Will the U.S. breach the debt ceiling on October 17?

Posted on by The INO.com Team

Democrats controlling the Senate are planning to try to pass a stand-alone measure to increase the government's borrowing cap, challenging Republicans to a showdown that could unnerve financial markets as the deadline to a first-ever default on U.S. obligations draws closer.

Will the U.S. breach the debt ceiling on October 17?

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Every Success,
The INO.com team

56 thoughts on “Will the U.S. breach the debt ceiling on October 17?”

  1. its probably more like 17 Nov if the debt ceiling is not raised.

    Hey anyone know what Treasury interest went up today?

    I know the 30 year Treasury bill were sold to day and they had more buyers than securities but I would have thought that would have pushed yields down.

    Thanks.

  2. Congress needs to give Everybody 1 year notice then default and make due with our own tax money......................

    1. Default might be interesting for those that survive.

      Individual public holdings, IRAs, 401Ks in the toilet overnight.

      Bank portfolios scratched off the books and depositors told bye bye American pie.

      Businesses with bond portfolios heart attack. Kiss the jobs goodbye?

      Since in a debt based economy debt is money and no debt equals no money, what happens next?

      Other "governments" shattered but China might be angry enough to top the default with radiation pudding?

      Try this math: There are 10,560 $100 bills end to end per mile. 280,000 miles to the moon. How many trips to the moon is $1,000,000,000,000 in hundred dollar bills? And the debt is how many $trillions? Add in unpaid "entitlements?

      Here's an idea---but not a solution: Confiscate all the assets of the politicians AND those who pull their strings who foisted this mess on everybody else and distribute it to those they have damaged.
      Then hand them a weapon and send them to the Middle East to man patrols to "defend American interests." OH and put a dozen INO contributors on the selection committee to examine the evidence? Did they do it because they were stupid or smart---and do they get to those positions because they are stupid?

      Sorry! I couldn't resist the temptation...

      Will that solve anything? No, but it might be a lesson to future schemers that criminals pay debts in this world...not to mention a much more fearful judgment.

      One man's opinion...

      1. No money means just that - no money. However, should capital hill be exempt from their loss of pay/benefits the instigation of severe measures are very likely to become a national issue.

  3. It will be raised,no other option for Establishment.They will kick the can down the road untill they cannot.That time is not here yet.The final catastroffy will be therefor much nastier. Martin

    1. Agree, expanding fiscal policy was the basis for every party. It's somehow the fate of a country's way to finance its budget. But that's not only a demand by politics, it finds its basis in economical science.
      Financing a budget deficit by credits is more effective for economy than financing it by raising taxes.

      Read John Keynes : "The General Theory of Employment, Interest and Money"

    2. Maybe reading John Keynes' theory is a bit to complicated, because you need to study economy in greater details. But the basics can be extracted in some simple formulas, and be applied to the US deficit spending.

      1. Keynes is discredited rubish in spite being bible of the estabishment.The reconing is closer and closer and it will be nasty.Martin

        1. You call it rubbish, probably you didn't understand the impact. Therefor you "believe" (and call it bible) and do not know. Believe is something in the ideological aerea, knowledge something in science. Maybe we should look at "Keynes' laws" in more detail, to see what they tell us about the rubbish.

        2. When reading Keynes theory you get an idea of what is called Wagner’s law: “Law of increasing state spending”. That law was not the idea of Keynes but of the German economist Alfred Wagner. Read: http://en.wikipedia.org/wiki/Wagner%27s_law
          Several attempts to declare its function were made. An important reading is also: Timm, Herbert: Das Gesetz der wachsenden Staatsausgaben, In: Finanzarchiv, N. F. Vol. 21, 1961, p. 201-247.
          This law is directly influencing fiscal policy as an empirical factor.
          This law also leads to an asymmetrically business cycle policy, which means, that in phases of recession it is popular to create a economic stimulus package, and when it comes back to an economic boom, it might be unpopular (because of supporting voters), to implement factors of a recessive fiscal policy (increasing taxes, etc.)… As a result government spending is always increasing. That’s why there is implemented a dept ceiling by law.

