Proposal to Give Control of Debt Ceiling to POTUS?

[ivwshane]

How about you address my points instead of just repeating the original assertion?

How about you look up what the actual debt limit is and realize how stupid your post is?

I'll help you:
http://www.treasury.gov/initiatives/Documents/Debt Limit Myth v Fact FINAL.pdf

 

[the DRIZZLE]

How about you look up what the fuck the actual debt limit is and realize how stupid your post is?

I'll help you:
http://www.treasury.gov/initiatives/Documents/Debt Limit Myth v Fact FINAL.pdf

I understand quite well what the debt limit is and how it is related to, but not the same as the budget. You still have not addressed any of the points in my first post.

 

[Jhhnn]

You and others in this thread appear to be confused. Congress sets a budget but does not control the financial results of the government because some factors are outside of their control. They can set tax rates but that results in uncertain revenue and even they wrote a law specifying how much each American had to pay to the penny they couldn't guarantee it would be collected. Congress also doesn't control interest rates so they don't know how much interest the government will have to pay with certainty

An analogy would be that the manager of a business could set prices and employee salaries but couldn't precisely control the cash flows of the business because some things are out of his control.

The Treasury manages the day to day finances which of the result of both things Congress can control and those that they can't. I think that it's appropriate for Congress to set reasonable boundaries to force some action when the fiscal situation gets out of hand. I understand the argument that this is a redundant check, but sometimes redundancy is prudent.

Another issue is that without the debt ceiling I think the treasury would actually be able to conduct a shadow monetary policy by issue extra bonds and sitting on the cash. Although there may be other laws preventing this.

Congress routinely passes budgets whereby the debt ceiling must be raised. This known when the budget is sent to the President for his signature. Obviously, there is some uncertainty as to the precise amount, but when the budget is projected to exceed the debt limit by a huge amount anyway, hundreds of billions, your arguments fall apart. It's pure posturing & pandering to knowingly pass such a budget and then try to weasel out of paying for it later, or to hold implementation hostage to future goals. It's dishonest.

The downgrade of US wasn't because of the debt itself, but rather because Repubs discredit the govt they're part of, sow doubt as to the ability to govern effectively & responsibly. A paralyzed govt is not a responsible govt, nor is a govt held hostage to the whims of an extreme minority, the financial elite.

 

[the DRIZZLE]

Congress routinely passes budgets whereby the debt ceiling must be raised. This known when the budget is sent to the President for his signature. Obviously, there is some uncertainty as to the precise amount, but when the budget is projected to exceed the debt limit by a huge amount anyway, hundreds of billions, your arguments fall apart. It's pure posturing & pandering to knowingly pass such a budget and then try to weasel out of paying for it later, or to hold implementation hostage to future goals. It's dishonest.

Agreed, but that doesn't mean that it's not an appropriate check in the system. If you look at the financial management system of any large publicly traded company you will see plenty of analogous, arguably redundant controls in place.

 

[Jhhnn]

Agreed, but that doesn't mean that it's not an appropriate check in the system. If you look at the financial management system of any large publicly traded company you will see plenty of analogous, arguably redundant controls in place.

Those controls aren't analogous at all. When corporate auditors see that spending is within reasonable bounds as set by the budget, that's that.

What Congressional Repubs did in 2010 wasn't that at all. They created a hostage when the budget was passed, then attempted to use it for extortion.

We both know it.

 

[Ausm]

The debt ceiling limit should abolished anyway. It does nothing to limit spending. Thats what the budget is for.

The debt ceiling vote is more "shall we or shall we not stiff our creditors and send ourselves into economic pandemonium?" Only idiot teapartiers think thats a good idea.
Its like having a vote every month to whether I should pay the Visa bill or not.

agreed it;s bullshit anyone to froth up the weak minded.

 

[the DRIZZLE]

Those controls aren't analogous at all. When corporate auditors see that spending is within reasonable bounds as set by the budget, that's that.

What Congressional Repubs did in 2010 wasn't that at all. They created a hostage when the budget was passed, then attempted to use it for extortion.

We both know it.

I'm not talking about audits or internal audits, I'm talking about basic controls in treasury and other finance functions, but that's beside the point. I already conceded that control over the debt ceiling has been inappropriately used for political purposes in recent history. That doesn't mean that the check doesn't serve an important purpose or that we should remove the it from the system.

Given how dysfunctional Congress has been during the past 12 years, if we removed every power that has been misused we'd end up a dictator executive. The same is true for the executive branch as well.

 

[Greenman]

The debt ceiling limit should abolished anyway. It does nothing to limit spending. Thats what the budget is for.

