My View on the "Debt" Ceiling

[sangha]

"Afford" is a relative term and one utterly dependent on a snapshot in time. Have we defaulted yet? No. But as you admit, we *are* spending more than we take in. Moreover, the disparity between what we spend and what we take in is increasing. It's getting worse.

Untrue

 

[ARealConservative]

Comparing the finances of a household with a government will always get you in trouble. Especially when the use of the word "afford" is applied in each situation. The government can afford to do whatever it wants (from a financial standpoint). Not that i am saying it should.

please point out where you were critical of the thread starter for his analogy, as from my perspective, it seems you are wildly inconsistent here

 

[francois60]

Untrue

You're right in the short term. The long term picture shows the deficit increasing again due to increased entitlement costs associated with the retiring Baby Boomers.

In order to make that work, we need to run surpluses starting like in two years, big surpluses.

 

[sangha]

You're right in the short term. The long term picture shows the deficit increasing again due to increased entitlement costs associated with the retiring Baby Boomers.

In order to make that work, we need to run surpluses starting like in two years, big surpluses.

Maybe it's just me, but I don't find predictions of the future credible when they come from people who can't even "predict" the past.

 

[EdwinWillers]

Untrue

Not untrue, but true

File:U.S. National Debt - Dollars and Relative to GDP.png - Wikipedia, the free encyclopedia

The bars in the chart show the nominal level of U.S. total national debt, which is the sum of "debt held by the public" and "intra-governmental debt." These terms are described in the United States public debt article. The line and right axis show this amount as a percentage of GDP, which is a primary measure of the debt level a country is carrying.
The figures for fiscal year 2012, which ended September 30 2012:
Debt held by the public: $11,270 billion ($11.27 trillion)
Intragovernmental debt: $4,797 billion
Total national debt: $16,067 billion
GDP: $15,676 billion
Total national debt as % GDP = $16,067 / $15,676 = 102% Another common measure of debt to GDP, not shown in the graph, is debt held by the public.
Debt held by the public as % GDP = $11,270 / $15,676 = 72%
The GDP data is from the Bureau of Economic Analysis.[1]
The debt data is from the Treasury Department monthly statements of the public debt.[2]

 

[francois60]

Maybe it's just me, but I don't find predictions of the future credible when they come from people who can't even "predict" the past.

Well, the CBO is pretty sure, and I'm not sure how you can disagree with their math:

CBO | The 2013 Long-Term Budget Outlook

As you can see, it goes down a little, and then up, up, up.

 

[EdwinWillers]

Well, the CBO is pretty sure, and I'm not sure how you can disagree with their math:

CBO | The 2013 Long-Term Budget Outlook

As you can see, it goes down a little, and then up, up, up.

Good post. From the CBO's own assessment:

Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing federal debt to soar. Federal debt held by the public is now about 73 percent of the economy’s annual output, or gross domestic product (GDP). That percentage is higher than at any point in U.S. history except a brief period around World War II, and it is twice the percentage at the end of 2007. If current laws generally remained in place, federal debt held by the public would decline slightly relative to GDP over the next several years, CBO projects. After that, however, growing deficits would ultimately push debt back above its current high level. CBO projects that federal debt held by the public would reach 100 percent of GDP in 2038, 25 years from now, even without accounting for the harmful effects that growing debt would have on the economy (see the figure below). Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.

 

[sangha]

Not untrue, but true

File:U.S. National Debt - Dollars and Relative to GDP.png - Wikipedia, the free encyclopedia

The bars in the chart show the nominal level of U.S. total national debt, which is the sum of "debt held by the public" and "intra-governmental debt." These terms are described in the United States public debt article. The line and right axis show this amount as a percentage of GDP, which is a primary measure of the debt level a country is carrying.
The figures for fiscal year 2012, which ended September 30 2012:
Debt held by the public: $11,270 billion ($11.27 trillion)
Intragovernmental debt: $4,797 billion
Total national debt: $16,067 billion
GDP: $15,676 billion
Total national debt as % GDP = $16,067 / $15,676 = 102% Another common measure of debt to GDP, not shown in the graph, is debt held by the public.
Debt held by the public as % GDP = $11,270 / $15,676 = 72%
The GDP data is from the Bureau of Economic Analysis.[1]
The debt data is from the Treasury Department monthly statements of the public debt.[2]

It is misleading to include intra-governmental debt

 

[sangha]

Well, the CBO is pretty sure, and I'm not sure how you can disagree with their math:

CBO | The 2013 Long-Term Budget Outlook

As you can see, it goes down a little, and then up, up, up.

