It's time for the U.S. Government to sit down and get serious about the Debt Ceiling, but we want to know....
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Re: Randy
I have a very simple explanation for your question about raising the debt ceiling. Under Bush, the money was needed for WAR. Now it is needed to help PEOPLE: Social Security, Medicare, Medicaid, insolvent states meet their local services payrolls, etc, etc.
Most congressmen (95%?) have never met a war they did not like. One notable exception is Rep. Dr Ron Paul R, TX. (They don't like him too much). Of course, PAC money political contributions from the Military Industrial Complex help a lot. {Non other than Ex-President & WWII Ex-Commanding General Dwight Eisenhower's parting advise was: “Beware The Military Industrial Complex”)!!!
War and war preparations (euphemistically called “Defense”) have been and are sucking up around 30% of the yearly budget. Social Security, Medicare and Medicaid around 34-35%. The Republican's expense cutting target is always Social Security-Medicare-Medicaid, NEVER war or “Defense”. To them and most other congressmen (PAC money helps), this is a Sacred Cow, not to be even whispered in cutting circles.
Social Security, Medicare and Medicaid are funded liabilities, i e: people contribute to them all their working lives (and expect something in return). Wars are NOT funded liabilities (there is no war contingency fund). They must be funded “off budget” or “supplemental appropriations” by additional taxing, borrowing (bonds) or printing money. Increasing taxes to pay for war is extremely unpopular so borrowing and money printing is used. Thus, the National Debt goes up and the value of the $ goes down. To see the historical effects chart of funding wars and war preparations on the National Debt go to http://zfacts.com/p/461.html.
Now, before anyone starts firing at me about being unpatriotic:
I proudly joined the Navy during World War II, at the age of 17½ because WE WERE ATTACKED BY ANOTHER POWER and felt the war was clearly needed for our survival against THREE major industrial powers: Germany, Italy and Japan. We had next to nothing to fight a war in 1941, The Army had left-over WWI rifles and uniforms and still used pack mules and WWI vehicles for transport on many bases. The Air Force was The Army Air Corps. The Navy had old ships, four of them carriers. We came up from waaay behind and disposed of the 3 powers in 3 years 9 months! That, in my book, is A LOT different from fighting wars trumped up by politicians and ideologs!
Friends,
No meaning to think over the rise or no rise of limits, because every things are sure to burst like anything,only question is When?
Since World Warr-2, either US or EU, Asia or any other country, world has created so many financial complexun, and now it is a time to pay the cost therefor, none of any action will be sufficient to prevent financial disastor.
Rasesh Shukla
India.
The Tea Party seem to be the stickers. OK Tea Partygoers - How many of you supported President Bush when he went to war?
Thought so - Well guys no free lunches - It's time to pay up.
As I said before you can't go to war and cut taxes.
Otherwise you face "The Italy Solution" - Low growth, high taxes, high unemploymeny etc.
Was that part of your promise too?
Our situation today mirrors the crisis we have heard about our entire lives, that of the Depression of the 1920-30'a. Caused by Wall Street and Corporate Moguls who put their pockets ahead of the entire national wellfare. That is what you have been reading in the press for the past 10 years. If Washington is guilty of anything it is allowing them to do it again--for the same reasons and with the same result. But the problem is now systemic, not a knee-jerk--oh! this is what is wrong so lets fix it now--mentality. It has taken 30 years of this type of greedy exploitation by all of the principal players, an idle regulatory system, a pandering Washington, greedy Corporate moguls, selfish shareholder wrenching every possible profit, star watching public, and irresponsible if not bribed Rating industry. The solution will be to gradually restore sanity to the fiscal components of our economy, measured and deliberate. There is no elixir that we can swallow to suddenly fix this mess. Refusing to raise the debt ceiling is such a measure. Not needing to raise the debt ceiling is the real issue--and this must be the goal over the next couple YEARS--not this month or this quarter or this Adminstration. There are many, many corrections needed. Unfortunately, history has not favored such commonsense inititives. Special interests, Elections, Wealthy vs. Middle Class Imperatives, an easily manipulated press and the common demominator in all social implosions--the comotose electorate suggest these are and will forever remain our national headwinds.
I dont understand why there is such a big deal about raising the debt ceiling. We raised it under Bush several times with no haggling, why now suddenly under a Democrat President is it a big deal? You guys are the definition of a double standard! You just listen to your conductors and cheer whatever song they tell you to, your good at that. For me? I'll actually think.
I agree that we need to get it down, but if was such a huge deal NAME ONE REPUBLICAN PRESIDENT THAT DID ANYTHING ABOUT IT. The most fiscally responsible President was Clinton! A Democrat you idiots! Get over yourselves, quit hand picking data you can find to make your view work and deal with reality. When was the last time DEFAULTING was a good thing? And for those of you that talk about "dealing with the pain now" are full of it! This isnt some family, this is the backbone of the world economy. It is being handled very poorly and has been for most if not all of our history, however forcing us to not raise the debt ceiling is the worst way to handle the situation.
