Debt ceiling brawl threatens economy, consumers

[sao123]

The truth surfaces... the GOP isnt secretly just letting all the wealth go from the poor to the wealthy...
They are setting up the wealthy for self destruction...and now its time for the bubble to burst.

bring on the global collapse... its time for the ultra wealthy to become the ultra poor.
Then they can lament bitterness and live as one of those american slave laborers they stole from.

 

[manimal]

The truth surfaces... the GOP isnt secretly just letting all the wealth go from the poor to the wealthy...
They are setting up the wealthy for self destruction...and now its time for the bubble to burst.

bring on the global collapse... its time for the ultra wealthy to become the ultra poor.
Then they can lament bitterness and live as one of those american slave laborers they stole from.

Sadly another drop will just make the rich richer since they will get bailed out and our wall street masters will ride it out..


main street in food lines wall street in walled subdivisions..

 

[JTsyo]

Someone connect the dots for me. How does not raising the debt limit result in us defaulting our current debt? I would think it would mean that after May the government would only have whatever money it collects plus whatever has already be borrowed to use. Anything that costs more would have to be stopped. What would defaulting on our current debt save us other than interest payments?

 

[Gonad the Barbarian]

We use borrowed money to pay debt that comes due. No more borrowed money and we default on those debts.

 

[manimal]

where are the masses screaming about uncertainty in the markets?


I am waiting...

 

[piasabird]

It is time to say enough is enough and just start firing federal workers, and reducing people's pay and hours. I doubt they can even pay for the interest payment on the debt now!

 

[PokerGuy]

Good. They should force the mad spenders to agree to massive spending cuts before the ceiling gets increased yet again. That's the only way to get it done.

 

[Fern]

where are the masses screaming about uncertainty in the markets?


I am waiting...

The problem we face, and I haven't seen this mentioned in any discussion yet, is that we cannot borrow in an unlimited amount.

So, we are placing ourselves between the proverbial 'rock and hard place'. We're on a steady pace to cause our credit rating to drop; even more revenue/gdp will go towards servicing our debt - a bad, very bad thing. We are also going to eventually approach the point where we will have problems getting lenders, even with the higher interest rates.

So, in a recession I favor deficit spending. Without deficit spending we'll have less (gov) demand and thus risk an economic slowdown. However, we are running out of borrowing room, and are up against increased interest cost which drains money away and leaves less for (gov) stimulous. Our ability to navigate this economic problem is hampered.

I see two sides. One screaming about the dangers of increased borrowing, the other about the loss of (gov) stimulous and it's negative effect on the economy. Neither side seems to acknowlege the danger in their own favored position.

People, we're running out of room to turn this ship around. Screaming about not hitting the rocks to the starboard/port side need to realize we've also got rocks to avoid on the port/starboard side.

Fern

 

[matt0611]

We had higher taxes in the 90s, life was good until Republicans royally screwed up everything.

And how much extra revenue would those taxes bring in per year if re-enacted?
120 billion / year? maybe?

Whatever it is, it won't be anywhere close to enough to cover our deficits in the coming years.
Therein lies my point...
Who's left to tax after you're through taxing the rich?
We all know the answer to that though.

 

[Darwin333]

Someone connect the dots for me. How does not raising the debt limit result in us defaulting our current debt? I would think it would mean that after May the government would only have whatever money it collects plus whatever has already be borrowed to use. Anything that costs more would have to be stopped. What would defaulting on our current debt save us other than interest payments?

Because we effectively pay the minimum payments on our credit cards (or just the interest) with another credit card. If our credit cards get cut off we can no longer pay the minimum payments on what we already owe.

Last fiscal year the Feds revenue was barely enough to cover mandatory spending which is Social Security, Medicare, Medicaid and the interest on the debt. Thats it. No .mil spending at all, no department of anything, not even the light bill at the White House.

 

[Darwin333]

And how much extra revenue would those taxes bring in per year if re-enacted?
120 billion / year? maybe?

Whatever it is, it won't be anywhere close to enough to cover our deficits in the coming years.
Therein lies my point...
Who's left to tax after you're through taxing the rich?
We all know the answer to that though.

300ish billion a year if we let them expire on EVERYONE which neither party wants to do. $70 billion a year if we let just the tax cuts on the rich expire. Lets pretend you can really soak those rich bastards and double that number to $140 billion, like I keep asking, now what.

 

[manimal]

The problem we face, and I haven't seen this mentioned in any discussion yet, is that we cannot borrow in an unlimited amount.

So, we are placing ourselves between the proverbial 'rock and hard place'. We're on a steady pace to cause our credit rating to drop; even more revenue/gdp will go towards servicing our debt - a bad, very bad thing. We are also going to eventually approach the point where we will have problems getting lenders, even with the higher interest rates.

So, in a recession I favor deficit spending. Without deficit spending we'll have less (gov) demand and thus risk an economic slowdown. However, we are running out of borrowing room, and are up against increased interest cost which drains money away and leaves less for (gov) stimulous. Our ability to navigate this economic problem is hampered.

I see two sides. One screaming about the dangers of increased borrowing, the other about the loss of (gov) stimulous and it's negative effect on the economy. Neither side seems to acknowlege the danger in their own favored position.

People, we're running out of room to turn this ship around. Screaming about not hitting the rocks to the starboard/port side need to realize we've also got rocks to avoid on the port/starboard side.

Fern

Your points are very valid but not germain to this actual issue. Not raising the ceiling will have a cascade effect throughout the us and world economy. Decouple that argument and lets have it. This is a separate issue.