The debt ceiling vote is more "shall we or shall we not stiff our creditors and send ourselves into economic pandemonium?" Only idiot teapartiers think thats a good idea.
Its like having a vote every month to whether I should pay the Visa bill or not.

That's not really accurate. It's more like having a vote every month on weather you should max out another credit card. But I still agree that it's kind of stupid, we're well past the point of no return. The debt we have right now, combined with unfunded entitlements and pensions, can't be paid. The system has to crash, so another few trillion one way or the other doesn't really matter.

 

[fskimospy]

You and others in this thread appear to be confused. Congress sets a budget but does not control the financial results of the government because some factors are outside of their control. They can set tax rates but that results in uncertain revenue and even they wrote a law specifying how much each American had to pay to the penny they couldn't guarantee it would be collected. Congress also doesn't control interest rates so they don't know how much interest the government will have to pay with certainty

An analogy would be that the manager of a business could set prices and employee salaries but couldn't precisely control the cash flows of the business because some things are out of his control.

The Treasury manages the day to day finances which of the result of both things Congress can control and those that they can't. I think that it's appropriate for Congress to set reasonable boundaries to force some action when the fiscal situation gets out of hand. I understand the argument that this is a redundant check, but sometimes redundancy is prudent.

Another issue is that without the debt ceiling I think the treasury would actually be able to conduct a shadow monetary policy by issue extra bonds and sitting on the cash. Although there may be other laws preventing this.

There are lots of ways that Congress could choose to control spending without risking a cataclysmic worldwide financial meltdown once or twice a year. If you want a redundant check on spending it's fine to advocate for that, but I don't believe any sane policymaker would want to continually toy with catastrophic default as a method of achieving it. Similarly if you want to stop the treasury from conducting shadow policy it's quite easy to regulate that without, once again, attempting to blow up the world economy.

The debt limit is impossibly stupid, it should be immediately abolished. The whole reason why the Republicans are trying to use it as a cudgel is because they lack the political or popular support to implement their policies in the normal legislative manner. Instead they have become emboldened to take hostages, which is why you don't negotiate with terrorists.

I still firmly believe the president should just invoke the 14th amendment and abolish the debt ceiling. If Congress wants to impeach him fine, they will fail. If they want to sue him in the courts fine, there's a good chance he will win and if nothing else we will be able to tie it up in court long enough to implement sane fiscal policy to end this economic difficulty. After that the debt limit will be less consequential anyway.

 

[fskimospy]

That's not really accurate. It's more like having a vote every month on weather you should max out another credit card. But I still agree that it's kind of stupid, we're well past the point of no return. The debt we have right now, combined with unfunded entitlements and pensions, can't be paid. The system has to crash, so another few trillion one way or the other doesn't really matter.

No it isn't like that at all. The money has already been appropriated and spent on services and policies that the government has implemented. It is totally a question of whether or not we pay the bills for things we have already bought.

As for our debt being 'well past the point of no return', that's simply inaccurate. There have been not only a number of countries that have had greater debt/GDP ratios than the US does now, but the US ITSELF has had a larger debt/GDP ratio in the past and has come out of it.

 

[werepossum]

No it isn't like that at all. The money has already been appropriated and spent on services and policies that the government has implemented. It is totally a question of whether or not we pay the bills for things we have already bought.

As for our debt being 'well past the point of no return', that's simply inaccurate. There have been not only a number of countries that have had greater debt/GDP ratios than the US does now, but the US ITSELF has had a larger debt/GDP ratio in the past and has come out of it.

Yes, during World War II. We came out of that with the world's largest manufacturing base and the Old World's capacity was, with the exception of the little United Kingdom and the Soviet Union, largely destroyed. That was a singular event of fairly short duration and to recover we had the largest wealth-creating machine the world had ever seen coupled with worldwide need for production and worldwide limited competition.

Fast forward to 2012 - we're now only the third largest exporter and by far the world's largest importer, and we are increasing this imbalance and increasing our debt at an ever-quickening pace to pay for this. We will soon move to the world's second largest economy, our currency's days of being the world's reserve are clearly numbered, we're losing our manufacturing base at a shocking rate, and we've largely lost the educational base to rebuild it competitively if we wanted. And unlike World War II, this is not a singular event, nor is there anything on the horizon to limit it. This is a paradigm shift from a nation that produces a surplus to a nation that consumes far more than it produces, with the rate of consumption to production growing.

We have absolutely no way of ever paying our debt, or even of ever breaking even. You guys on the left have been adamant that our nation can borrow as much as we want, forever, without ever causing any problems. You'd best be right, because if you're wrong we have little ability to climb out of Third World status and even that is diminishing every year. Whatever the left makes of this country - socialist or Marxist Republic, North American Union, several smaller balkanized states, UN province or whatever - if you're wrong, we're going to be locked into poverty, struggling just to service our debt, for at least our children's lives.

