"...don't call my bluff..."

[Econoline]

"The validity of the public debt of the United States, authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion shall not be questioned." (From the 14th Amendment to the United States Constitution.)

Looks to me like if Congress authorizes an expenditure, or has previously authorized an expenditure, the U.S. government has to pay for it, no ifs ands or buts, no only-up-to-an-arbitrary-"ceiling".

That would mean that the whole idea of a legislatively imposed "debt ceiling" is--say it with me, boys and girls--UNCONSTITUTIONAL.

Hm...it appears that quaddriver's boss agrees with me here.

[Liberty1]

No. You don't need to incurr more debt to pay for debt. That's like paying for 1 credit card with another.

The law means the debt is paid first. Washington takes in ~$200B per month, more than enough to pay for the debt, but not enough (short 40%) to pay the other bills.

Remeber Geitner said DC sends out 80M checks a month. Can you say INSANE.

[Econoline]

No. You don't need to incurr more debt to pay for debt. That's like paying for 1 credit card with another.

Been there, done that. Sometimes ya gotta do what ya gotta do.

I survived, and paid it all off eventually, without threatening to stop paying everything unless I got my way.

So should the U.S. of A.

[Joe Guy]

President Obama has stated more than once that he believes that citing the 14th amendment to disregard the debt ceiling limit would not stand up in court.

He isn't going to do it.

A compromise needs to happen.

If it weren't for the so-called 'tea party' (TP) the current problem would not exist.

They don't want to negotiate.

The TP is comprised of people who hate Obama and will do anything they can to make him look bad, regardless of the effect it may have on our economy & country.

[Gob]

You give Israel $2,423,800,000 or so each year, why not cut that off?

[liberty]

quote]
That doesn't answer my question at all. How much money would we actually save by cutting off Puerto Rico?

Well, I don‘t know but what ever it is, it is too much. It has got to be in the billions. The federal government doesn’t do anything cheaply. "A billion here and a billion there and pretty soon we are talking about real money."

I am not opposed to saving money in the military budget where we can. We start by closing the two remaining military bases in Puerto Rico. All they do is provide jobs for a foreign nation. We could move those bases to the US and provide jobs for our people or we could save the money.

[liberty]

You give Israel $2,423,800,000 or so each year, why not cut that off?

Gob, we might end up doing that too. I would feel sorry for the Jews. I don’t know if they could survive without our money. I see that about the same way as George Bush’s African AIDS program. We could end that too but if do people that are depending on us will die.

[Lord Jim]

The TP is comprised of people who hate Obama and will do anything they can to make him look bad, regardless of the effect it may have on our economy & country.

Somebody else here also suggested that, (I think it was Grimmy) but while politics are driving this process, I don't believe that is the "politics" that's involved.

I think you have two factors here:

First, as I believe I pointed out before, you have a large group of Republicans in the House, (perhaps a hundred or so) who all things being equal would vote for a whole range of compromise proposals, but who are so terrified by the prospect of having a Tea Party backed primary opponent, that they are toeing the most extremist line. They are afraid to back a proposal that doesn't get backing from a significant number of the Tea Party types.

Then you have a smaller group of the actual ideologically committed folks, (perhaps 40 members) who aren't motivated by "politics" (since this is objectively awful politics) but by pure ideology. These folks are in fact political kamikazes. They are not being cynical; they are absolutely sincere and committed. They are on a mission not so much to get rid of Obama, (though they certainly have no great love for him) but to fundamentally alter the role of government, consequences be damned. They don't even care if they get re-elected, (which is why they are utterly impervious to any sort of carrots or sticks from the leadership) they see their mission as pure and noble, the whole concept of compromise is downright immoral from their point of view.

For those who have long felt that it would be a grand idea to have non-professionals sitting in Congress, these folks are what that looks like, and a lovely sight it is. They are naive, and they are largely ignorant about economics. If they weren't they would realize that a default will result in a credit rating drop for T-Bills which will raise interest rates across the board resulting in higher debt through interest payments, and less revenues coming in as more people are thrown out of work due to businesses not being able to get the money they need to expand. A government default, (or even an agreement which continues to perpetuate uncertainty about a government default) will. actually result in HIGHER debt, that will completely wipe out any savings that are realized through cuts. It will facilitate a recession that will make the one we are struggling to emerge from look like a, well, "tea party".