The CBO's estimates are based on legally prescribed assumptions that certain things will not change

In the real world, things change

From your link:

. If current laws governing taxes and spending were generally unchanged—an assumption that underlies CBO’s 10-year baseline budget projections—the deficit would continue to drop over the next few years, falling to 2 percent of GDP by 2015. As a result, by 2018, federal debt held by the public would decline to 68 percent of GDP.

 

[EdwinWillers]

It is misleading to include intra-governmental debt

It's misleading not to. Moreover, we're not even mentioning unsecured debt - something I would hope you don't even want to attempt to defend.

 

[JayGatsby]

Not only is it not "perfect" - it completely misses the point.

Ok, so...
You borrow money from others to buy a house.
You borrow money from others to buy a car.
You borrow money from others to buy groceries.
You borrow money from others to buy clothes.

You pay others for the privilege of borrowing money to buy a house.
You pay others for the privilege of borrowing money to buy a car.
You pay others for the privilege of borrowing money to buy groceries.
You pay others for the privilege of borrowing money to buy clothes.

Only you don't own the house - your creditors do.
Only you don't own your car - your creditors do.
Only you didn't buy your groceries - your creditors did.
Only you didn't buy your clothes - your creditors did.

Your creditors are funding your entire lifestyle, not you.

Now you find yourself in "rough times" and can't pay your creditors.
Now you need to borrow money from your creditors... to pay your creditors.

...and you feel you have some sort of "right" to their money?
...because you now find yourself in "rough times???"

I don't feel any "right" my point is even though we are borrowing a lot the creditors still are lending us money at low rates!! If we saw interest rates rising every year then yes we would have a major problem on our hands.

 

[JayGatsby]

Your scenario is invalid. The person you describe is not consistently spending more that he is making. He is managing his debt realistically and will eventually eliminate it. The Federal government on the other hand consistently spends more than it brings in. Raising the debt limit gives it incentive to spend even more and go deeper into the hole. Apples and oranges.

Yes and if lenders believed that we wouldn't be able to pay them back then they would not be lending to us at historically low rates, but if we threatened to limit the debt ceiling then the rates may go up and we will have a problem.

 

[JayGatsby]

FAIL - you are right its not perfect - and the simple failure I'd suggest you back away from is what the friends say but what the credit card company says when they demand payment and you don't have any money. DO you have a printing press you can go to and create money, and then sell the old debt you have to a new creditor that's willing to buy because the old creditor is worried about getting paid? Over and over again - when does the music stop?

What happens to your family of 4 when the music stops?

CalGun, the credit card company, in this case lets say an investor who has money in bonds, can't just come and "demand" his money plus interest all at once, we pay interest on the debts and after so many years the bond matures and you get your money back.

 

[EdwinWillers]

I don't feel any "right" my point is even though we are borrowing a lot the creditors still are lending us money at low rates!! If we saw interest rates rising every year then yes we would have a major problem on our hands.

Well I was speaking rhetorically. My use of the word "you" did not mean you explicitly.

But you're missing my point. Yes, I understand we're getting relatively "cheap" money - but the point is that regardless how "cheap" it may be, it's still not our money. It belongs to someone else. And just because the fed is keeping interest rates artificially low, which is why are creditors are lending at such low rates, btw, that doesn't mean 1) it's right to have a policy of constant borrowing to fund our ever increasing spending, or 2) that we can/should continue to do so ad-infinitum. The fed can't keep interest rates low forever - and they won't. Nor will creditors lend to us forever at such low rates, particularly when our indebtedness to them continues to increase. At some point we're going to have to pay the piper.

Some debt is "ok" - buying a home, e.g. But going into debt, let alone operating from a basis of ever-increasing debt is just flat out immoral. It's unsustainable. And regardless how "good" our intentions may be, regardless how we rationalize spending money that doesn't belong to us, it's wrong - moreover, it eventually has the OPPOSITE intended effect. E.g. If I commit to helping someone out - particularly to the point that they become dependent on my help, and I am not fiscally responsible in the process, I go bankrupt and worse - I leave the very people who have come to depend on my good intentions in the lurch. I hurt them far worse than I hurt myself.