 

[Ausm]

Uh, the Congress already voted to spend the money. Its insane that after they vote to spend it they want to vote to pay back what they spent?

Yeah to bad Rightists can't grasp this basic concept....

 

[Fern]

The debt ceiling limit should abolished anyway. It does nothing to limit spending. Thats what the budget is for.

The debt ceiling vote is more "shall we or shall we not stiff our creditors and send ourselves into economic pandemonium?" Only idiot teapartiers think thats a good idea.
Its like having a vote every month to whether I should pay the Visa bill or not.

That's incorrect.

The debt ceiling only means no more new/additional borrowing.
I.e., the maximum amount of borrowing is limited.

And none of that means you can't pay off existing creditors. To pay off existing debt that comes due is easy, just roll their debt over to another party. it's quite similar to refinancing your house. And, in fact, this is what we did during the last debt fight.

E.g., the govt needs to pay me $1 million for my Treas coming due tomorrow. All they must do is find someone who'll buy a $1 million bond and flip that money to me. Eliminate one $1 million bond and issue a new $1 million bond = zero change in outstanding debt. I.e. debt ceiling not affected.

Fern

 

[Fern]

Because the debt ceiling in no way limits Congressional spending or tax laws. People seem to think the debt ceiling is a limit on how much we can borrow in the future to spend, but it's really a limit on how much we can borrow to pay off debt congress already created.

^That is 100% incorrect. You have it completely backwards. (Except for the part about "tax laws" - I'm not sure what that means.)

The debt ceiling in no way prevents us from issuing a new bond to pay off the old bond holder. Again, that's we handled that problem the last time - just 'rolled over' the expiring debt.

And, short of just printing new money, reaching the debt limit most definitely limits how much Congress can spend. That's why govt shut downs occur or are threatened.

Fern

 

[jjjayb]

The debt ceiling limit should abolished anyway. It does nothing to limit spending. Thats what the budget is for.

The debt ceiling vote is more "shall we or shall we not stiff our creditors and send ourselves into economic pandemonium?" Only idiot teapartiers think thats a good idea.
Its like having a vote every month to whether I should pay the Visa bill or not.

What budget? We haven't passed one in 3 years.

 

[Fern]

I don't think the proposal to give the POTUS control of debt ceiling would be Constitutional.

Reminds me of the line veto on the budget. SCOTUS said no, Congress cannot delegate it's Constitutional obligation to POTUS and struck it down.

Fern

 

[First]

This current Congress has shown itself completely incapable of using the debt ceiling debate responsibly, instead using it to shut down Congress and bring great financial harm and great additional cost to getting it raised.

Frankly, they don't deserve the power.

 

[ivwshane]

How about you look up what the actual debt limit is and realize how stupid your post is?

I'll help you:
http://www.treasury.gov/initiatives/Documents/Debt Limit Myth v Fact FINAL.pdf

That's incorrect.

The debt ceiling only means no more new/additional borrowing.
I.e., the maximum amount of borrowing is limited.

And none of that means you can't pay off existing creditors. To pay off existing debt that comes due is easy, just roll their debt over to another party. it's quite similar to refinancing your house. And, in fact, this is what we did during the last debt fight.

E.g., the govt needs to pay me $1 million for my Treas coming due tomorrow. All they must do is find someone who'll buy a $1 million bond and flip that money to me. Eliminate one $1 million bond and issue a new $1 million bond = zero change in outstanding debt. I.e. debt ceiling not affected.

Fern

You would think that when one provides a link to the definition of the debt limit, they might actually understand it instead of looking like an idiot repeating false information.

But that's what you get for thinking. People like that do exist.

 

[Jhhnn]

That's incorrect.

The debt ceiling only means no more new/additional borrowing.
I.e., the maximum amount of borrowing is limited.

And none of that means you can't pay off existing creditors. To pay off existing debt that comes due is easy, just roll their debt over to another party. it's quite similar to refinancing your house. And, in fact, this is what we did during the last debt fight.

E.g., the govt needs to pay me $1 million for my Treas coming due tomorrow. All they must do is find someone who'll buy a $1 million bond and flip that money to me. Eliminate one $1 million bond and issue a new $1 million bond = zero change in outstanding debt. I.e. debt ceiling not affected.

Fern

You ignore the other responsibilities of govt- not just to pay creditors, but to make the payroll & to meet contractual obligations for work performed.

You also neglect the fact that debt rollover isn't instantaneous. There is a period of time, no matter how brief, that the debt limit is exceeded in the process if you're already at the limit from meeting other obligations.