They either don't understand this or they don't care. Maybe some of them think, "well if those things happen all it means is that we'll have to make even more cuts". And because they are non-professionals, and don't care if they get defeated, there is no mechanism for dissuading them.

The most radical elements in the House are at the moment driving the process to such an extent that John Boehner couldn't cobble together the 217 votes he needed (the number is 217 because there are a couple of vacancies) to pass a fairly limited six month extension measure that included more in cuts than the debt ceiling was raised until he also included a trigger provision for further debt ceiling increases requiring that a budget balanced amendment be passed by both Houses. Not a debate about it, not a vote on it, but actual passage. And even with this he was only able to barely get his bill passed with 218 votes.

This is simply ridiculous, and just makes the House look foolish and unserious about a deadly serious matter. The original Boehner bill wasn't going to pass the Senate, but at least it could have served as a basis for discussion in terms of trying to carve out a middle ground between that approach and the Reid bill. But the inclusion of this provision makes the bill irrelevant to the discussion. I've got nothing against a Balanced Budget Amendment, (provided it's fazed in and has provisions for being over-ridden by super majorities) but anybody who thinks that an amendment like this will gather the 2/3 rds majority from both houses needed for it to be submitted to the states in the current political environment, in the next six months, has obviously been dipping big time into Sue's stash.

Every time the political kamikazes have gotten a concession in this process, all they do is raise the ante. Even Pat Buchanan accused them last week of trying to "run up the score" and not being able to accept a victory. A little while ago I saw Ben Stein, (no one would certainly question his conservative credentials or knowledge of economics) making points highly critical of those who don't appreciate the utter unacceptability of a default.

At the end of the day, the deal that is reached will most likely not include the votes of the zealots, though they will have played a role in the spending cuts that it will contain. (which isn't a bad thing; cutting spending are a good thing to do. Policies that will encourage economic growth and create jobs is an even better thing to do since this is the way you really reduce the debt as a percentage of GDP.) The final deal will probably be a version of the Reid bill that will avoid another vote before the election, but contain more upfront cuts and stronger language to make sure the cuts actually materialize. The hardcore won't vote for it, but it will pull enough off setting Democratic votes to gain final passage in the House.

However, whether this can be accomplished by Tuesday and in time to avoid a credit rating devaluation, has at this point become extremely problematic.

[liberty]

You give Israel $2,423,800,000 or so each year, why not cut that off?

Gob, we might end up doing that too. I would feel sorry for the Jews. I don’t know if they could survive without our money. I see that about the same way as George Bush’s African AIDS program. We could end that too but if do people that are depending on us will die.

This Bush AIDS program has grown to fifty billion dollars. God have mercy on us, the road to hell is paved with good intentions.

[Crackpot]

Jim Don;t forget Boehners cynical ploy to run us through this again in six months for no other reason than to hinder Obamas re-election campaign.

[Lord Jim]

Jim Don;t forget Boehners cynical ploy to run us through this again in six months for no other reason than to hinder Obamas re-election campaign.

Again I have to disagree. Bringing this up again in six months is in no one's best political interest. (At least no incumbent's) The public is completely disgusted with the entire exercise. Professional politicians care a helluva lot more about getting themselves re-elected then about who they can get defeated. Yes a bad economy hurts Obama but this reckless spectacle hurts everyone involved with it..

Boehner knows this. I'm sure he would personally prefer a bill that went through the election; he included the six month provision because he had to in order to line up the votes to have something to send to the Senate beside the DOA "Cut cap and balance".

[Gob]

US economic growth is much weaker than first thought, government figures show.



The economy grew at an annualised rate of 1.3% in the second quarter, the Commerce Department said. Economists had forecast growth of 1.8%.

And in a surprise move, first-quarter growth was revised down sharply from 1.9% to 0.4%.

This evidence of economic weakness increases the pressure on the government as it attempts to increase its borrowing limit.

Slow growth makes it more difficult for the US to tackle its deficit.

http://www.bbc.co.uk/news/business-14344671

[Econoline]

No. You don't need to incurr more debt to pay for debt. That's like paying for 1 credit card with another.

Been there, done that. Sometimes ya gotta do what ya gotta do.

I survived, and paid it all off eventually, without threatening to stop paying everything unless I got my way.

