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The Debt Ceiling

S

snarlcakes

All-American
Sep 9, 2009
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What does everyone predict?

1) Biden/Senate say no to the House proposal and we default.

2) Biden/Senate accepts the Houses proposal and the debt ceiling is raised.

3) Biden/Senate say no to the House proposal, but do negotiate a compromise to raise the debt ceiling.
 
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House has already raised the ceiling, Buyden/ senate say no, we don't default as we have a ton of money coming in although some payments may be delayed (the full default scare tactic was ruin months ago), In the end house will cave and agree to nominally higher than 2022 spending levels, and proctor gambol lobbyist draft a rinse lather repeat bill that passes with all of DC and legacy swamp creatures getting a 7 figure bump in their shell LLC accounts.
 
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Govt spending is out of control. Both sides should agree to that.

When will we get rid of all these unelected agencies that spend, spend, spend?

Yes, there are tons of places to cut.
They are spending trillion$$$.
Someone have the steel to start cutting!!
 
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DualGrad said:
Govt spending is out of control. Both sides should agree to that.

When will we get rid of all these unelected agencies that spend, spend, spend?

Yes, there are tons of places to cut.
They are spending trillion$$$.
Someone have the steel to start cutting!!
Click to expand...
I saw something about the US spending 150 million on a wall in Jordan to secure their border for them? WTF is the thinking? Could there be more hypocrisy amongst Democrats than this?
 
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Crayfish57 said:
I saw something about the US spending 150 million on a wall in Jordan to secure their border for them? WTF is the thinking? Could there be more hypocrisy amongst Democrats than this?
Click to expand...
“…debt rose by nearly $7.8 trillion under President Donald Trump..”

“…debt has increased by around $3.5 trillion under the Biden administration…”

www.forbes.com

Biden’s Costly Agenda Alarms Republicans, But Trump Spent Big, Too

The White House will release a $6 trillion budget plan amid complaints from the GOP about wasteful spending and ruinous debt, but their guy also added to the national debt big-time.
www.forbes.com www.forbes.com

www.newsweek.com

Fact Check: Did Joe Biden bring down national debt by $1.7 Trillion?

President Joe Biden's clash with House Republicans over the debt ceiling could lead to a default.
www.newsweek.com www.newsweek.com

Not as much hypocrisy as amongst you and the Republicans.
 
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Harry Hondo said:
“…debt rose by nearly $7.8 trillion under President Donald Trump..”

“…debt has increased by around $3.5 trillion under the Biden administration…”

www.forbes.com

Biden’s Costly Agenda Alarms Republicans, But Trump Spent Big, Too

The White House will release a $6 trillion budget plan amid complaints from the GOP about wasteful spending and ruinous debt, but their guy also added to the national debt big-time.
www.forbes.com www.forbes.com

www.newsweek.com

Fact Check: Did Joe Biden bring down national debt by $1.7 Trillion?

President Joe Biden's clash with House Republicans over the debt ceiling could lead to a default.
www.newsweek.com www.newsweek.com

Not as much hypocrisy as amongst you and the Republicans.
Click to expand...
The thing is that Trump is no more of a Republican than Biden is. Besides that spending starts in the House of Representatives.
 
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Harry Hondo said:
“…debt rose by nearly $7.8 trillion under President Donald Trump..”

“…debt has increased by around $3.5 trillion under the Biden administration…”

www.forbes.com

Biden’s Costly Agenda Alarms Republicans, But Trump Spent Big, Too

The White House will release a $6 trillion budget plan amid complaints from the GOP about wasteful spending and ruinous debt, but their guy also added to the national debt big-time.
www.forbes.com www.forbes.com

www.newsweek.com

Fact Check: Did Joe Biden bring down national debt by $1.7 Trillion?