This brings up another topic, if we are going to pay down our debt we actually have to PAY down our debt. Not SAVE down our debt. We also need to cut spending, some social programs but mostly military spending, but they'll never do that. The alternative is that we raise taxes on the people that make way too much money, yes charge the successful people! They need to pay! They should understand that! But they are greeeeeeedy! And so are you if you disagree. You are just greedy. If you knew anything you know that the middle class runs this economy not the rich. The rich run our stock market, personally I'll take less stock market performance for more bang for my buck in the form of paying down the debt and getting the economy back on track. If you think that raising taxes will make rich people stop working then I dont think you are right. Rich people didnt get rich by whining about taxes, they work and make more money! Thats how they get rich, they arent going to stop making money because they have to pay 5% more taxes. If they do then they can live next to you and me and I'll be happy to listen to them whine about their new 9-5 job.
The inmates are running the asylum. Allowing our bonds to default will trigger an imediate stock market melt down. Precepitating not a recession but a giant size depression that will dwarf what happened in "29". .All for no reason. Congress and Presidents have dealt with these problems many times in the past. Fiscal sanity has prevailed when reason has appeared to be abandoned. Yes we have to get spending under control and at the same time some taxes may have to be raised. Loopholes may have to be closed.
Some bright bilionaires have commented that something is out of wack when their secretaries pay more taxes then they do!! Everybody seems willing to blow the country to bits unless we fix it their way. I suggest anger management classes to those who think they have the only solution.
If there is an outbreak of patriotism and we start trying to make solutions that make the system work without insisting on no compromise, we will be remembered as a people who ran the country well.
The US need to do three things.
1. Raise taxes. (To pay down some of the debt)
2. Cut spending.
3. Raise the debt ceiling so that 2 and 3 can be implemented in an orderly fashion.
Debt ceiling should be based on a % of GDP (previous year outcome+50% of projected growth in current year) and not a fixed amount.
Running large deficits has not brought full employment and is counter productive.
The US was far to pro cyclical in the 2000's when spending should have been control.
You can't fight a war and cut taxes, it was madness and a recipe for disaster.
It was the politicians who got the US into the mess it's in and now it's the politicians balking at making the hard decisons. They can't have it both ways.
The joke about Ireland was- what's the differnece between Ireland and Iceland - Answer 6 months.
Remember that? - Fail to raise the debt ceiling and the US could be Italy in six months time.
So why take the risk?
Don't raise the debt limit.
We have two different ideologies in this country, at least in politics, and they
can't compromise.
It's time for a Civil War
Thomas
The debt ceiling should not be raised. It will be a bad situation temporarily if the debt ceiling is not raised. However we need the correcting and cleansing action it will bring about. Butt if the debt ceiling is raised it will be terrible in the long run. Many politicians need to be hung by the neck until pronounced DEAD , for their treasonous actions. We need a balanced budget amendment, but we also need damned politicians that can read and are responsible. The U.S. Constitution mandates that the Fed govt can only borrow money during time of war. The damned corrupt govt has not officially ended WW II.
It's not our responsibility to support half the damn world.
__Democracy is Two Wolves and a Lamb Voting on What to have for Lunch. Liberty is a Well-Armed Lamb Contesting the Vote - Benjamin Franklin__
In capitalism, happiness is not evenly spread, in socialism misery is.
''Life's tough, pilgrim, and it's even tougher if you're stupid.''-- John Wayne
We're not sposed to have a damned democracy in the U.S.A., in art 4 sec 4 of the U.S. Constitution we are sposed to have a republic ! A damned democracy is mob rule. Our republic is sposed to be a rule of law protecting the individual.
The Tea party representatives in Congress are by and large not qualified to govern our nation. All they can do ios spout ill-considered platitudes and they are going to destroy my country.
Time to increase interest rate to control Debt .
How can interest be high when there is no money ?????????????
Depresion (DEPRESS DEBT )is only solution !
It's time the President and Congress quit playing cat & mouse games. We the people are paying them huge salaries to sit up in Washington and argue. Let's be realistic...cut out the money sent to other countries, cut the salaries of our President and congress. They waste more in one day than the middle income would earn in a year and all the President can say,"no social security checks will be cut on Aug. 3. These people have worked all their lives for this retirement income and it should NEVER be touched for anything but what it was meant for. We are giving away our country. Take the money, create jobs here in America!
Follow the money. Bamster is propping up his buddy Soros et al, and everything POTUS does protects his elite contributors, at the majority's expense. The MSM allies itself with Obama, who is the defender of his contributors. Cut the budget 10% across the board. 15 if necessary to leave the debt ceiling where it is. The Administration would have to publish the prioritization of their payments. Some would be deferred, but paid late. When the budget cutting catches up to the overspending because of the lack of budgeting (thank you D party), pass a Constitutional Amendment to leave the debt ceiling where it is. Cut all govt salaries, benefits and perks (no limo, ride coach etc) above Dept head, MC etc 50% until this all gets worked out, just to help them get this done faster. Then make their pay/benes contingent on balanced budgets. Doing less than this, means get your guns, your hard tack and your home medicines, because it's going to be ugly within two years.