        3. Martin, thanks for your observation.

          A Google search for "Keynes Homosexual" produces a mountain of evidence that he could not keep his zipper up around other men.

          Just how reliable is Keynes Socialist thinking when he spends his time thinking about buggery?

          Polls indicate that over half of the U.S. think buggery is OK, so no surprise if some on this blog take exception

          2. In Keynes book "The General Theory of Employment, Interest, and Money (1936)" a chapter is titled “The State of Long Term Expectation.” Here, Keynes got right to the point, deciding to “appropriate the term speculation for the activity of forecasting the psychology of the market, and the term enterprise [a word he used for investment] for the activity of forecasting the prospective yield of assets over their whole life.”
            Source: http://blogs.cfainstitute.org/insideinvesting/2013/02/27/what-is-the-difference-between-investing-and-speculation-2/

            My comment: This Keynes law is right.
            By the way, Keynes' investment decisions were NOT short term. Markets in Keynes' times were more likely those, which one expect from markets.

  4. Todays USA today says we have 35 BILLION in interest payments alone due by Nov. 15th!! Many feel that simply increasing the debt limit is the solution, but if we do, people need to realize that our interest payments on that debt rise also, making it even more necessary to raise the debt ceiling again & again. I firmly believe something needs to be done to reign in our out of control economy. No, it won't be pleasant for anyone, but it only gets worse with each debt ceiling rise.

    1. Leela,

      Many thanks for conributing your thoughts on what is a monumental problem that I don't even think the government understands. We have got to start living within our means. if we don't do that soon our children and grand children will be saddled with our mistakes.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  5. I answered no but I think that unless there is some bigger deal the expansion of the debt ceiling will be a limited amount causing the problem to come up again in a few months. It should, somehow the people need to understand that the debt is growing so large and entitlements are growing so fast (ACA to cost one trillion over 10 years at time of passage is now up to 1.8 trillion alone) that it is not possible to expand the GDP fast enough to ever overtake entitlement growth, making a balanced budget no longer possible without a major devaluation of the dollar. With the debt so large it will not be possible to increase interest rates to fight inflation (e.g. mid 1980's).

    1. Sandy,

      Thanks, for your insightful comment on the debt ceiling, much appreciated.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

    2. Sandy,

      I can't agree with you.
      You only gave the projections of ACA costs over the next decade, but you did not mention that there is a considerable more tax income for goverment, too, and it will come to cost reductions, at least. that' not only a theory, but can was tested in a smalller modell. Those people, projecting ACA, are economists, and they understand a littel more than you and me about that processes.

      1. Actually income tax revenue will be reduced by the tax subsidies for lower income individuals that will show up as reduced income tax revenue. I am not sure that this significant loss of tax revenue will actually be reflected properly as a part of the cost of the ACA. The loss of revenue from ACA subsidies could actually be used to hide a portion of the cost of the ACA. It is interesting that the people will have first purchased insurance from a private insurance company and then will receive the tax subsidy. In effect you and I as taxpayers are paying for someones insurance premiums to a private company. So the ACA actually is a tax transfer to the insurance industry. And, when you look at the numbers it is a rather generous one at that. Further, there will be significant increased costs in medicade (medical in California). Any added tax revenue, such as from high cost insurance plans will be more than offset by the tax transfers and added costs of the program. The numbers I cited were estimates of added costs to the government and the economy from past readings in the media. I cannot vouch for accuracy. But, I suspect that the ACA is so complex that none of the estimates will prove to be accurate. I do expect that like Social Security and Medicare and Medicaid all of the cost estimates will prove to be understated. It would be interesting for Congress to ask the CBO to make the estimates of growth in GDP necessary to reach a balanced budget, by holding all else equal (discretionary spending and using current year dollars) and allowing for only built in increases in entitlement spending. My bet is that the required increase in GDP to balance the budget would not be achievable in our current competitive world economies.

