Raising the US debt ceiling

[bush_cheney2004]

I agree down grade, credit market freeze, welcome to the depression 2.0. Nice thanks Republicans for not taking this thing seriously.

Please stop this Whining from Winnipeg....it is not anything we haven't seen before, and I'm using the term "we" very loosely. The debt ceiling has been raised about 100 times since 1917...they need to earn it this time around by bending the deficit curve downward. Is that too much to ask?

Edited July 15, 2011 by bush_cheney2004

[August1991]

It is no use, if you read the thread everyone in it is all for running for the cliff with their only solution that magic will save them. No one here is willing to try and understand what would happen if the debt ceiling isn't raised.

I agree that penicillin does not make anyone live longer. To live longer, we have to exercise and stop smoking.

Penicillin stops people from dying when they're 34 years old. In 1910, it didn't exist. Now, it does. And it would be foolish not to use it. But unlike daily exercise, penicillin doesn't make people live longer.

----

Government spending and deficits don't make societies richer in the long run. But in specific cases, they cure diseases in the short term.

The US federal government should spend and borrow now; just as someone ill takes antibiotics.

It would be foolish to do otherwise.

Edited July 15, 2011 by August1991

[dre]

Letting them is one thing.....demanding that they do so is quite another. The Americans get ripped for too much debt, then they get ripped for not adding more debt.

Well, a more accurate portrayal would be the democrat and republican parties get ripped, by not only Americans but everyone else that watches them operate.

I dont think very many people would argue that the US, and other western countries in that position need to clean up their balance sheets, by increasing revenue, reducing spending, or a combination of both.

Its just a matter of how you go about it, and to start defaulting on financial obligations probably isnt the best long term strategy. The reality is that the current government liabilities were created by legislators that were democratically elected, and your government runs the risk of creating a real credibility problem if you just stop paying your bills. Nobody is going to buy bonds from a government that cant even pay their own employees, or write checks to fund government programs.

A better way to go about this, would be to keep paying your bills, and then take meaningful legislative action to clean up the balance sheet(probably a mixture of tax increases and spending reduction).

[punked]

Please stop this Whining from Winnipeg....it is not anything we haven't seen before, and I'm using the term "we" very loosely. The debt ceiling has been raised about 100 times since 1917...they need to earn it this time around by bending the deficit curve downward. Is that too much to ask?

Nope, you me and the Dems agree on this. Heck Obama gave them 4 Trillion the Republican seem hell bent on driving off the cliff.

[August1991]

.I dont think very many people would argue that the US, and other western countries in that position need to clean up their balance sheets, by increasing revenue, reducing spending, or a combination of both.

Dre, you are a medievalist who would cut the veins of someone ill.

I think antibiotics will achieve more. But I understand that while antiobiotics can cure disease, they do not make people superhuman.

People usually stop taking penicillin/antibiotics after 10 days. IME, leftists never quite understood that concept when it came to government spending.

Leftists would have everyone take penicillin everyday forever on the belief that it would make everyone rich and healthy forever.

Edited July 15, 2011 by August1991

[bush_cheney2004]

...You keep saying pension fund as if that isn't just full of T-bills to. The Treasury can't pay t-bills with t-bills they can however default.

You are too young to remember such things plus you live in another country! Google 1985 and see what Reagan did with pension funds. Also see the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act.

[bush_cheney2004]

Well, a more accurate portrayal would be the democrat and republican parties get ripped, by not only Americans but everyone else that watches them operate.

Those who can...do...those who can't...watch.

I dont think very many people would argue that the US, and other western countries in that position need to clean up their balance sheets, by increasing revenue, reducing spending, or a combination of both.

Ya think?

Its just a matter of how you go about it, and to start defaulting on financial obligations probably isnt the best long term strategy. The reality is that the current government liabilities were created by legislators that were democratically elected, and your government runs the risk of creating a real credibility problem if you just stop paying your bills. Nobody is going to buy bonds from a government that cant even pay their own employees, or write checks to fund government programs.

Yes they will....just as before. Foreign investors would continue to be paid as a matter of priority....the majority of US federal debt is still held by Americans. Some will even welcome the resulting higher interest rates (like me).

