Debt Ceiling Debate

Dakota Kid

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With the upcoming debt ceiling debate looming, I'm glad Harry Reid will be supporting the Tea Party position. Maybe something productive will actually happen in Congress and we can ease the suffocating burden of debt we are placing on our children and grandchildren.

Harry Reid in '06: Raising debt limit last thing we should do, will weaken country, hurt economy - YouTube

With the debt now twice what it was then, I'm sure he'll be twice as committed!
Go get 'em, Harry! Stand up for your principals.

Kid
 
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Is it even worth describing the economy in 2006 vs 2013 or how GWB had a surplus that quickly turned to red ink thanks to tax cuts and war and you name it. 19 times it was raised during GWB's reign. Nahhh not worth it.
 

Perados

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so... What do YOU think will happen, if the debt limit doesnt get increased on october the 17th?

You are right to say debts are bad for our children and grandchildren. Just as the debts of our parents do create problems for us...
But you cant solve the current debt problem from one day to an other - it will need time. A balanced goverment budget is a middle term goal.

Not to increase the limits means a default of the usa and a default of the whole finance system.

You think the housing crisis, past 2008, was a problem for the usa? Wait till the 18th october and you will see what crisis means...
 

ClintHardBall

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Please oh please Slurper explain to us mere peasants what the debt ceiling is?? Please

The debt ceiling is similar to the limit on a credit card. Once you hit the limit generally the CC company says pay what you owe and then you can spend again. Unless you are the US government. Then you just continue to increase the debt ceiling which means you then increase spending to yet again have the need to increase the debt ceiling.

So please tell us why its a good idea to increase the debt ceiling so this country can fall further into debt????
 

Jason

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So please tell us why its a good idea to increase the debt ceiling so this country can fall further into debt????

Because there is no alternative.

The USA could produce a balanced budget where tax equals spend, and this would help somewhat. But it is not going to solve the immediate problem. The big issue is bonds that need repaying - the next big date is 17th October. The USA must find the funds to pay this existing debt, and the only way it can possibly do this is by rolling over the debt - ie it pays off the existing debtors by borrowing.

There is no short-term solution whatsoever. The debt ceiling must be raised or the USA will go broke. Long-term the USA must start policies which neither party will even talk about. Spending must be cut, and in the end this means the enormous US spending area of defence. Taxes must be hiked. The USA must implement spending cuts of a level which makes the most extreme Tea-Party member seem moderate (though it is defence that must be clobbered as this is the big area) while at the same time introducing tax rises of a level no-one in America will be able to believe. Think an additional 20% on income, an additional 10% on sales, much higher CT, another $5 tax per gallon on petrol/gas, basically tax for anyone who dares to breathe. And it has to make these enormous changes without crashing the economy, which means it is a long-term rebalancing.

Right now the USA must increase the debt ceiling. There is no alternative.
 

slurper_la

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Please oh please Slurper explain to us mere peasants what the debt ceiling is?? Please

The debt ceiling is similar to the limit on a credit card. Once you hit the limit generally the CC company says pay what you owe and then you can spend again. Unless you are the US government. Then you just continue to increase the debt ceiling which means you then increase spending to yet again have the need to increase the debt ceiling.

So please tell us why its a good idea to increase the debt ceiling so this country can fall further into debt????

And yet another idiotic statement.

The debt ceiling is nothing like a credit card limit. It's more like your self-imposed household budget.

But I'm glad you brought up credit cards because the proper analogy is:

You have a household budget.
You've set your limits for essential and non-essential spending.
You make purchases throughout the month, many using your credit card.
The statement arrives, you realize you went over budget so you decide - "F" it, I'm not paying!

THAT is what this is about. Congress, CONGRESS, budgeted, allocated and spent the money.... Now they don't want to pay the bills.
 

B_underguy1

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With the upcoming debt ceiling debate looming, I'm glad Harry Reid will be supporting the Tea Party position. Maybe something productive will actually happen in Congress and we can ease the suffocating burden of debt we are placing on our children and grandchildren.

Harry Reid in '06: Raising debt limit last thing we should do, will weaken country, hurt economy - YouTube

With the debt now twice what it was then, I'm sure he'll be twice as committed!
Go get 'em, Harry! Stand up for your principals.