        1. There are some points I do not see it the same way. It’s right that actual tax revenue will be reduced, but ACA is not a program you have to look at in the short run. Tax subsides for low-income individuals you also have now in form of payment of uncovered bills due to emergency room visits of the uninsured. The point, which has to be asked by taxpayers, is, if a considerable reduction of these subsides occur on the long run, when the health care program is implemented.
          Therefore we need to look at what happened at those states, which served as a model for ACA. In Massachusetts, when Romneycare was implemented, some interesting things occurred. First, number of uninsured residents dropped by more than 65%, reaching near complete insurance coverage for residents.
          Second, we need to look at the impact of the health reform on taxpayers’ money:
          The Massachusetts Taxpayers Foundation released a report about the impact of Romneycare to taxpayers’ money as review for the period 2006-2009 with the title: “Massachusetts Health Reform. The Myth of Uncontrolled Costs”. This report is available at the the MassTaxpayersFoundation website at URL: http://www.masstaxpayers.org/publications/health_care/20090501/massachusetts_health_reform_the_myth_uncontrollable_costs
          They have also published an update for the period 2006-2011 with the title. “Massachusetts Health Reform Spending, 2006-2011: An Update on the “Budget Buster” Myth” available at URL: http://www.masstaxpayers.org/publications/health_care/20120413/massachusetts_health_reform_spending_20062011_update_%E2%80%9Cbudget_buste
          Or at URL:
          https://www.mahealthconnector.info/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/Health%2520Care%2520Reform/Overview/HealthReformReport-MATaxpayersFoundation.pdf

          When you follow the conclusions, then the output of the health reform to Taxpayers was better than estimated.
          Some more interesting opinions can be found here:
          http://www.americanprogress.org/issues/healthcare/report/2011/04/13/9530/myth-vs-fact-health-care-reform-in-massachusetts/
          and here:
          http://bostonherald.com/news_opinion/local_politics/2011/03/therese_murray_claim_romneycare_budget_buster_%E2%80%98myth%E2%80%99

          I can follow your opinion stating that “taxpayers are paying for someone’s insurance premiums” only in part. You have left out the effect, that through the individual mandate, also many newly insured ppl receive insurance coverage by paying money to insurances, easing the burden for taxpayers to pay for uncovered bills at emergency rooms. These additional funds paid to insurances are probably more, than the outflow of money to uncovered bills due to uninsured medical treatment. This is due the effect, that the additional ppl, now paying for their own health insurance, are not all ill. In summary, the former amount of uncovered bills is being reduced, and in fact, that is what we see in the model.

          1. Thank you for your thoughtful response to my comments. I appreciate a political debate that includes details and real information, which is very different than the name calling that is coming out of Washington D.C. today.

            I wonder if the available of medical facilities, which are plentiful in Massachusetts, had any major effect on their experience? Years ago I wrote the clinic and specialist care eligibility manuals for our county's medically indigent program. After I left the county eligibility management was transferred to the Welfare Agency from the Health Department. Now with the ACA, the medically indigent program is being cut. It makes me wonder how those who will most benefit from the ACA from subsidized insurance will deal with the administrative requirements. For example: someone on the financial edge signs up for a bronze plan and cannot really afford the co-pays. What happens then? I think that on a national level the experience will be very different from Massachusetts' experience because of both the education level of the population and the availability of medical services.

            Unless something like the opening of urgent care clinics were to happen, I think the visits to emergency rooms will increase as people may feel that they do not have to worry about payment for services. One thing that I am sure of is there are so many variables in the ACA that no one can predict what it will end up looking like.

            With unlimited money almost anything can look successful. Unfortunately, If the nations debt gets too large for the GDP, raising interest rates becomes a dangerous way to fight inflation and spending which is already uncontrolled cannot be expanded to fight recession/depression.