A fiscal policy of dependent spending - regardless on what, or on whom I'm spending that money, or why, such a fiscal policy that depends on borrowing money to help others will eventually hurt them.

IOW - I can't help those dependent on me if I'm myself dependent on others to give that help. That's an immoral proposition no matter how you look at it.

 

[CalGun]

No a credit card company can say - no more credit here. That was my point.

CalGun, the credit card company, in this case lets say an investor who has money in bonds, can't just come and "demand" his money plus interest all at once, we pay interest on the debts and after so many years the bond matures and you get your money back.

 

[head of joaquin]

No a credit card company can say - no more credit here. That was my point.

No credit, no modern capitalism. You need to hit the economics books harder. Your memes are in conflict.

 

[CalGun]

Absolutely BS.

Capitalism would thrive without you socialist grubbynutts in the way.

No credit, no modern capitalism. You need to hit the economics books harder. Your memes are in conflict.

 

[the_recruit]

the better analogy is ordering a meal knowing you can't pay for it, and expect your unborn child to pay for it.

Then don't order the meal in the first place! Why is this such a ****ing difficult concept!

 

[the_recruit]

What a crock of disturbingly disingenuous BS.

Let's correct your analogy with a basic fact - The decision is not whether to pay for it or not. You've already paid for it and consumed it. The decision is whether or not to pay those from whom you borrowed the money to pay for the meal you just ate.

That doesn't make one ****ing difference in the context of the example. When you order a meal you are effectively taking out a tiny loan against the restaurant under an implicit agreement that you will pay for the services/resources rendered (the prepared meal) at a later time (after you've finished eating). It doesn't change a single relevant concept in the analogy if you just shift the creditor from the restaurant to some third party. You've agreed to pay for something, you need to honor the agreement or you face the very negative consequences of not doing so.

But that's not the real issue either - because responsible people SHOULD pay their debts.

Responsibility doesn't even enter into the equation. You SHOULD pay back your debts because you will face bad consequences for defaulting on any debts. It's an issue of practicality, not morality.

The real issue is borrowing money in the first place; the real issue is getting yourself into a cycle of ever-increasing spending and borrowing to fund that spending.

Read my post. What did I just say? If the government doesn't want to spend more money, don't appropriate it! If you don't want to spend more money, don't agree to spend more money! It's not ****ing difficult.

The issue is the interest we must pay for the privilege of grossly negligent, irresponsible spending that only escalates year after year - to the point that the portion of our budget that goes to paying the interest on all our irresponsible spending is exponentially approaching the amount of money we receive in annual revenues.

The ISSUE is stopping the irresponsible spending and borrowing BEFORE we reach the point that the interest we pay for the privilege of borrowing money for our irresponsible spending becomes 100% of our annual budget.

(Just downright amazing how willfully and irresponsibly ignorant the left is on this issue).

THEN. STOP. APPROPRIATING. MORE. FUNDS.

Why should the government appropriate funds, then not pay them? That's beyond idiotic. The idea is so incredibly stupid I'm going to have a ****ing aneurysm if people keep trying (and failing miserably) to defend it.

 

[Sietske22]

I'm mad about the Tea Party using a government shutdown to try to force their agenda on the Senate since they know they don't have the votes to repeal ObamaCare. That's one thing.

But don't you DARE threaten a debt default in order to kill or even slow down ObamaCare.

In fact, don't you DARE hold the nation paying its debts hostage to ANY agenda!!!

We MUST pay our debts!!!

Congress approved the spending. The House approved the spending. They MUST approve an increase in the debt to fund that spending.

If not we turn into a nation of cheats and thieves.

If the Tea Party DARES to force the USA to default on its debt, thereby damaging the entire world economy, then anyone who voted for such a thing must be impeached from Congress and face charges of TREASON!!!!!!

 

[francois60]

The CBO's estimates are based on legally prescribed assumptions that certain things will not change

In the real world, things change

From your link:

Sure they'll change, because they have to. If something is unsustainable, it won't be sustained. Which means entitlement spending is going to have to drop.