A better way to go about this, would be to keep paying your bills, and then take meaningful legislative action to clean up the balance sheet(probably a mixture of tax increases and spending reduction).

Sorry, but the pressure would be off to make any substantive impact on deficit spending, now gone gaga even by Bush's measure.

The 2012 election cycle will soon be in full swing, making it even more difficult to slash entitlements, raise taxes, or reduce discretionary spending.

Edited July 15, 2011 by bush_cheney2004

[Smallc]

The Department of Energy, which actually produces no energy, take a break for a while?

Who regulates energy production?

The Department of Education, which actually doesn't educate anyone, take a break for a while?

Who regulates education?

The Advisory Council on Historic Preservation take a break for a while?

I agree...and close all of the parks and historic sites while you're at it. That will certainly generate revenue.

The Department of Agriculture, which doesn't actually produce any food, take a break for a while?

And so then what?

The Department of Immigration and Naturalization, take a break for a while?

And so then what?

How about the billions being spent on Obama's unconstitutional mission in Libya be stopped for a while?

Whatever. That will just mean more costs for Canada, the UK, and France, I suppose. You never worried about the constitutionality of wars before, did you?

How about NPR, and PBS, and ACORN stop getting funding for a while?

So what, that's less than a billion dollars between them, at most...

How about Federal workers getting furloughed for a while?

Yes, and lets stop your paycheque tomorrow. Don't worry, you can get employment insurance. Who pays that again? You sir, are a moron.

[Smallc]

Good analysis that suggests the US has a spending problem - not a revenue problem:

http://blogs.forbes.com/warrenmeyer/2011/07/14/its-a-spending-problem/

The US has a problem with both. People demand the spending, but won't pay the taxes. They have to make a choice, and the choice is probably somewhere in the middle.

[TimG]

The US has a problem with both. People demand the spending, but won't pay the taxes. They have to make a choice, and the choice is probably somewhere in the middle.

If you look at the graph you will see that revenue has been static around 18% of GDP. It is not clear that raising taxes will actually bring in more revenue if you go by the historical record.

[bush_cheney2004]

If you look at the graph you will see that revenue has been static around 18% of GDP. It is not clear that raising taxes will actually bring in more revenue if you go by the historical record.

Agreed, the concept was proposed as Hauser's Law:

Hauser's law is the proposition that, in the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.

http://en.wikipedia.org/wiki/Hauser%27s_law

[Smallc]

If you look at the graph you will see that revenue has been static around 18% of GDP. It is not clear that raising taxes will actually bring in more revenue if you go by the historical record.

Well, even to maintain lower levels of spending, they're going to need to generate more revenue somehow, if only to pay the debt service charges.

[Oleg Bach]

Well, even to maintain lower levels of spending, they're going to need to generate more revenue somehow, if only to pay the debt service charges.

How about we just toss the folks that are paid the service charge into the dungeon and say we can't find them?

[eyeball]

Thanks for the clarification. If I am not mistaken the population is expected to crest at about 10 or 11 billion by 2050. At that time I will most likely be in the past tense. Environmental degradation is a concern of mine too.

I think we'll be 'lucky' if we make it to 7.5 or so billion myself.

The economists have completely failed to account for and subtract (deliberately in my opinion), the draw-down of goods and services that our planet's natural system's produce for us when dreaming up their calculations. This makes climate scientists look like victims of a crime instead of perpetrators in comparison.

I think if Shakespeare were around today he'd say screw the lawyers, it's the economists we should be rounding up.

[maple_leafs182]

Government spending and deficits don't make societies richer in the long run. But in specific cases, they cure diseases in the short term.

The US federal government should spend and borrow now; just as someone ill takes antibiotics.

It would be foolish to do otherwise.

I think you have it wrong. They are not trying to cure the disease, they are focusing on the symptoms rather then the disease itself.

It would be foolish for them to continue spending and borrowing. There needs to be a correction in the market, yes it will be extremely painful and a lot of people will suffer but it is necessary. Some times medicine tastes bad but you have to take it. If they continue on the path they are going down, then they are headed for a bigger problem because the dollar will collapse.