The only ones truly hurt by not raising the debt ceiling are the Banksters. The key is the false fear they will raise to scare many of our incompetent representatives to buckle. It is time for the Banks to feel the pain. However, I do not hold my brrath
Legal limit??? Who set the legal limit? Some human being in the past. We live in a world where any limits can be exceeded and life can continue as good as ever.
Moreover, all these politicians definitely have their money in the market. I am sure they will not allow any such chaos that will hurt their own interest. So I am betting, they will come up with a proposal that will cause the markets to rally. Besides, we are heading toward the second half of the year. So S&P 1500 here we come.....
In the long run,defaulting could be the best thing to happen to us. It will cut out the bloated bureaucracy. We will be forced to simplify the government, making it more Constitutionally recognizable. It will hard to understand at first, since no generation alive as ever experienced the U.S. government as it was originally intended.
1) The first cuts should be to the politicians' pay, perks, and pensions. It would be a good symbolic gesture that they are serious and willing to share in the pain.
2) With reference to comments above on past civilizations...yes, Rome fell because of excessive taxation and "money" printing (they filled their gold currency with worthless metal and tried to pass it off as gold). The Romans thought they could expand and conquer forever, but bigger societies require bigger overhead and more revenue, so they collapsed. Sound familiar?
3) The majority of Americans no longer pay income tax. The nation is officially made up of more "takers" than "makers." This is not good because everyone's vote counts and the majority now have no skin in the game, so cutting will be difficult as politicians worry about their jobs more than what's good for the country.
4) Easter Island disappeared from existence when its leaders used up all the island's resources (mainly trees) to build giant statues of themselves to prove how important they were. We look back and say, "How could a society be so stupid as to use all its resources building statues rather than growing food or building shelter?" Are America's politicians not doing the same thing now? Are they not more interested in their positions and their legacies than what's good for the country?
I'm sure there were citizens of Easter Island who were screaming at the insanity up until the last tree was cut to prop up a stone statue. Let's hope our politicians do a better job of listening to the screamers.
There are many pundits out there who have fallen for the false notion that if we do not raise the debt ceiling we will lose our credit rating and it will plunge the United States into financial disaster. It is an assumption that is not empirically based but based on fear and fear is never something you want to base your decisions on. As Herman Cain, the black Republican candidate for President, would say "the problem is that we are not defining the real problem in order to come up with a clear solution". The problem is, the government of the United States of America is spending way beyond the means of the country's revenue. So the questions that come into play are many: why doesn't our government spend within its means, why isn't there more revenue coming into the treasury?
So why doesn't the government spend within its means. Simple. They feel that they can always print more money because, so far, they have always been able to raising the debt ceiling. Nothing has ever stood in their way, until now.
The revenue is inadequate because the tax paying members of our society just don't make enough earned income to generate sufficient revenue. This is not because taxes are too low, they are among the highest in the world, it is because laws and bureaucratic regulations have stifled American business, a "global economy" has foisted upon it an unequal playing field in the guise of "Free Trade" brought to us by the ill conceived NAFTA AND GATT and forty-nine percent of our population pays nothing in taxes.
I said before that there is no empirical evidence that our credit rating would drop if we did not increase the debt limit, but let's clarify that even further by illuminating the fact that no one's rating is lowered until they default on their debt unless the credit bureaus determine a particularly high debt to income ratio (that is, even though you are paying all your bills on a timely basis, the credit guys see that the increasing debt you have in comparison to your income, has gotten to a point where you will soon not be able to pay the interest on your debt). Well, haven't we admirably shown that we have had an insurmountable debt for a long time already? Yet our credit rating has remained solid. So, why should we not assume that the same forces/factors that that saved us from a ratings drop already would not act to prevent a ratings drop if we put a cap on our debt ceiling. Doing so does not mean that we will default. It just means that we will get our house in order, cut back on our expenditures and pay our bills without borrowing more money. This is an exemplary path to financial solvency and would be judged so by the world, ultimately, as being very responsible. For the naysayers out there who will say that my argument is flawed because they think that I've forgotten the extra money is needed, not for future expenses, but for what we have already incurred, let me say this. It will force the government to find the money (and not by raising taxes). Certainly, the United States is not without sellable resources? Also, it would force them to find the fat and cut it out so that future years would have balanced budgets.
It just boggles the mind to think that anyone would be stupid enough to believe that letting them raise the debt ceiling again (Just one more time?) will not lead to continued overspending and repeated increases in the ceiling and ultimately - yes, I'll say it because now it would really happen- lead to the reduction of our credit history and financial and social chaos.
The fourteenth Amendment to the Constitution, Section 4:
Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
If they fail to raise the debt ceiling please remind your congressman of this. It is a part of the Constitution which he swore to uphold when he/she took the oath of office. Don't let them squirm out of it. Hold their feet to the fire. The arbritrary assignment of a debt ceiling means nothing and they have demonstrated that thoroughly by the frequency with which they have increased it.
It's all an act to make us believe that their services are essential to us.
Get involved. Write letters. Make phone calls.