 

[Jhhnn]

I'm not talking about audits or internal audits, I'm talking about basic controls in treasury and other finance functions, but that's beside the point. I already conceded that control over the debt ceiling has been inappropriately used for political purposes in recent history. That doesn't mean that the check doesn't serve an important purpose or that we should remove the it from the system.

Given how dysfunctional Congress has been during the past 12 years, if we removed every power that has been misused we'd end up a dictator executive. The same is true for the executive branch as well.

That sounds fine, except that "inappropriately used" is an extreme understatement wrt the debt limit. Boehner promises more of the same-

I've made it clear to the president, that every time we get to the debt limit, we need to cut some reforms that are greater than the increase in the debt limit. It's the only way to leverage the political process to produce more change than what it would if left alone.

http://www.huffingtonpost.com/2012/12/02/john-boehner-debt-ceiling-congress_n_2228377.html

Which is doublespeak for creating his own hostage, over & over again. "Leverage the political process" indeed.

If Repubs want to fight for less spending, they need to do it at the other end of the process, the commitment to spend end of it. If they're willing to shut down the govt in that way, at least it's honest.

 

[Conscript]

This is exactly how Palpatine started.

Sent from my Lumia 810 using Board Express

 

[fskimospy]

^That is 100% incorrect. You have it completely backwards. (Except for the part about "tax laws" - I'm not sure what that means.)

The debt ceiling in no way prevents us from issuing a new bond to pay off the old bond holder. Again, that's we handled that problem the last time - just 'rolled over' the expiring debt.

And, short of just printing new money, reaching the debt limit most definitely limits how much Congress can spend. That's why govt shut downs occur or are threatened.

Fern

This is 100% incorrect. Congress can continue to spend money, just that when people lend it money to spend the US will default on those obligations sooner or later. That is of course the whole point.

Also, government shutdowns have literally never happened due to the debt limit, they have happened due to the failure to pass appropriations bills.

 

[fskimospy]

I don't think the proposal to give the POTUS control of debt ceiling would be Constitutional.

Reminds me of the line veto on the budget. SCOTUS said no, Congress cannot delegate it's Constitutional obligation to POTUS and struck it down.

Fern

This is also incorrect. The debt limit or lack thereof has no constitutional basis, and Congress could definitely abolish the debt limit or give the president that power.

SCOTUS denied the line item veto for hugely different reasons, concluding that it vested legislative power in the president, something he doesn't have. Paying the bills for spending Congress has already directed to be spent would most certainly be constitutional.

 

[Fern]

You ignore the other responsibilities of govt- not just to pay creditors, but to make the payroll & to meet contractual obligations for work performed.

I haven't ignored anything.

As far as new expenses like you have referred to above I already stated this in my post above:

-snip-
And, short of just printing new money, reaching the debt limit most definitely limits how much Congress can spend. That's why govt shut downs occur or are threatened.

You also neglect the fact that debt rollover isn't instantaneous. There is a period of time, no matter how brief, that the debt limit is exceeded in the process if you're already at the limit from meeting other obligations.

It is absolutely "instantaneous". Government accounting 'books', or any other entity for that matter, are only 'closed' at the end of the day. I.e., I can sell a new Treas bond at 9 AM and pay you off at 4 PM and still not legally exceed the debt limit. I posted proof of this before back during the previous 'cliff' crap when the likes of you and yllus were making this ridiculous argument. This is how Geithner was able to 'juggle the books' for several months pending the deal (sequestration).

I.e., the "brief period" theory is utter rubbish.

Do you think when you refinance your home mortgage the law is broken if you sign the new loan before they legally dismiss your old one? Under your theory the loan contract would be breached - you can't have two first mortgages outstanding simultaneously without committing fraud, right?

And how do you get released from your original home loan without first paying it off? Isn't how you pay it off with the proceeds of the new loan? So, the new loan exists before the original is paid off. It all comes down to 'the end of the business day'.

Your "brief period" theory is bunk.

Fern

 

[Fern]

This is 100% incorrect. Congress can continue to spend money, just that when people lend it money to spend the US will default on those obligations sooner or later. That is of course the whole point.

You're 100% incorrect.

I've already amply demonstrated, and as the fed govt has actually done, debt can be rolled over without affecting the debt limit.

As for Congress continuing to spend I'm pretty sure Congress can't spend (appropriate) beyond the debt limit, otherwise there's no point in having a debt limit.

Also, government shutdowns have literally never happened due to the debt limit, they have happened due to the failure to pass appropriations bills.

A distinction without meaning; in the last impasse a govt shutdown was exactly what was threatened if the debt ceiling was not raised. Jeez people, it's not that hard to understand. You can rollover debt, but you can't spend more than you take in unless you can increase borrowing (i.e., debt ceiling).

Fern