 

[manimal]

300ish billion a year if we let them expire on EVERYONE which neither party wants to do. $70 billion a year if we let just the tax cuts on the rich expire. Lets pretend you can really soak those rich bastards and double that number to $140 billion, like I keep asking, now what.

Once unemployment drops we should scale back the rest of those tax cuts as well.

 

[piasabird]

The question is which would hurt this country more?

1. Not making the bush tax cuts permanent.

2. Not increasing the debt Limit.

There comes a time when every tax dollar collected goes to pay the interest on the debt! Are we already at that point?

Do you really want to reach that point?

Why did the president have to start another war?

 

[matt0611]

Once unemployment drops we should scale back the rest of those tax cuts as well.

Get back to me when they make some actual cuts, something in the hundreds of billions range.

I won't agree to give another cent until then.
I'm not giving them more money only to have them increase spending even further. F that.

 

[Darwin333]

The problem we face, and I haven't seen this mentioned in any discussion yet, is that we cannot borrow in an unlimited amount.

So, we are placing ourselves between the proverbial 'rock and hard place'. We're on a steady pace to cause our credit rating to drop; even more revenue/gdp will go towards servicing our debt - a bad, very bad thing. We are also going to eventually approach the point where we will have problems getting lenders, even with the higher interest rates.

So, in a recession I favor deficit spending. Without deficit spending we'll have less (gov) demand and thus risk an economic slowdown. However, we are running out of borrowing room, and are up against increased interest cost which drains money away and leaves less for (gov) stimulous. Our ability to navigate this economic problem is hampered.

I see two sides. One screaming about the dangers of increased borrowing, the other about the loss of (gov) stimulous and it's negative effect on the economy. Neither side seems to acknowlege the danger in their own favored position.

People, we're running out of room to turn this ship around. Screaming about not hitting the rocks to the starboard/port side need to realize we've also got rocks to avoid on the port/starboard side.

Fern

Fern just nailed it, which is why it is my opinion that we be fucked.

The .gov is currently replacing a huge portion of our GDP with borrowed money. Taking that borrowed money out of our economy will cause GDP to contract (relative to the amount removed) regardless of when it is done. So the obvious answer is until the economy can add more than we subtract we should continue keeping it afloat with borrowed money, right?

Unfortunately there is a "gotcha". If the hailmarry works the economy starts to improve on its own. When that happens people are far less likely to loan anyone, including the .gov, money for zero and even potentially negative returns. So the better the economy does on its own the higher interests go. Since we have structured ALL of our existing debt on the very short end, on average, ALL of it must be rolled over every 4 years or so. That means those higher interest rates cause the cost of servicing existing debt to shoot the moon. All of the cuts and revenue increases that they could realistically enact would be more than wiped out by this increased cost.

Playing the inflation game might work if our debt wasn't structured the way it is. As it is, it would cause rates to eventually go up which immediately costs us more to service existing debt as well as increasing our entitlement payments since they are indexed to inflation (albeit the .gov can play some games with those numbers).

 

[Darwin333]

Once unemployment drops we should scale back the rest of those tax cuts as well.

We should but we won't.

It still leaves a trillion or so a year in deficits...

 

[Darwin333]

Your points are very valid but not germain to this actual issue. Not raising the ceiling will have a cascade effect throughout the us and world economy. Decouple that argument and lets have it. This is a separate issue.

The debt ceiling will be raised. The Dems and Repubs are simply playing a game of chicken. I guarantee that one side will blink before mad max happens.

 

[Trianon]

The debt ceiling will be raised. The Dems and Repubs are simply playing a game of chicken. I guarantee that one side will blink before mad max happens.

don't know what to do, to laugh or to cry?

And people made fun of Hank Paulson for threatening with eternal damnation if congress didn't stamp his multi-trillion blank check to bail out his former co-workers from Goldman. In a step that makes the Kashkari-Paulson threat seem like amateur hour, the teleprompter just received its latest high frequency directive from the Wall Street superiors, promptly delivering the latest MAD message to what continues to be perceived as an idiot audience: "Failure by Congress to raise the U.S. debt limit "could plunge the world economy back into recession," President Barack Obama declared Friday, and he acknowledged that he must compromise on spending with Republicans who control the House to avoid such a crisis. Obama urged swift action, saying he doesn't want the United States to get close to a deadline that would destabilize financial markets. He said he was confident Congress ultimately would raise the limit. "We always have. We will do it again," said Obama, who voted against raising the debt limit as a freshman senator from Illinois."

For those keeping score of the President's numerous accolades, this merely underscores that the president is now in contention for the Nobel Prize in hypocrisy: after all compare this statement to Obama's now supremely ironic remark from March 20, 2006: "The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

 

[sandorski]

don't know what to do, to laugh or to cry?

You should be /facepalm at the articles you read, apparently.

 

[Trianon]

You should be /facepalm at the articles you read, apparently.

LOL, you think?

 

[Darwin333]

don't know what to do, to laugh or to cry?

I have joined the "fuck it" camp. Lets cut everyones taxes to zero and party like its 1999 until they cut our credit off. Just a quicker, but funner, version of what we are currently doing.

 

[Darwin333]

You should be /facepalm at the articles you read, apparently.

I agree, just not for the same reasons as you.

 

[Trianon]

I have joined the "fuck it" camp. Lets cut everyones taxes to zero and party like its 1999 until they cut our credit off. Just a quicker, but funner, version of what we are currently doing.

yeah, it's becoming extremely boring to watch this slo-mo train wreck...

 

[matt0611]

If the debt ceiling is something that should "not be messed with / played chicken with" why do we even have it? Whats the point of a ceiling if we raise it every time we reach it?
Why don't we just get rid of it?