Our country is in trouble. I believe that increasig the debt limit will only lay grounds for future increases. Best to bite the bullet now instesd of making it easier to keep on raising it
they will raise it this time, only to delay the inevitable. Greece can't pay, The only thing that is different here is ego and power
Get ready for the revolution Garry? We are the enemy this time around? We have a Marxist for president and a free press that serves the left wing of the democratic party. The press is honor bound to tell both sides of the news and they have failed. Our morals are in deep decline and we can`t understand why. Remember we asked God to leave. The sons and daughters of the greatest generation are trying to destroy america because they and spoiled. And oh yes the tea party people are the problem because they are holding the line on spending as best they can. Have you heard what the media has to say about them? Maybe we are being judged? But then there would have to be a God. garry we better get our guns soon the 2nd amendment is under attack by the left and the U.N.! Honest!
From California with regards Lynn
Raising the debt limit is necessary for us to meet our CURRENT obligations not future programs. S&P has said that they will drop the credit rating of the US from Aaa to Aa if we miss one payment. In fact they've said that they probably will reduce it even if we don't because of the ridiculous charade the Republicans have been running refusing to negotiate on making the rich pay their fair share and reducing our bloated military. Moody's has said they will immediately drop the US debt rating to the lowest level (D just like Greece) if we default on our debt.
Reducing our credit rating will drive up federal bond yields. Interest on the debt takes up 1/3 of the budget with 10 year yields around 3%. A default could easily drive yields up to 9% which would mean interest on the debt would consume the ENTIRE BUDGET. It's extremely irresponsible to fool around with empty threats like the Republicans have been doing. A debt default WILL DESTROY AMERICA.
How about we start by stopping foreign aid and halt the building of more aircraft carriers, which are obsolete by the time they are built, we already have enough ships like this. Get out of the wars. and save the country we live in. Wake up!
If you give a man a fish, he can eat for a day,
If you teach a man to catch fish, he can eat for ever.
AS long as the government is given a fish (aka, raising the debt limit), there is o incentive to learn to fish (aka make spending cuts).
I say lets let the debt limit be reached. Suffer the consequences, and THEN maybe the boys and girls in Washington will get the message.
On a related note: I would like to see a Tea Party type grass toots movement called VITAL - Voter Imposed Term Limits. 2 Terms and your out...god, bad of indifferent. If during each election season, VITAL published the current term length of incumbents and then suggested that after 2 terms they not be elected, I think that many would follow that thought.
Raise the debt limit and the rating agencies downgrade the US credit rating. Hold the debt limit and the rating agencies down grade the credit rating. Cut spending and the economy tanks again. Adopt QE3 and inflation and commodities go through the roof as the dollar sinks to new lows.
Hmmm me thinks we are between a rock and a hard place.
Tim, I get what you are saying and ideally we would expect the pols to honor promises of later cuts in spending but the reality is that they lie like heroin addicts who promise to stop using heroin if given a little more. That being the case, I feel that forbidding the increase in the debt ceiling will prove to the world that the US is REALLY a great nation because we will take the bold, heroic steps to cure ourselves of overspend.
All heck would break loose. Can you imagine the shock to the system? The unemployment rate would go to 35% overnight. In the first month, we would be forced to default, or by executive order, the ceiling would be raised. That would make our bonds junk, and business would shut down in this country. Get a grip, people. This is like playing russian roulette, with six chambers filled.
Have a nice day.
While I consider it likely that the debt ceiling issue will be resolved, I do have a concern that the administration might want a collapse of the negotiations and blame the republicans for the consequences. It is a terrible thought but appears to be a justified concern.
Seems to me you need a large enough financial crisis to get congress moving and the special interest groups out of the way of proper decision making. Perhaps a municipal bond default or a state default with all the human distress it will cause, will be the only wake up call they will hear.
The CBO projects Revenues to the Treasury (Taxes) growing at a steady 3% per year, which is about the Economys' historical "average"! They do not count in the slow-downs,(Recessions), fast enough to cut off Congressional Spending, therefore the "short-falls". I want the Congress to spent like a drunkin' sailor, ie. the can only spend what they have in their pocket; no 3% growth projections, no deficit spending and over time, no debt.
Q.E.D.
Anything else, is Bovine Scat!
Yours in Freedom,
Frank Gildner
All of the rich people I know (a good number, but probably not a good statistical sample) didn't get that way by "spending more" for the heck of it, but by being generally prudent in combination with hard work, with some brains supplied along with the elbow grease. Forcing them to lose money just puts them back down into less productive positions. Yes, this doesn't cover the uber-rich, whose names you mostly don't know and who really control most things from a position behind the curtains. But realistically, you're not going to touch them with anything our government (which is more or less owned by them in fee simple anyway) can do. They'll just quit participating in us at all if you try to force that.
People do need to make more dollars -- but as a business owner in the past, I have a take on that. They need to create more value, when they do that, there are more dollars. Just insisting they get paid more isn't a good answer, no unsubsidized business can survive doing that. The truth is, there was and is a lot of deadwood, many of whom are the ones without jobs now -- I don't believe people deserve a middle class lifestyle unless they create the amount of value they consume (the golden rule or karma, phrased another way). The thing is, between the internet and automation, you've got the most deflationary items ever to be invented, just now really kicking in. Some of the old things that capitalism used to take care of automatically, but peripherally, just don't work anymore.