 

[JMak00]

I'm mad about the Tea Party using a government shutdown to try to force their agenda on the Senate since they know they don't have the votes to repeal ObamaCare. That's one thing.

Except that is not what is happening. It ain't just the Tea Party that opposes the ACA, but unions and the majority of ordinary people. The real issue is, as Obama has already acknowledged...the ACA ain't ready to be implemented. Obama has said this and the numerous delays of significant portions of the law are examples of this. And there's no other "agenda" here except to now delay a law that even the President acknowledges aint ready for implementation.

You have to wonder why the Democrats are so hard up then that they would shut the government down over delaying implementation of a badly flawed law.

But don't you DARE threaten a debt default in order to kill or even slow down ObamaCare.

Oh, please. There is no threat of default. Obama and the Democrats are deliberately threatening a default that would only occur if the Treasury, on the command of the President, were to not pay interest on the debt. There is far more more revenue each month than interest payments due...so, why would the President deliberately threaten default to enact a law that he acknowledges, by word and deed, is not ready to be implemented???

In fact, don't you DARE hold the nation paying its debts hostage to ANY agenda!!!

Talk to the President. He commands the Executive. The Treasury Department is an executive branch agency charged with payment of interest on the debt. Only by Presidential order would those interest payment go unpaid. And there is no reason for them to not be paid. Your anger should be directed at the President as he is holding default in the balance.

We MUST pay our debts!!!

Only the President, not Congress, can determine that.

Congress approved the spending. The House approved the spending. They MUST approve an increase in the debt to fund that spending.

Talk to the President.

If the Tea Party DARES to force the USA to default on its debt, thereby damaging the entire world economy, then anyone who voted for such a thing must be impeached from Congress and face charges of TREASON!!!!!!

The Tea Party cannot do that. The Treasury determines the order of payment. The President controls the Treasury as an executive function. Blame the President.

 

[iguanaman]

If the debt was getting paid down regularly it wouldn't be a problem but the government debt is NEVER getting paid down and we're still adding to it.

In your scenario what would happen is that if the debt never got paid off then one day mom and dad are going to be dead and the kids would be left with the debt. With the government.......SAME SCENARIO!

We will never pay down one cent of the debt and we don't ever need to. Believe it or not the finances of the most powerful nation in the world has NOTHING to do with "family" finances. The analogy is infantile and wrong.

 

[iguanaman]

Except that is not what is happening. It ain't just the Tea Party that opposes the ACA, but unions and the majority of ordinary people. The real issue is, as Obama has already acknowledged...the ACA ain't ready to be implemented. Obama has said this and the numerous delays of significant portions of the law are examples of this. And there's no other "agenda" here except to now delay a law that even the President acknowledges aint ready for implementation.

You have to wonder why the Democrats are so hard up then that they would shut the government down over delaying implementation of a badly flawed law.



Oh, please. There is no threat of default. Obama and the Democrats are deliberately threatening a default that would only occur if the Treasury, on the command of the President, were to not pay interest on the debt. There is far more more revenue each month than interest payments due...so, why would the President deliberately threaten default to enact a law that he acknowledges, by word and deed, is not ready to be implemented???



Talk to the President. He commands the Executive. The Treasury Department is an executive branch agency charged with payment of interest on the debt. Only by Presidential order would those interest payment go unpaid. And there is no reason for them to not be paid. Your anger should be directed at the President as he is holding default in the balance.



Only the President, not Congress, can determine that.



Talk to the President.



The Tea Party cannot do that. The Treasury determines the order of payment. The President controls the Treasury as an executive function. Blame the President.

Its called the rule of law and too many have died to protect it. There is already a way to repeal laws, the one in the Constitution.
The debt ceiling threat is just another flim flam . Even the most looney of the looneies know that it MUST be raised.
Therefore there will be no deliberations at all about it. You don't take hostages you can't shoot.

 

[JMak00]

Its called the rule of law and too many have died to protect it. There is already a way to repeal laws, the one in the Constitution.

The GOP is not proposing to repeal it now are they? Delay.

The debt ceiling threat is just another flim flam . Even the most looney of the looneies know that it MUST be raised.

Then why have a ceiling at all?

Therefore there will be no deliberations at all about it. You don't take hostages you can't shoot.

Talk to the Democrats about terrorist and hostage metaphors...