better than if we lost the war. No one is complaining we borrowed money to build great universities and make Silicon Valleys possible. The goal is to optimize real GDP in the long run. Period, end of story. Having 10% of population doing nothing because we don't want to borrow to invest in the future is idiotic.

 

[Doppel]

It's OK to borrow from the future if you use the money to build things that will make the future better. No one is complaining that we borrowed money to win WW2, because it made the future a lot better than if we lost the war. No one is complaining we borrowed money to build great universities and make Silicon Valleys possible. The goal is to optimize real GDP in the long run. Period, end of story. Having 10% of population doing nothing because we don't want to borrow to invest in the future is idiotic.

But this nation has forgotten how to borrow money to invest in the future. The majority of borrowed money isn't going to the future but going to the current "utility bills". There is the key problem. It doesn't invest its money, it simply spends it. Like a trailer park dweller given $50k. He doesn't take time off work and get a degree somewhere to get up out of the park he just buys a mustang and then blows the rest on beer.

 

[Engineer]

But this nation has forgotten how to borrow money to invest in the future. The majority of borrowed money isn't going to the future but going to the current "utility bills". There is the key problem. It doesn't invest its money, it simply spends it. Like a trailer park dweller given $50k. He doesn't take time off work and get a degree somewhere to get up out of the park he just buys a mustang and then blows the rest on beer.

If we don't fix the foundation problem that I described above, the whole damn building will crumble....no matter how much money is spent decorating the top floors.

 

[the DRIZZLE]

5% unemployment.

So as long as unemployment is high you would raise spending to infinity?

 

[Jhhnn]

Are Republicans on this board really that forgetful?

Do you REALLY think your party is about spending cuts, saving money, and fiscal responsibility? Do you want to rewind the clock about 8 years and see what hell they unleashed on this country with their fiscal irresponsibility?

Can Republicans really be this stupid? How can you not see that your party is NOTHING more than a shill for big business? The whole conservative social agenda is a PLOY to get you morons to vote R. Make the big bad socialist, leftist, progressive the bogey man and the moronic mass of Republicans will follow. Scare them with abortion and gay marriage and they will continue to vote AGAINST their interest time and time again.

It's truly pathetic how stupid the majority of the Republican party is and how woefully misled they are about their party's real intentions.

You might as well have posted that in some obscure dialect of Farsi, at least as far as our resident righties are concerned.

They're emotionally vested in the repetitive rhetoric of their party. It's a form of denial, often exploited by demagogues. It's very difficult for rational outsiders to understand how seemingly rational people are transformed into drooling idiots by powerful rhetoric that taps deep seated jealousy, resentment & rage. Tap that, and they'll believe anything else you send along with it, even highly contradictory information.

Everything they believe in so fervently leads to inexorable conclusion that it's all Obama's fault. Everything. The fact that they believe in lies & distortions is immaterial, because they believe in lies & distortions. They feel good doing so, getting all those smug, self righteous juices flowing for that self satisfied glow of just knowing that they're oh so right...

 

[Darwin333]

Optimizing real GDP.

LMAO!

So the housing bubble was simply optimizing real housing prices?

 

[Darwin333]

In other words, we've ripped the foundation (middle and lower classes) out from under the US by shipping their good paying, wealth creating jobs offshore and then, propping them up with debt. Now the credit card has been shredded and the foundation is collapsing again. The politicians are trying to keep the foundation by throwing more spending toward it but the cement (money) is stuck at the top of the building and not running down to the foundation. Only those with helicopters (jets or the like - i.e. those at the top) will survive when it all comes down and crashes. The rest will be roaming the streets looking for what was....

Pretty much.

 

[Darwin333]

If we don't fix the foundation problem that I described above, the whole damn building will crumble....no matter how much money is spent decorating the top floors.

While I doubt either of you will ever believe it, imo you are both right.

 

[brencat]

Are Democrats on this board really that forgetful?

Do you REALLY think your party is about caring for the little guy, the disadvantaged? Do you want to rewind the clock about 36 years and see what hell they unleashed on this country with a full-on leftist agenda a la Jimmy Carter style?

How can you not see that your party is NOTHING more than a shill for big business and the political donor class just like the Repubs? The whole social agenda is a PLOY to separate people into groups...blacks, latinos, the gays, the poor, millionaires & billionaires, play you off one another to create strife, and get you morons to vote D. Make the small business owner, fat-cat CEO, greedy corporation, and evil pharmaceutical company the boogey man and the moronic mass of unthinking emotionally driven drone Democrats will follow. Scare them with taking away abortion on demand and gay marriage bans and they will continue to vote AGAINST their interest time and time again.

It's truly pathetic how stupid the majority of the Democrats are and how woefully misled they are about their party's real intentions.

See how easy that was?

 

[IronWing]

14th amendment.

And frankly I disagree with you, unless you can show me actual black letter law that states the President when faced with not having enough money to cover expenditures must.... I don't know what you are suggesting. Are you suggesting that he can not, by law, pay anything because he can't pay one thing and not the other?

Are you suggesting that on Aug. 2nd that the lights in the White House will get shut off because he can not, by law, divert funds to the electric bill because he can not pay all of the expenditures in the budget? Or is there some lawful limit that he can divert but the rest must be put into a piggy bank?

Your argument is simply absurd. The only thing he can possibly do is to divert funds to the highest priority items. Period. Both Obama and Geithner have already threatened to do exactly that so obviously they don't think it is against the law or they have publicly conspired to break the law. Which is it?

Here ya go:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+31USC1341

TITLE 31--MONEY AND FINANCE SUBTITLE II--THE BUDGET PROCESS CHAPTER 13--APPROPRIATIONS SUBCHAPTER III--LIMITATIONS, EXCEPTIONS, AND PENALTIES
Sec. 1341. Limitations on expending and obligating amounts
(a)(1) An officer or employee of the United States Government or of the District of Columbia government may not--
(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation;
...

Appropriations are designated for specific purposes and can not be diverted unless specifically authorized by Congress. An example of this is that the Forest Service is allowed to borrow funds from other Dept of Ag funds for the purpose of fighting forest fires which vary so much year to year that trying to match the appropriation to the need in advance is hopeless. When the summer winds down, Congress passes a supplemental appropriation bill to cover the costs once known. This diversion of funds is specifically allowed in law.

An example of a President running afoul of the law was when Reagan tried to divert EPA funds to debt reduction. The courts smacked his administration over that as he was trying to use funds in an unauthorized manner, violating the appropriations law that specified that those funds were to be used by EPA.


Edit: Whether or not the government will have to stop spending when the debt limit is reached is an open question. Congress has already passed into law the appropriations for fY11. It may be the case that the government can continue spending money that doesn't exist as Congress has already directed it to do so. It may be the case that the US defaults on its bonds and merrily continues spending at the same time. Being sovereign has its advantages.