The world doesn't actually need everyone to work to produce all we consume anymore. Capitalism (of which I'm a booster and charter member, you bet) doesn't solve this one alone, not that I like any of the other suggested "solutions" one bit, as none of them do as well when applied with human nature involved. We might be at the point of having to invent a new system because in the limit, (almost) no one will need to work -- full automation -- but the guy who builds that huge autmated factory that makes everything or that huge farm that grows all the food won't have any paying customers. We're bouncing up against that one repeatedly now. Rather then innovate, all the M&A is simply a way to increase market share, not the size of the pie, and every single one lays off some more of that deadwood. In this case, pure capitalism is exacerbating the problem. I've thought about this one long and hard, and so have many of my associates, and we've just not come up with a better answer. Not for lack of trying, and some of these people are pretty doggone smart. All we can agree on so far is that it's a really hard problem, given human nature to work with, and not assuming you can change human nature so "it's different this time" because that's never ever worked.
And yeah, what about our lawmakers taking themselves off the dole, refusing to exclude themselves from laws we must obey, like insider trading, and maybe working for a buck a year, as some CEO's have done to set an example? How about they pay their own medical bills and are denied insurance of any kind so they see what it really looks like? That'd cause some changes in the laws overnight. Nah, they're all sociopaths. The only way we'd get good government is to draft the unwilling into the job. Obama wants to tax the poor through the oil companies (talk about hypocrisy, or ignorance, take your pick, but it's not just him or his party).
And he thinks guys like him should pay more. Surely he knows that IRS will let you donate any money you want to, they have a program. How about he gives a million or so of his private book income -- which he only made because he's got this job anyway? What a missed opportunity to walk his talk! It would probably get him re elected even if the GOP doesn't manage to self destruct, as they look like doing now -- they remind me of the old (d) circular firing squad -- they're no better.
I'm not holding my breath. I wish there was a good way to go long tar, feathers, pitchforks, and torches, frankly, and that it would be a good bet, but we the sheeple don't seem to have the guts to fix this, so are getting what we deserve as a whole. Unfair to those of us who don't deserve it, but we've been unable to bring the crowd along with us by ranting alone and haven't done enough I suppose.
Why wasn't it catastrophic to throw a few hundred billion at the banks and car companies, then? Although I don agree on the Pork issue. The bill should be analyzed for pork before anything is signed and the porkers should be exposed and held up for public ridicule.
Obama says "we" must take a 'Balanced approach," but his insistance in raising taxes PROVES he's only wanting to make the conservatives eat crow and knuckle-under by agreeing to raise taxes. Too many people got elected/re-elected in 2010 by declaring that they will NOT raise taxes, to now say they'll "compromise" and go along with the liberals.
Spending over $300 billion per month with at best only $200 billion/month revenue tells us taxpayers one BIG truth.
The Obama administration and Democrats think we're stupid enough to continue spending more than 50% more than we take-in because "its needed." Please ask yourselves "Are you that myopic?"
Here the people who pay taxes..... NO More Over-Spending!
I'll now dismount my soapbox.
If you give them an inch, they'll take a mile!
no jobs no tax base, corparate america has abandonded the usa 30 years ago. now choas rules. get ready for the revolution.
Obama's "regular folks" are already in dire conditions. The debt is political bribes and payoffs, as well as, paying for bread and circus. Obama can't rey on military to supress "regular folk." do he has a mercenary army like Justinian in the Roman empire to oppress the "regular folk" when they get out of line (DHS, TSA, ATF, etc.). Put the banksters and wall street crooks in pat downs to get our moneyback.
Not raising the debt ceiling will increase interest costs by a trillion dollars. Is this the way to cut the deficit?? Furhter, it will decrease GDP by 10 percent putting us into another deep recession. This is not my opinion. These are the forecasts of the vast majority of the leading economists of both the left and the right. For those who believe in the "tough love" approach, why not try raising taxes to compensate for all of the debt we created by unpaid for tax cuts, two unfunded wars, and an unfunded medicare drug giveaway to the pharmaceutical industry. Where were all of you deficit hawks then?
If they stop unemployment payments social security payments foodstamps people relying on them wouldn't be able to make mortgage car insurance ect. payments, things would get much worse money from these programs are going right back into the system .we need to help these people until jobs come back or the economy will get much worse instead of better.Greed by rich has to end people need to make more $ so they can be purchase more and rich need to spend more instead of hoarding when to few people have majority of money the economy stops revolving.
Amen to that!
Remembering that Congress is largely made up of lawyers, one can't expect much. They are arrogant, unprincipled, power hungry and know little about business and finance.
First, let's get rid of the lawyers; they smell to high Heaven. Where have we heard that before?
My message to Congress is, take the bitter pill (drastically reduce spending), no tax increases and quit whining!