President Joe Biden's clash with House Republicans over the debt ceiling could lead to a default.
www.newsweek.com www.newsweek.com

Not as much hypocrisy as amongst you and the Republicans.
Click to expand...
So no one should be concerned about it unless it surpasses Trump. The fact that you keep wanting to use one of the worst Presidents in out history as the performance standard if baffling, & a great example of TDS…smh.
 
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Spartans9312 said:
www.cbo.gov

An Update to the Budget Outlook: 2023 to 2033

CBO’s updated projections show a federal budget deficit of $1.5 trillion for 2023. That estimate is subject to considerable uncertainty, though, in part because of a recent shortfall in tax revenues.
www.cbo.gov www.cbo.gov

1. Higher inflation
2. Lower Revenue
3. Higher Spending
Click to expand...
www.fool.com

This Recession Indicator Hasn't Been Wrong in 57 Years, and It Has a Very Clear Message for Wall Street | The Motley Fool

This may spell trouble for stocks.
www.fool.com www.fool.com
 
They won't default. They never do. They'll come to some kind of deal.

For the longer term issues, go find a budget balancing sim online. Here's one below. With the numbers we're dealing with, everyone is going to have to take some pain to get our fiscal house in order. There aren't enough rich people to tax and there aren't enough "frivolous" dollars being spent to close the gap on their own.

us.abalancingact.com

Balancing Act

Welcome to Balancing Act, a public budget simulator. Have a voice in your government. Show your elected officials how you’d balance the budget.
us.abalancingact.com
 
The bill seems unworkable without changes . . . for example in comparing the article linked in NPT's post with the bill as described in your link . . . will the savings be realized in an economic environment which features double-digit unemployment?

Seems that the bill assumes that all things stay the same . . . and they'll surely be different.
 
NPT said:
Kinda like Biden saying if you got the Covid shot you wouldn't get Covid. 🤣
Click to expand...
That was not an unreasonable expectation at the time. There is a big difference in simply being wrong because you are basing an argument on incomplete data, and being intentionally dishonest.
 
outside shooter said:
That was not an unreasonable expectation at the time. There is a big difference in simply being wrong because you are basing an argument on incomplete data, and being intentionally dishonest.
Click to expand...
Even doctors and pharmacists say stuff like that even though they know a vaccine doesn’t actually keep a virus from entering your body. It just makes it less likely you’ll get gravely ill from said virus, or even display symptoms.
 
Spartans9312 said:
www.cbo.gov

An Update to the Budget Outlook: 2023 to 2033

CBO’s updated projections show a federal budget deficit of $1.5 trillion for 2023. That estimate is subject to considerable uncertainty, though, in part because of a recent shortfall in tax revenues.
www.cbo.gov www.cbo.gov

1. Higher inflation
2. Lower Revenue
3. Higher Spending
Click to expand...
I’ll take the over for the year. Also, the budget isn’t getting balanced. They’re going to inflate it away. Democrats will blame the wealthy and enough people will believe them because the populace can’t count.
 
TMFT said:
So $480B / yr?

Half-way there if our pre-COVID deficits are a guide. Honestly, probably less than half-way there since Medicare & SS outlays are fixin to go up for a while.

fiscaldata.treasury.gov

Fiscal Data Explains the National Deficit

Check out @FiscalService Fiscal Data’s new national deficit page! #NationalDeficit
fiscaldata.treasury.gov fiscaldata.treasury.gov
Click to expand...

According to Yellen, federal borrowing authority could run out by June 1st
 
snarlcakes said:
I’ll take the over for the year. Also, the budget isn’t getting balanced. They’re going to inflate it away. Democrats will blame the wealthy and enough people will believe them because the populace can’t count.
Click to expand...
They need to raise the debt limit but also pass reforms to stabilize the debt as a percentage of GDP
 
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Spartans9312 said:
They need to raise the debt limit but also pass reforms to stabilize the debt as a percentage of GDP
Click to expand...
I’m always leery of things like that or balanced budget amendments. Like they don’t allow for circumstances where increased borrowing makes sense. Similar to Indiana property tax caps putting the squeeze on local governments if something comes up they really need to pay for.
 