    4. Another account from Jonathan Gruber, with an update of projections:
      Gruber, J (2011): The Impacts of the Affordable Care Act How Reasonable Are the Projections, NBER WORKING PAPER SERIES, Working Paper 17168.
      URL: http://www.nber.org/papers/w17168
      URL: http://economics.mit.edu/files/6829
      Revised version of this Article was published in: National Tax Journal, Vol. 64, 2011, pp. 893-908. (Journal web site: http://ntj.tax.org/ )

      He cites not only reliable data analysis from Congressional Budget Office, but also used data from past experiences (Romeycare in Massachusetts) and scientific models to explain how he comes to the results.

  6. U.S. is a great country and of mutual respect between democrat and republican to get the best path to economic interests and confidence. The important thing is to look at how big the U.S. needs to play a role in today's international world, with regard to the ability of U.S..

    1. Agung.

      Thank you for taking the time to leave a comment on our blog. We really appreciate and respect your viewpoint.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  7. You know, I remember someone asking me some time ago, "What would happen if the Soviet Union just disappeared over night?" And, after 1989, it happened like I never thought it would,,,,, and, now we know.

    And, I remember someone asking me some time ago, "What would happen if we had another Pearl Harbor and another World War?" And, after 9/11/2001, it happened like I never thought it would,,,,,, and, now we know.

    And, I remember someone asking me some time ago, "What would happen if the stock market crashed, and we had another Depression?" And, after 2008, it happened like I never thought it would,,,, and, now we know.

    Someone asked me the other day, "What would happen if the debt ceiling didn't get raised?" The only thing that I'm sure of is that it won't happen in any way that I can imagine. But, I know that the rich get richer, and the poor get poorer--until they can't take it anymore. Read James Garner's book about his childhood, and maybe that will shed some light on what is happening to our country right now.

    Something to think about,

    Cherubim

    And, I remember someone asking me, "What would happen if we didn't raise the debt ceiling?"

  8. I AM HOPEFUL ABOUT THE GOVERNMENT OPENING UP AND THE DEBT CEILING DOING THE RIGHT THING SOCIAL SECURITY IS A NECESSITY FOR MILLIONS AND NO MATTER WHAT THE CHECKS WILL BE SENT ON TIME. THIS IS A SEPARATE FUND.

    1. ANNPETERS,

      Thank you for your feedback. I think that everyone here on this blog or looking for the government to do the right thing, I know I am.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  9. With all the Republican members of the Congress are scared of being "primaried" by a small but very focused group of party members, namely the Tea Party which is hell-bent of breaking the government at whatever cost, I am not optimistic that rational decisions can be expected. It is like letting a mad man holding a grenade, any outcome is possible.

  10. The statue on top of the "capitol" building is referred to by members of congress as the "Goddess of Liberty."

    This statue makes mockery of the very first of God's Commandments: "I am the Lord thy God, thou shalt not have false gods before Me."

    The cornerstone of the capitol was planted by George Washington in 1793 in full Masonic dress with Masonic religious ceremony CONSECRATING the cornerstone to the "god" of Masonry in the "year of Masonry 5793!" Needless to say Anno Domine (the year of Our Lord) is not there.

    Various Masonic authors, including, Albert Pike the godfather of U.S. Masonry, have referred to Masonry as the church of Lucifer while the Church has idenified Masonry as "the Synagogue of Satan."

    The capitol Prayer Room In the center of the building. It is locked and reserved to "members only."

    A guard opened the door for our group, but forbad entrance. The picture this correspondent took from the doorway threshhold shows George Washington, in stained glass, kneeling in prayer to the to the all seeing eye of the reverse side of U.S. seal and supported the obverse side of the same seal found on $1 U.S. "currency."

    A little research discloses that most members of Congress either are Masons, taking the required blood oaths, or in the service of Masonry.