BK
It won't be catastrophic but it will put a dent in the market for a few weeks or months. The debt limit needs to be reined in - absolutely. But the past two years of QE have conditioned the economy (and markets) to EXPECT refreshment. Ideally, the model to get out of this cycle would be a curving reduction of QE supports over the next year to at last no more QE. The markets going cold turkey on QE would be overly stressful in my opinion. However, in two years - probably the same result would happen if debt limits and QE were set at fixed amounts immediately or if they were dosed immediately.
Last year, here in California, the voters passed a ballot measure to force the members of the State Legislature to go without pay and compensation if they did not pass a "balanced budget" on time. This year, the Legislature went without pay for a few weeks. It is past time that we get a national referendum on this issue. And what happened to Obama's efforts, prior to his election, to keep lobbyist off Capital Hill?
It's incredible how Americans can ignore anything that won't happen in the next 30 seconds. At the current rate of growth, Medicare, Medicaid and Social Security expenditures will be equal to the United States entire GDP. It won't happen next week so nobody wants to face the fact. We'd rather flagillate ourselves and our opponents over a meaningless and nonexistent ceiling. Really, how can it be a ceiling if we can move it up seventy times or more?
Both parties are completely owned by other interests, and this is what you get. Blaming one or the other is to have drunk tie Kool-aid, frankly.
It won't be a disaster for me as long as I can short these losers, I'm pretty well set up and nearly self-sufficient, as are my rural neighbors. I don't want to see a collapse of course, but compared to most, I'm well set if it does happen.
We need to stop stealing from SS and filling their filing cabinet with IOU's -- I have trouble understanding why we haven't held their feet to the fire over this theft -- which isn't a recent event. We've been the slow-boiled frog. And unlike the way it's turned out - SS was intended to be only a last resort, not the main one, but due to other government malfeasance, most need it -- but not all, yet we can't seem to do means testing. I live where a lot of people get SS, and maybe half really do need it. The other half buy new cars with cash, live in what amount to mansions, and just don't need it, but sure, they cash those checks.
Having dealt with the utterly incompetent medical system without insurance - I can say insurance is the problem, not the solution. If people saw the real bills....things would get better quick and a lot of crap would go by the wayside. No other business gets away with doing whatever they want and charging whatever they want to do it, free of any requirement to let you know even a gross estimate of costs upfront. And while drugs aren't the main problem for most of the system, I think we should wise up when you can't turn on the TV without seeing an advertisemt for a drug that (sometimes you can't even tell what it does) is shown to produce instant nirvana if taken. And right after that, there's the advert for the class action lawyers because these high priced non-generics are killing people, with help from the FDA to get them pushed on us, and favorable treatment from the patent system.
I think they get enough revenue already. I have mixed feelings about the current use of the tax code to manipulate what gets done in private industry. In theory, it could be used as a tool for good. In practice??? We here are smart enough to know that taxing the oil companies more (for example) isn't taking one cent from *them* -- it will all show up at the pumps as a *regressive* tax that hurts people more the less money they have, for whom gasoline is a major budget item. Much as I'd like to see those guys get hurt - it just doesn't work that way in reality. A whole lot of things are like that, frankly, and this "take from them so I get my goodies" just doesn't work out in this game. There is no "them" you can take from where it doesn't ripple down to the rest. Trickle down may not work on the upside, but it never fails going the other way!
And we can't just "tax the rich" as there aren't enough of them rich enough to make the amount of difference needed, and reality is that once rich, it becomes pretty easy to avoid taxes and there's a lot of motivation to do so.
We just need "less of it" from government. It's already at the point where I live that we plow our own roads before their snowplows get here, clear the roads from fallen trees after storms before they get to it, help our neighbors when a tornado takes their house apart and so on -- we don't get diddly from our tax payouts as is. I think the reason they don't shut it down more often is that they are afraid we won't notice anything bad as a result.
But if you make them cut (and my county is raising taxes, unlike us, they don't think they should tighten up in tough times) - it's always the stuff that hurts service delivery -- never do they skip expensive renovations, expensive office help that sits around all day, and so on. Petty little jerks who think they are above us, instead of our servants. Can't fire bad teachers to hire good ones of course -- not that it's all their fault, parenting really has taken a turn for the worse.
Since government has proved beyond any doubt they stink at giving value for the money, despite endless reform (so called) -- the best thing is to just cut them off like you would anyone else who never keeps promises and is generally a parasite.
YOU CAN NOT SPEND YOUR WAY OUT OF DEBT !!!!!! STOP SPENDING AND YOU DON'T HAVE TO RAISE THE DEBT LIMIT !!! AS FOR THE IMEDIATE WELLFARE OF THE COUNTRY, PUT TONS OF PRESSURE ON OUR LEADERS AND TAKE OUR COUNTRY BACK !! It is a fine line with the debt ceiling and to lower are credit ratings will only trickle down to more hardships on the working class people. IE... High interest rates and more inflation. Stop Illegal aliens, stop the no incentive social programs, buy only American when possible, stop fighting no win wars and put our peoples futures at the forefront and end it with a prayer to GOD for guidance !!!
We don't need to raise the debt limit -- we need to LOWER the debt limit!