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outside shooter said:
That was not an unreasonable expectation at the time. There is a big difference in simply being wrong because you are basing an argument on incomplete data, and being intentionally dishonest.
Click to expand...
It's fun to watch you try to justify Biden lies and condemn Trump's lies. I know Trump lies a lot and I don't try to justify them. He's said things and I'll ask my wife "Do you think he really believes what he just said?" I don't believe there's a politician out there that doesn't tell a lot of whoppers.

 
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TMFT said:
I’m always leery of things like that or balanced budget amendments. Like they don’t allow for circumstances where increased borrowing makes sense. Similar to Indiana property tax caps putting the squeeze on local governments if something comes up they really need to pay for.
Click to expand...
Emergency spending is a big issue.
Look at the Budget Control Act of 2011. It was a good idea but they only allowed sequestration one time. I think it was 2013. Emergency spending needs to be budgeted in. We always have an emergency. It needs to be accounted for and paid for. Pass a bill that has a single, total limit on discretionary spending. We also need Medicare and Social Security reform. Congress doesn’t have the guts to do it so as much as I hate to say it…we probably need an independent commission.
 
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Spartans9312 said:
www.whitehouse.gov

The Potential Economic Impacts of Various Debt Ceiling Scenarios | CEA | The White House

New White House analysis finds that if the U.S. government were to breach the debt ceiling, the economy could potentially lose millions of jobs.
www.whitehouse.gov www.whitehouse.gov

Here’s the scenario put out by the whitehouse if we don’t raise the debt ceiling.

Have they put out any scenarios if we continue to allow spending and debt to continue to grow?
Click to expand...
I dunno . . . but it seems like this question only comes up from GOP-leaning folks during Democrat-led administrations.

I suggest getting your own house in order before you start this s#!+.
 
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Sope Creek said:
I dunno . . . but it seems like this question only comes up from GOP-leaning folks during Democrat-led administrations.

I suggest getting your own house in order before you start this s#!+.
Click to expand...
Yeah well…I’ve consistently bitched about the Republicans voting for the omnibus bills and never having the guts to vote no.
So yeah…they suck. I track closely on all spending votes with Massie.


“Nearly one-fifth of countries that defaulted or required debt restructuring has external debt (held by foreigners) of less than 40 percent of GNP (Gross National Product), and more than half of countries experiencing debt crises had debt levels below 60 percent of GNP. Thus, 60 percent might be viewed as a rough barometer of high risk for budget failure. However, nearly one-sixth of countries did not reach a crisis point until their debt level had exceeded 100 percent of GNP.”

As debt grows the likelihood increases
 
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NPT said:
According to Krugman we the US doesn't have to pay off it's debt...

markets.businessinsider.com

Here's why the US doesn't have to pay off its $31 trillion mountain of debt, according to Paul Krugman

"When governments for one reason or another run up large debts, it is, as far as I can tell, unusual to pay those debts off," Nobel economist Paul Krugman said.
markets.businessinsider.com markets.businessinsider.com
Click to expand...
He’s technically right, of course, but it’s the wrong time for that headline since it’s not what’s at issue. This isn’t about the existence of long term debt, it’s about the service of current debt.

Personally, I think the debt ceiling concept is a self created crisis so the pols have something to fight about/do on a regular basis.

Cynically, one could argue that both parties know that spending cuts and tax increases are unpopular enough that they use the debt ceiling farce to force changes they don’t have the balls to make when they write fiscal bills.

It sure would be refreshing to have adults in elected positions who could do their jobs without having to have their backs against the wall.

Overall though, I’ll agree with Krugman’s thesis that government finance isn’t anything like household or even corporate finance in that there is no retirement or lifetime horizon (compared to personal finance) and no competition inspired business decisions (compared to corporate).
 