    So, from the very top of the capitol to it's root with a stop in the middle for "our" "founding father" to worship the Eye of Horus supported by congressional members of one or more secret demonic societies, is it possible that anything good or wholesome can come out of Congress?

    Just thinking out loud...

    1. John,

      Where do I start?

      First, I think we all agree that you need psychological help as soon as you can get it--or, you whole life is going to implode (and, maybe, it already has). Being a compassionate, loving, religious human being can only help everyone. But, being delusional can only get you shot by DC police officers. The masons are a secret society, like many others that help shape this world in which we live. But, demonic--no, I don't think so (I am not a mason, by the way).

      And, whether mason or not, George Washington was a great man for the ages. And, America is the sum of its parts, and has been the best thing that this world has had for 250 years. They were men of enlightenment. And, they saved us all from the Hitlers of this world. You've got to love America.

      Something to think about,

      Cherubim

      1. Your argument looks ad hominem.

        Attacking the man and not the issue seems to display the weakness of your position.

        Against a fact there is no argument and it might be worth noting that the difficulty with some conspiracy theories is that they are not theories...

        This correspondent, complements of my employer, spent two years off and on in Washington DC. The evidence of the demonic foundation and root of this poor republic is everywhere in plain sight and openly boasted of, but not reported by the oh so trustworthy U.S. media.

        When I finished the slide show I put together from official Masonic and U.S. documents together with what is in plain sight at the DC monuments, for those who can see, concerning this evidence it took nine and a half hours to narrate it. Needless to say it has been edited...

        And this is merely the tip of the iceberg. If you can set aside the propaganda we have all been soaked in since childhood the results would be surprising.

        Be at peace.

    2. That's certainly a different take on the events at hand John. I've always been intrigued by the role that the masons played in founding our wonderful country.

      Thanks for sharing your thoughts,
      Jeremy

      1. Thanks, Jeremy, for your observations.

        There is a recent expos'e posted September 23 on ChurchMilitant.tv which consumed several hundred hours of research by a dedicated team.

        Enjoy might be the wrong word...

    3. Stop thinking. Unless you were ever a Freemason, you don't know what you're talking about.

  11. I expect that no agreement will be reached and we will go over the cliff. The fall might be only a few feet or it might be miles. Nobody knows.

    The reason we have come to this is because for 40 years everyone has "talked" about what will happen if we continue to spend and spend but nobody wants to do anything about it. So the Republicans have decided to test the waters and find out just what will happen if we are forced to live within our means. No deficits, just spend what comes in as revenue. A grand experiment.

    Andy

    1. Andy,

      Yes it would be in grand experiment. Imagine living within your means how crazy is that, the US has to do this otherwise is going to end up like Italy, France or Greece.

      Once again thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  12. I'm a little concerned that most people assume that level heads will prevail and agreement will be reached. I would like to think that will be the case, but there seems to be something a little different going on this time. Not quite sure what it is. Maybe it's Pres. Obama's "no negotiation" stance or the Republican's feeling that 'if they don't push this now, when will they ever get to push it'.
    It's starting to make me feel a little nervous that they could really blow the economy up, by mistake. I didn't think we get a replay of August 2011, but I am now starting to think so.

  13. Does anyone really think the the President or the Speaker wants to the footnote in history that it was on their watch that the US defaulted for the first time in its history. I dont think so.

    1. Gary,

      It seems to me that it's all about brinkmanship, I don't think the president or the speaker want to go down in history as the leaders who put the US into default.

      Let's see who is the first to blink.

      Thank you for participating in the conversation.

      All the best,

      Adam
      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  14. if and even 17th passed favorably too, serious as well considerably wide spread damage is already taken place, and also one more question that what next?

  15. I can only shake my head in disbelief that the US has allowed its debt to grow at such a rate that it is now approaching the basket case position as per Greece. The one bright outcome is that gold prices will escalate.