The situation is very bad and it will be bitter if they wont raze teh limit,
Most americans don't understand that the U.S, economy has already tanked. This is IT!! Without the Fed's money printing since Q.E.-1 we would all be drinking dirty water from a ditch. There is no way out or back. The government needs to crash the system and re-start it on a gold based dollar. In between now & then [sooner than later] all hell will break lose. Happy days baby--------------------------------
Hi John,
I totally agree with you. I'm tired of our representatives only thinking about their own re-election instead of the welfare of our country. It just becomes more and more apparent.
Is the PARTY SYSTEM a DINOSAUR and start getting people with business and economic degrees holding elected officials to a higher standaed much like the private sector workforce is required to do by getting super high priced degrees that enslave them in student debt for a lifetime that does not go away. Plus now grads are getting out of school with nowhere to go
If anyone else other than the Chicago thug was in the White House, I would believe the country could survive a failure to raise the debt ceiling. However, when Obama says that social security payments will be withheld when everyone knows that the monthly cash flow of tax collections is sufficient to make those payments, then I have to worry that Obama would not hesitate to inflict as much pain as possible on the American people. That's the Chicago style. I also wonder if part of our indebtedness is interest owed to the Federal Reserve for printing our money? If so, then it might be time to cease doing business with Fed. I think our country would do fine without the Federal Reserve racketeers.
I might be naive but shouldn't the debt limit and deficit cuts be part of the budget debate? I mean when they vote to approve the budget shouldn't they provide the means to implement it?
I agree with the theater comment since it is an artificial limit--I mean no creditor set it...
The focus needs to be on cutting excessive spending. There are plenty of areas to cut. While I think the tax code needs completely rewritten. Messing with any tax loopholes in the current code will accomplish little and just further bastardizes an already complex illogical tax code.
If the government raises the debt ceiling, they keep digging a deeper hole. Social Security and Medicare is de factor an insurance product. It has to be made actuarially sound,i.e. larger premiums, do a means test and raise the age to qualify. Like 17 other major countries we need to pare back our defense spending so that it is on pare with other major countries. If the government pared back with the EU we'd probably save at least $300 billion, if not more. Defense does not produce a product that increases our standard of living.
Spending all that money on defense is just like spending it on kid's fire works. It's like pounding sand down a rat hole.
True, defense products is an export that not only raises hell and brings in dollars, but can't the US find other products to export in it place, e.g. medical research knowlege. Our medical research spending is only $30 billion of a nearly $2 trillion industry. Ten years ago the US was only spending on $13 billion on medical research. One company, Intel, was spending half that much on R & D. Intel spent about $7 billion and employed 12,000 people in R & D. The US can't get ahead on spending $30 in R & D to impact a $2 trillion medical industry. Our government has to play it smarter with our tax dollars. But I don't think they're capable.
I'm sorry Adam but the question is not a fair one - it is a moot point. The debt ceiling will be raised, guaranteed, although some drama and compromises will be thrown in.
If the question is :if we fail to raise the debt limit, and default on our US gov. bonds, is it serious, even ruinoous for not only investors but our good old US citizens, the answser is so obviously "YES, it would be the stupidist thing we could do".. I cannot imagine anyone believing US should default on its debt obligations.
The first cuts to the budget should be to foreign governments. Explain to me the logic of borrowing money to give to the corrupt leaders of foreign countries? The bribes to them have been a failure, then if our own citizens have the trappings of a middle class life, a big screen TV, a late model car, or any of a number of middle class assets, they should not be able to access entitlement money. What is described as poor in this country is completely laughable and they have gotten away with it. Blame the system of buying votes. I live a farming area of Calif. and more than half the cars parked along the picking areas are later model, higher quality brands than we drive, and yet we are feeding their families three meals a day in the schools! At the same time the government entity responsible for food stamps was soliciting applications in advertisements. It's a parents responsibility to feed their children not the tax payers. Charity is sometimes necessary, but it should be limited and not considered a birthright. This country has been changed alright, but not for the better.
I personally will think that is just a matter of time when all bad issues in us should ease as us is the main concern in the whole world ! Just imagine what is going to happen if us is going to fall . The rest of the country will not be able to survive . Then the collapse of end of the world will arrive . Therefore i am quite optimistic about the economic condition in us . The dark clouds will be over very soon and the rising of the sun shine will soon apppear .
Default on your debt and nobody lends you money anymore. So far not a problem as you can always just keep printing more. Hello INFLATION!! Not just in the U.S. but gets exported globally. Other countries get fed up and all of a sudden the US $ is no longer the world's reserve currency. You have to pay for imports in foreign funds. Prices at home skyrocket. Loss of reserve currency status is well underway.
Cannot allow default on debt. But most pundits seem to think the current debt level will never be able to be repaid. Massive shock adjustment needed. Will either happen all at once which is the most likely scenario because none of the politicians have the guts to take the necessary steps and also don't really seem to give a damn about the people.
To the analogy of the best house in a bad neighborhood. If I am the owner of the best house, I do not want to put more money in it than I have to. It may save the neighborhood from the pending collapse by keeping it afloat, but will not ultimately save the neighborhood and will put me in worse financial condition when the collapse happens.
To make another analogy "Let's take our medicine now when we are ill rather than when we are on our death bed".