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TMFT said:
He’s technically right
Click to expand...
I'm not sure about that. Eventually the interest on the debt would eat up all the revenue wouldn't it? Admittingly that would be a long ways down the road.
 
NPT said:
I'm not sure about that. Eventually the interest on the debt would eat up all the revenue wouldn't it? Admittingly that would be a long ways down the road.
Click to expand...

Only if interest expense is growing faster than the overall economy. According do that article we spend about 1% of GDP on interest expense. Of course that was when rates were lower. Though long term rates haven't really moved that much higher.
 
NPT said:
I'm not sure about that. Eventually the interest on the debt would eat up all the revenue wouldn't it? Admittingly that would be a long ways down the road.
Click to expand...

“A far worse situation would be for interest rates to stay low while we accumulate unprecedented amounts of debt only to respond very suddenly when financial markets or foreign lenders decide that the United States is no longer a good credit risk. That could produce a catastrophic financial meltdown, like the Great Recession, which was triggered by the housing bubble bursting, but with one crucial difference. If the crisis is caused by an excessive amount of government debt, the government will not be able to borrow to deal with its effects. This would be a catastrophic budget failure.”
 
twenty02 said:
Only if interest expense is growing faster than the overall economy. According do that article we spend about 1% of GDP on interest expense. Of course that was when rates were lower. Though long term rates haven't really moved that much higher.
Click to expand...
Yeah, the rates thing is scary. Recognizing that borrowing was super cheap was one thing Trump was right on about. He was wrong that it would somehow be possible to refinance that debt like there’s even a mechanism for that with treasuries. But I can get past that as long as he got the gist of the situation correct.

Inflating away our issues is one theory. I think it’ll be devastating long run though. I consider myself lucky. I bought my house in foreclosure near the bottom of the market. I ain’t moving. Home cost inflation doesn’t impact me anywhere but property tax. Some poor kid coming out of college can’t save enough money on a $55k/yr job to even dream about owning one of these overpriced bungalows.
 
Spartans9312 said:

“A far worse situation would be for interest rates to stay low while we accumulate unprecedented amounts of debt only to respond very suddenly when financial markets or foreign lenders decide that the United States is no longer a good credit risk. That could produce a catastrophic financial meltdown, like the Great Recession, which was triggered by the housing bubble bursting, but with one crucial difference. If the crisis is caused by an excessive amount of government debt, the government will not be able to borrow to deal with its effects. This would be a catastrophic budget failure.”
Click to expand...
If you owe the bank $1,000, it’s your problem.

If you owe the bank $1,000,000 it’s the bank’s problem.

We’re too big to fail at this point. The process for selecting a new reserve currency that can handle being the global economy and unwinding global possession of US treasuries will take longer than any of us will live.
 
twenty02 said:
Only if interest expense is growing faster than the overall economy. According do that article we spend about 1% of GDP on interest expense. Of course that was when rates were lower. Though long term rates haven't really moved that much higher.
Click to expand...
Why do they always compare it to the GDP? I know that revenues go up as the GDP goes up but seems like to me a better comparison would be to compare the interest paid to the budget or the amount of revenue collected.
 
NPT said:
Why do they always compare it to the GDP? I know that revenues go up as the GDP goes up but seems like to me a better comparison would be to compare the interest paid to the budget or the amount of revenue collected.
Click to expand...
I think it’s because GDP is a measure of economy size and revenue is a reflection of tax policy against economy size.

Like, as long as GDP is growing, there’s a bigger pie for revenue to come from without altering tax rates much or at all. Theoretically, they could raise effective tax rates of everyone to 75%, interest on the debt would be totally covered, but it would crash everything.

Maybe alternatively, we can think about it like investments in the economy producing greater output. Say we have to go into debt $100B to build some new interstate system. Service on that debt will be $1B annually for 100 years. We still come out ahead of it increases economic output by $10B/yr. That might not be much different than what you’re saying about comparing to tax receipts though.

I don’t know, just thinking out loud.
 
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