    1. If any private business ran itself the way our Government operated...We'd FOLD too.
      many private folks have been laid off, at no fault of their own....Why should be feel sorry for
      Government employee's who never take pay cuts.. and have a guaranteed Retirement/Pension plan
      ....OH and benefits far exceeding private industry standards......Lets pay more taxes to save government jobs???

      1. Government employees have had a three year pay and cost of living freeze and in order to hire one new employee you have to lose three [trained] employees. In short, if you want to hire 100 employees they have to lose 300 employees first. Another fallacy is that the retirement program is so good. The retirement/benefits - now - are the same as the average large corporate private sector business. Now if you are talking about those Congressional losers your right.

  16. I am totally disappointed but not surprised at the stalemate and puffery happening in Congress and the White House. I agree with Javed that it makes no sense that the US Government cannot resolve its financial crisis. These folks are supposedly smart people. Yet,the crisis is of their own doing!!! That is the more bizarre evidence. The Republicans are to blame as well as the Democrats.

    I liked what I heard from the Israeli Prime Minister on handling their budget. If they cannot agree they take 1/12 of the prior year's budget and put it in place. If, within 6 months, they still cannot agree, then there is a call for general elections. I am not sure that we can afford to do the latter in the US but the concept makes sense. Further, I believe that the politicians should forgo their salaries for not coming up with a budget. This is not a temporary hiatus in paying them. But if they cannot do what we elect them to do, i.e. run the government they should at least forfeit their pay for the time there is no budget. This means, quite clearly, that if the budget is not resolved in a month, they lose one month's salary- for the year. It is not deferred; it's gone.

    Every time I hear of the stalemate in the government I reflect upon an old movie with Kevin Kline called "DAVE." It doesn't take a genius to run the government but someone with sense of right, high morals and integrity and, most importantly, a passion for doing the right thing for America.

    David Friedman

    1. Define the "right thing for America"... that's why there is a stalemate...... too many Politicians think "their" way
      is the right thing for America....?

    2. David,

      I did see he movie "Dave" with Kevin Kline when he brings in his local accountant to balance the budget it was a CLASSIC moment. Looking back it makes sense just bring in some accountants from somewhere way outside of Washington D.C. and I bet they could clean up this mess and balance the books in a no time at all.

      Appreciate your thoughts and input.

      Cheers,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

      1. Except the raw numbers make it quite clear there won't ever be a pay off of the debt, or a balancing of the books. You're familiar with parabolic curves, the debt soaring out of control is a classic example. It is well past the point of being fixed, balanced, whatever you want to call it.

        Either get it over with now, or have it be even yet more painful when the foreclosure notice becomes a mandatory pay now or quit.

  17. Many years ago I worked for a wonderful Congressman who cared about his constituents and about the country. He was a Republican Congressman from Maine. Just down the hall was a Democratic Congressman from Georgia. My boss helped his neighbor out on votes for peanut growers in Georgia, and the other gentleman helped my boss out on matters affecting the maritime industry in Maine. They respected each other even when they held opposing beliefs.

    Many of today's politicians do not seem to have any understanding of our history or concern for the greater good. I fervently hope that those who remain committed to what is best for America can persevere in pulling us out of this infantile behaviour on the part of some of their colleagues.

    1. Diane,

      Thank you for your feedback. I'm up here in Maine right now closing up my summer home. I mentioned that, simply because the folks here in Maine are all very well mannered and are always respectful to their fellow citizens.

      I agree with you, the bigger picture is America, not individual brownie points.

      Appreciate your thoughts and input.

      Cheers,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  18. If the market even slightly entertained the idea that default would happen interest rates would have soared on Treasury debt. The 10 year note has flatlined at around 2.6 - 2.7%, down from almost 3% earlier this year. I don't see a default happening. I don't care what the politicos are saying in Washington, they are all full of hot air.

    Andy

  19. It will be unpleasant for USA Democrates and Republicans that a country leading the world it unable resolve its interanal problems through dialog. Specially when dead line is approaching and creating uncertainty not for USA only but for entire business world.

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