So should the U.S. of A.

Oh yeah, one thing I forgot to mention in the above post: When I was trying to get out of a financial mess, I did *NOT* say, "No overtime, no weekend work, any increase in income is off the table."

[Long Run]

We'll see if we get some sausage made this weekend. The risk of a credit rating hit seems pretty unlikely, especially since no raising of the debt ceiling means less spending (at least in the short run) and less budget deficit, which is actually a good thing when it comes to credit ratings. Grandma and Granddad are going to get their checks since there are plenty of taxes putatively dedicated to paying their benefits. Instead, the people who are going to get hammered are government workers and government contractors (who have workers). There are plenty of these folks who don't have a lot of cash flow to weather a protracted battle. They're the ones who are going to get hurt, along with everyone who sells them stuff.

The only way this drama makes sense from the TP side is that it focuses the discussion on the seriousness of the debt issue (their priority), and stops any other legislation from happening. When was the last time anyone talked about another piece of legislation?

[rubato]

"...
For this one, it depends when you start the clock.

If you use fiscal 2008 as the baseline -- which we confirmed with Coburn’s staff was his intention -- then the comparison is just about right. Federal outlays increased by 28 percent between fiscal 2008 and fiscal 2011, which is just below the 30 percent Coburn cited.

The last Bush Budget ws the fiscal 2009 budget which was passed in 2008, signed into law by Bush and began in October 2008.

So someone who was trying to make sense and not lie would start there and then allow for the fact that the Bush-Republican economic crisis made the $1T stimulus necessary (albeit too small).

yrs,
rubato

[Gob]

Ending a perilous stalemate, US President Barack Obama has announced agreement with Republican congressional leaders on a compromise to avoid the nation's first-ever financial default.

The broadest outlines of the emerging plan would raise the federal debt limit in two stages by at least $US2.2 trillion, enough to tide the Treasury over until after the 2012 elections.

Big cuts in government spending would be phased in over a decade. The first step would take place immediately, raising the debt limit by nearly $US1 trillion and cutting spending by a slightly larger amount over a decade.

That would be followed by creation of a new congressional committee that would have until the end of November to recommend $US1.8 trillion or more in deficit cuts.

Congress must still approve the deal on raising the $US14.3 trillion debt ceiling by Tuesday US time (Wednesday AEST) to avoid a devastating government default.

"Is this the deal I would have preferred," Obama asked, answering his own question with one word. "No."

But he said: "Most importantly it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. An it will allow us to lift the cloud of debt and uncertainty" that has hung above the United States for weeks.

Default "would have had a devastating effect on our economy," the president said in his televised address at the White House on Sunday night (Monday morning AEST).

Read more: http://www.smh.com.au/business/world-bu ... z1Tkw6lv5R

[Long Run]

A result few are happy with. Sounds like a compromise.

[Gob]

That's the nature of compromise, unfortunately.

It's also a problem with your system, a major one.

[Gob]

here's an outsider's view;

Deal done. Crisis averted, a feisty president has come out fighting.

He's been humiliated and blown off course by the Republican victory, compelling him and his party to swallow deep spending cuts.

But he used his short Rose Garden speech to insist that tax rises had to be part of the eventual solution.

That is exactly why the Tea Party are grumpy about what looks like a clear win for them.

They fear tricks further down the line, and that after the special committee reports in November they will have to choose between tax rises swingeing cuts to defence spending.

Mr Obama said that money couldn't be cut too abruptly and that spending on education and science had to continue. He argued for a "fair" and "balanced" approach: getting rid of tax breaks for the rich and gas and oil companies.

This was a red rag to make the Republican bull rage... and it was intended as such. The more the Tea Party boil and steam, the more Obama's own party will feel that it is not such a defeat after all.

The president then promised to put job creation first, saying cutting spending was not the only thing that mattered, and called on Congress to reach agreement after the summer on extending middle-class tax cuts, something Congress wouldn't put in this agreement.

This deal is a serious knockback for the president, but he bounced right back, in terms of rhetoric at least.

It was the right response politically. However, no one doubts that when he's fired up and ready to go the president can make a fine speech.

It is still a question if he can turn today's defiance into a lasting theme and a winning strategy for 2012.

http://www.bbc.co.uk/news/world-us-canada-14381787