Kid

There is no debt time machine. The wealth not being produced now, due to lack of spending, can never be clawed back.

Austerity now makes the future poorer. Unemployed young people now will be poorer pensioners in the future.
 

B_underguy1

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Please oh please Slurper explain to us mere peasants what the debt ceiling is?? Please

The debt ceiling is similar to the limit on a credit card. Once you hit the limit generally the CC company says pay what you owe and then you can spend again. Unless you are the US government. Then you just continue to increase the debt ceiling which means you then increase spending to yet again have the need to increase the debt ceiling.

So please tell us why its a good idea to increase the debt ceiling so this country can fall further into debt????

No it isn't. So called government debt is not at all like household debt. Treasury bonds are savings accounts, not loans.

And households can't create their own dollars.
 

dandelion

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Because there is no alternative. The USA could produce a balanced budget where tax equals spend, and this would help somewhat. But it is not going to solve the immediate problem.
The big issue is bonds that need repaying ...
There is no short-term solution whatsoever.
I agree. Funny that Jason and I can agree on the US position but disagree on what the UK should do. But even in the Uk we agree there is no alternative to keep borrowing. Maybe here we agree because the Uk went through the defence spending crisis 100 years ago. Its taken that long to wind down our military spending. The US cannot afford to be at war. The one silver lining to raised US taxes is that it will allow other counrtries to raise taxes too. Thus preserving US competitiveness. The whole world needs to raise tax rates.

The debt ceiling is similar to the limit on a credit card. Once you hit the limit generally the CC company says pay what you owe and then you can spend again. Unless you are the US government. Then you just continue to increase the debt ceiling which means you then increase spending to yet again have the need to increase the debt ceiling. So please tell us why its a good idea to increase the debt ceiling so this country can fall further into debt????
because a sovereign government is unique and its finances do not work like a family budget. A better analogy would be a family living next to the fed printing works where they print dollar bills, and having a loose brick in the back wall where the house backs onto their print storage area. So when you reach your spending limit...why just move the brick and 'borrow' a bit more. Its not as if they will ever have to pay it back.

seriously, thats how it works. All that Quantum easing, what did you think it was for? The FED has been buying up government debt nearly as fast as it is being created. It isnt 'out there' waiting to be repayed, or a huge amount isnt.

Ok, this is a sleight of hand. Printing money dilutes the value of existing money, so what all this financial nonsense amounts to is really tax by another name. better to have taxed honestly to begin with, but the politicians didnt like that idea.

THAT is what this is about. Congress, CONGRESS, budgeted, allocated and spent the money.... Now they don't want to pay the bills.
As Jason outlined, they cannot pay the bills. Either the US borrows or it goes bust. yes, this IS the fault of past politicians but saying that does not change the current situation.
 

B_underguy1

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I agree. Funny that Jason and I can agree on the US position but disagree on what the UK should do. But even in the Uk we agree there is no alternative to keep borrowing. Maybe here we agree because the Uk went through the defence spending crisis 100 years ago. Its taken that long to wind down our military spending. The US cannot afford to be at war. The one silver lining to raised US taxes is that it will allow other counrtries to raise taxes too. Thus preserving US competitiveness. The whole world needs to raise tax rates.

because a sovereign government is unique and its finances do not work like a family budget. A better analogy would be a family living next to the fed printing works where they print dollar bills, and having a loose brick in the back wall where the house backs onto their print storage area. So when you reach your spending limit...why just move the brick and 'borrow' a bit more. Its not as if they will ever have to pay it back.

seriously, thats how it works. All that Quantum easing, what did you think it was for? The FED has been buying up government debt nearly as fast as it is being created. It isnt 'out there' waiting to be repayed, or a huge amount isnt.

Ok, this is a sleight of hand. Printing money dilutes the value of existing money, so what all this financial nonsense amounts to is really tax by another name. better to have taxed honestly to begin with, but the politicians didnt like that idea.

As Jason outlined, they cannot pay the bills. Either the US borrows or it goes bust. yes, this IS the fault of past politicians but saying that does not change the current situation.