As Adam always says, they are just kicking the can down the road if they raise the debt ceiling. We either take our lumps now by defaulting on the debt or we wait, raise the debt limit and take our lumps later and harder. In my opinion I say default on the debt and get rid of the banks. Let the United States of America print its own paper money backed by a hard currency worth its weight in gold(no pun intended) and become the sovereign nation it once was. Or, if we as a nation decide to let the Federal Reserve stay in business then the stipulation should be back the paper currency with a hard asset currency. The banks are an enemy of the people and must be dealt with as such. It is time for the American people to awaken from their long sleep.
They must cut spending and increase revenue
for a short term of 5-7 years. Starting with the 3 branches of govt,
all officials èarning over $70k should take an immediate
20% pay cut and all non essential travel and expense budgets frozen.
This will cause a mindshift among bueracrats that they are there for
public service not to become wealthy. Re-evaluate FRB Gold Certificates
and a minimum increase in debt limit if needed to satisfy
commitments that can't be canceled or downsized. Pull back war spending
which is mostly supporting commercial industry and refocus spending inside our own
boarders for investment in green energy and industry.
It is doable but I doubt if people in general have sufficient
selflessness and matured spirits to accomplish a turn around.
Only God knows if this is our track to ruin.
So you think one lives forever? Everyone dies, sooner or later.
Same with nations. Have you studied History? Where are the nations that ruled 1,000s of years ago? They live only in History books. Same will be for USA and all other nations. Only question is when. We all hope not in our lifetime. No one wants to die but it is part of life. Accept it and go enjoy life while you can.
uU
I'm afraid Rob is right...its probably too late, although technically it wouldn't be if there was someone in politics who would simply apply a common sense approach which would resolve our fiscal problem. Unfortunately, there doesn't appear to be anyone like that in a position to make it happen.
Furthermore, we have to ask the question, "Which is worse, raising the debt ceiling or not raising the debt ceiling?" The media is interpreting the credit agency warnings to apply to the debt ceiling. Well, think about it...if you are a credit agency, would you be more concerned about some artificial self-imposed credit limit or, would you be more concerned about too much debt and the resulting inability to pay one's debts?
If the debt ceiling is not raised there is still much more revenue every month to cover: foreign debt interest, social security, medicare, soldiers payroll, (all vital services) provided by the government. The only real problem that could arise from not raising the debt ceiling is the resulting perceptions and panic.
Other than that 🙂 the only thing it would do is stop the ridiculous spending. So, it's all in how the markets react. So far, the stock market doesn't seem to care one iota. Go figure.
The needed recession and clearing of bad debts has been postponed world-wide for three years. The cost of this "hide the weenie" charade is deficit spending, now averaging about 10% of GDP in the U.S., and suspension of accounting rules allowing banks and others to hide the impaired assets. How long can they continue the extend and pretend game? Far longer than we can imagine. The end will be an ugly economic downturn, on a scale never before seen in this country. No asset class will be safe -- the "authorities" will confiscate what they can as they attempt to preserve their power.
As the Greeks say, Malaka.....This is all theatre. NO one cares in office. ITs about their own agendas.
Ditto Rob
The only hope left to salvage a dying US economy is to lower the debt ceiling, drastically cut spending, and more importantly STOP THE MONEY PRINTING! Even with doing these three things, I am afraid its too late.
Yes, incompetence always leads to ruin.
They have debased the US dollar for years,
and it's time to face it.
I suspect that the perception of trouble and the interpretation of the potential severity (or lack thereof) is based in large part on the degree of direct financial or service based involvement one has with the US Treasury or agencies that are subject to funding interuptions. Those who believe they have no exposure to or are somehow insulated from gov't financial conditions will probably think they have no reason to worry. The opposite is also likely.
The results are suprising seeing as we all know what happens when a bank like Lehman brothers fails.If the U.S.A. fails to meet its obligations on its debt the results would be catastrophic as we are the holder off the worlds reserve currency.Financial armagedon would spread around the world.Now were the nicest house on the block in a bad neighborhood what happens to the neighborhood when we burn our house down over partisan politics.As Adam says this is insane.Rationality has left D.C. buckle up its gonna be a bumpy ride.
I don't necessarily disagree with raising the debt ceiling as long enough cuts are made to start reducing the overall debt going forward. I also think it is important that all tax loop holes are closed so that all individuals / companies PAY THEIR FAIR SHARE. This is not raising taxes in my opinion.
It would be catastrophic if we don't hold to the existing legal limit. Whenever the limit has been raised, our bureaucrats see this as more dollars avaiilable to spend. Why would raising the limit be any different than the recent past where bills were passed to get us out of our dire financial condition and the bills ended up being full of pork or dollars directed to things other than to help fix our situation. In essence, raising the debt limit would be a reward for those who have mismanaged our dollars and would be looked at as an opportunity to spend and create new programs.
I won't believe congress is serious about getting our debt under control until they stop raising the debt limit. It will be the school of hard knocks for maybe a few years but it has to be done to get in sync with reality. If this is not done the US will eventually have a total financial colapse that could destroy our country.