[Bonam]

I think we'll be 'lucky' if we make it to 7.5 or so billion myself.

The economists have completely failed to account for and subtract (deliberately in my opinion), the draw-down of goods and services that our planet's natural system's produce for us when dreaming up their calculations.

Economists fail to account for many things, as do any branch of people that try to predict the course of the change of human civilization more than 10-20 years in the future. The greatest unknown by far in making such prognostications is technological change. In my opinion, it is almost completely impossible to make any meaningful predictions about how the world will be in 2050 or later.

[Jack Weber]

Who regulates energy production?

Who regulates education?

I agree...and close all of the parks and historic sites while you're at it. That will certainly generate revenue.

And so then what?

And so then what?

Whatever. That will just mean more costs for Canada, the UK, and France, I suppose. You never worried about the constitutionality of wars before, did you?

So what, that's less than a billion dollars between them, at most...

Yes, and lets stop your paycheque tomorrow. Don't worry, you can get employment insurance. Who pays that again? You sir, are a moron.

Gotta love The Professor,huh?

[dre]

I think you have it wrong. They are not trying to cure the disease, they are focusing on the symptoms rather then the disease itself.

It would be foolish for them to continue spending and borrowing. There needs to be a correction in the market, yes it will be extremely painful and a lot of people will suffer but it is necessary. Some times medicine tastes bad but you have to take it. If they continue on the path they are going down, then they are headed for a bigger problem because the dollar will collapse.

It would be foolish for them to continue spending and borrowing.

Its really hard to say which course of action will hurt more. It might actually be a good idea for them to let the dollar deflate to zero, as long as they dont do it too quickly. If they do that, the 14 trillion dollar debt evaporates into thin air. Thats really the only way its even remotely possible for them to ever pay it off.

[TimG]

If they do that, the 14 trillion dollar debt evaporates into thin air. Thats really the only way its even remotely possible for them to ever pay it off.

Except Americans hold large chunks of that debt in the SS and Medicare accounts. Inflate the dollar - aggravate the SS/Medicare funding crisis. Hardly a politically popular move.

[pinko]

Please stop this Whining from Winnipeg....it is not anything we haven't seen before, and I'm using the term "we" very loosely. The debt ceiling has been raised about 100 times since 1917...they need to earn it this time around by bending the deficit curve downward. Is that too much to ask?

In Winnipeg we have a much more realistic outlook thn the one you portray. You gave a bad habit of misrepersenting the facts.

[pinko]

I think we'll be 'lucky' if we make it to 7.5 or so billion myself.

The economists have completely failed to account for and subtract (deliberately in my opinion), the draw-down of goods and services that our planet's natural system's produce for us when dreaming up their calculations. This makes climate scientists look like victims of a crime instead of perpetrators in comparison.

I think if Shakespeare were around today he'd say screw the lawyers, it's the economists we should be rounding up.

In addition to the lawyers and economists you should add accountants to your list.

You appear to be a climate science sceptic.

[eyeball]

You appear to be a climate science sceptic.

No, I'm an economic science skeptic.

Mostly I just can't believe how little controversy it's taken to virtually paralyze us on the climate compared to how conventional economic wisdom bulldozes right through any and all controversy as if it wasn't even there.

[pinko]

No, I'm an economic science skeptic.

Mostly I just can't believe how little controversy it's taken to virtually paralyze us on the climate compared to how conventional economic wisdom bulldozes right through any and all controversy as if it wasn't even there.

I am not sure there is such a creature as conventional economic wisdom unless you are comparing the Keynsesian model with that of Friedman.

[Oleg Bach]

Why is this strange finacial phenomena global in scope? I don't remember things being so intertwined that when one nation gets a disease they all seem to get it.

[punked]

If you look at the graph you will see that revenue has been static around 18% of GDP. It is not clear that raising taxes will actually bring in more revenue if you go by the historical record.

If you actually look at the graph 18% is the Average but in last 5-6 years revenue has been averaged around 16% the lowest in the last 60 years. I REPEAT (your "graph" backs it up) the US has a revenue problem.