Taxes and "competitiveness" (a nebulous concept at best) have little to no correlation.

Money, existing or not, has no value, therefore it cannot be 'diluted'. This is a concept that was debunked 80 years ago and was only ever vaguely applicable to a gold standard currency.

The world does not need to raise taxes. The GFC wiped out tens of trillions of financial wealth from the middle and working classes.

That lack of wealth and the resultant lack of spending is the problem.
 
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ClintHardBall

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So we all agree that the US should cut spending focus on paying down bonds thus reducing the need and try to get to a balanced budget. Great see we can all get along and agree.
 

B_underguy1

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So we all agree that the US should cut spending focus on paying down bonds thus reducing the need and try to get to a balanced budget. Great see we can all get along and agree.

Not me. The US needs massive stimulus spending aimed at getting the unemployed and underemployed back to work at living wages.

There is no conceivable scenario in the mid term where a balanced budget would be desirable.

Bond repayments (merely balance sheet transfers) are not budget items.
 

B_underguy1

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Bond redemptions are merely spreadsheet operations. When a bond is redeemed the bond is cancelled and the corresponding face value transferred to the holder's bank's reserve account at the Fed.

Nothing is created and nothing is lost. Just numbers being moved around.
 

dandelion

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So we all agree that the US should cut spending focus on paying down bonds thus reducing the need and try to get to a balanced budget. Great see we can all get along and agree.
ha, no I dont think anyone agrees this. Jason and I agree the US needs massive tax rises. We agree it needs massive cuts in defence spending. The US congress doesnt agree with either. I am not sure what underguy agrees with, usually he disagrees with everything. I foresee that the FED wil burn the US bonds it has bought and they will never be repaid. Jase taxes the view the US will never be able to repay its bonds, which in fact is the historical position, it never has.

The defence issue really is an elephant in the room. Is the US willing to give up fighting wars?
 
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ha, no I dont think anyone agrees this. Jason and I agree the US needs massive tax rises. We agree it needs massive cuts in defence spending. The US congress doesnt agree with either. I am not sure what underguy agrees with, usually he disagrees with everything. I foresee that the FED wil burn the US bonds it has bought and they will never be repaid. Jase taxes the view the US will never be able to repay its bonds, which in fact is the historical position, it never has.

The defence issue really is an elephant in the room. Is the US willing to give up fighting wars?

The war needs to be taken down and the national strategy needs to be re-looked.

The problem with just gutting defense (easy prey for both parties), is that Defense directly or indirectly accounts for a large percentage of employment and supports the economy.

The reason the war(s) did not support an economic kick, was that the US (based on the Republican-conservative model) tried to contract and outsource everything it did. So in turn a small number of Americans (KBR the biggest winner) turned a profit relying on a large number of foreign underpaid employees supporting the wars.

Taxes have to be increased (the real elephant in the room for everybody) across the board, the country will have to be weened off big defense, companies will have to given the carrot and stick for taking jobs out of the country and everyone will have to pay the piper (more sin taxes).
 

B_underguy1

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ha, no I dont think anyone agrees this. Jason and I agree the US needs massive tax rises. We agree it needs massive cuts in defence spending. The US congress doesnt agree with either. I am not sure what underguy agrees with, usually he disagrees with everything. I foresee that the FED wil burn the US bonds it has bought and they will never be repaid. Jase taxes the view the US will never be able to repay its bonds, which in fact is the historical position, it never has.

The defence issue really is an elephant in the room. Is the US willing to give up fighting wars?

Jason and you are massive morons.
 

Jason

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The problem with just gutting defense (easy prey for both parties), is that Defense directly or indirectly accounts for a large percentage of employment and supports the economy.

This is why solutions are medium- or long-term. In the short-term the USA cannot provide an instant rebalancing and must raise the debt ceiling. This is not really a point of view but rather a fact of life. The USA needs to sort out planned debt ceiling increases for the next couple of years, and it would be reasonable to expect every politician to agree this necessary measure. Anything else will damage the USA.

The movement should be away from defence expenditure and towards infrastructure expenditure. The unacceptable idea - unacceptable to the world - is that the USA has an enormous military and goes to war in order to stimulate its own economy.