2023 Debt Ceiling & Budget Negotiations

Catch all thread for both.

They are two separate issues however it looks like McCarthy is going to hold our credit rating and economy hostage with the debt ceiling to try and push through a budget that otherwise couldn’t pass.

He doesn’t have much of a choice as it was one of his many concessions he gave up to rent the Speaker’s office.

At the moment the Ds seem content to sit back and let the Rs fight themselves and actually produce a budget instead of negotiating against a deal that doesn’t exist (and likely never will).

So Senate Rs are the most vocal opponents so far.

McCarthy’s pitch to shrink food aid drawing skepticism from fellow Republicans

https://www.politico.com/news/2023/04/16/gop-mccarthy-snap-food-stamps-00092243

Any more talk of minting the trillion dollar coin? Or getting the Fed to just monitise the debt? Because those would be the kind of things to do if Democrats were really up for a fight, rather than presenting the appearance of one and blaming Republicans for cuts.

Time to break this golden oldie out again. Obama on the debt, "irresponsible and unpatriotic."

That's idiotic and he knows better.

What if I were to tell you he was talking about the Bush tax giveaways to millionaires and billionaires and the Iraq War.

Now play Little Miss Can't Be Wrong.

Says the partisan hack who would say "but Democrats tho!!" even if Satan exploded up from the ground with a Republican elephant on his chest.

Only after you play Beck's "Loser".

Both parties a shite, dumbass.

He says with his fingers crossed behind his back.

No. That song, in my head, is assigned to my younger brother who would sing that with the same tone as the original artist. For FF, as he presents himself here, that song would take on a whole different meaning.

Those were the wrong priorities but it doesn't change the economics. Until and unless the world changes dramatically, deficit spending is a good, necessary thing for the United States.

But it does the politics.

You can’t implement the economics if you don’t win the politics.

Facepalm all you want, FF, your posting history is of a guy throwing himself on the grenade for the elephants every single time.
It doesn't matter one fiddler's fuck to me if you get there with "..but the libs are worse! ".

Which one do you think has increased the deficit more over my lifetime and yours? Just curious.

There is no "debt ceiling." There's an arbitrary limit that gets raised every time it comes up. More of a "debt elevator."

Debt elevator, you say?

But does it even lift?

I'm not sure why it ought to be seen as good politics to weaken your own hand by implying that you need to make massive cuts once in power. There was plenty else to criticise about the Iraq war and tax cuts if that was what he wished.

And it's instructive to see how this developed once Obama was in power. He appointed fiscal conservatives and when they badly needed to have stimulus, they undershot the required size drastically, not least because they started compromising on the numbers in internal discussions before they even put a thing to the Republicans to agree.

In the Clinton Administration, they actually succeeded in running a surplus for 3 years. The effects were terribly negative. Private sector balance sheets were badly damaged to compensate for the lack of public spending (savings decreased, debt increased) playing no small part in the financial crash less than a decade later.

There simply is no excuse for Democrats continuing to propagate the nonsense that public finances operate the same way as household finances.

Just because you've built up this straw man in your head of what you think I am doesn't make it true. I've had plenty of criticisms of Republicans, you just have selective memory.

Yeah, he says some of their balls taste really salty.

Softball criticisms, sure.

I don't know what you want me to say?I lean right, but I don't vote for Republicans. This board is leans mostly left. There's plenty of threads about how bad Republicans are. Like damn near every single one of them. I don't see any criticism of Biden or Democrats unless it comes from me, Lanz or UA. Often times met with negative responses or certain posters making shit up or putting words in our mouths. Ever since 2015, everyone who leans right assumed to be a Trump supporter or a far right leaning Republican by the left. It's not my fault that @Diacanu can't differentiate or use nuance.

I guess Tererun doesn't exist, huh?

Yep. Turdrun has been on ignore for a long, long time.

This is confirmed: House Republicans make no carve-out for vets, their bill says VA must be cut by 22% or they will destroy the economy.

Unconscionable.

https://twitter.com/jesselee46/status/1648807346951401473

Example 214 this isn’t a serious bill. No budget cutting the VA by a fifth will even see the floor.

There is a fair amount of criticism of Biden and Democrats more generally. The Feinstein term limits thread is an example where the consensus is she should step down. Amaris and others from the left think Biden is too centrist.

What sorts of things do you think Biden or Democrats should be criticized for? If there's any validity to it, there's probably someone here who will criticize them for it.

Economics is complex, but when your opinion piece starts out with links to the New York Post you probably should consider it with a grain of salt.

Fannie and Sallie Mae did start expanding mortgages - however multiple analysis have shown that had little to no impact on the Housing Bubble, because the government based loans were highly regulated and failed at a rate of 1/5th the rate of private loans. It was the middle managers incentivized to loan to anyone or everyone, the collusion of the credit agencies because they were paid by the mortgage companies, and mortgage backed securities and especially derivative were the major problems. The fact the derivatives were completely unregulated as a shadow market was the biggest single problem, as derivative debt and financial risk taking created a market that dwarfed the value of the actual mortgages. That's probably the single biggest mistake of the Clinton administration.

Another criticism is the repeal of Glass-Steagal under the Commodity Modernization Act. There is definitely some justifiable criticism there, including the concept that it created banks 'too big to fail' and incentivized risk taking due to deregulation. This is true. However, it did not directly lead to the mortgage crisis, as none of the lenders qualified under the new legislation for broader powers, and all the moves they made that directly lead to the crash were legal under G-S too.

Clinton saw some of the lowest unemployment figures in 50 years, low inflation, and significant growth in real income. He did it unlike Reagan with a balanced budget.

He did cut back on welfare, but at the same time lowered poverty rates. He signed NAFTA, but unemployment went down.

Yes, the National Economy is not at all like a Household. But virtually no Democrats make that claim, that's a Republican talking point.

But too much debt can be a drag on an economy, especially if interest rates are high. The question is weather the US budget through expansion of the economy and sound tax policy stay equal or ahead of the amount of debt service it has per year. We'll see the debt service increase as interest rates increase. It is possible to break an economy with too much debt, look at Greece. Even though the US has significant advantages there due to worldwide monetary policy and the global US dollar it's not immune, just significantly more resistant.

Anyway, thought it was worth a comment. Putting the blame squarely and solely on Clinton is problematic. There were a lot of missteps by his adminstration to be sure, but it was absolutely the Republicans who sought to deregulate everything - and still do.

The relevant contention here - which you do not address - is that the Clinton Administration running a public sector surplus required a private sector deficit, and therefore a demand for private sector debt. Not the only or even the main cause of the financial crisis, but a significant factor.

A mixed bag overall, yes. But again your underlying presumption is that a "balanced budget" is a positive outcome in itself. It is not and you fall into the same trap as Democrats generally by pretending that it is.

Yes, they do. Including Obama, in the video posted upthread where he talks about money being "paid back". That's a misrepresentation about how US government finances work. The US government does not need to, nor does it in reality, collect money before it spends it. Either by taxes or by borrowing. The dollar is a fiat currency. Both taxation and the issuance of bonds are secondary and are entirely optional. Whether they are a good or useful thing is another question (they usually are) and whether their quantity should be made to match the level of spending by the government another again (usually not).

Any comparison with Greece is completely invalid, and that's another right-wing talking point. Greece operates using a currency it does not control. It is not to say that there are no limits on government finance in the US, but the chief danger is inflation - not bankrupcy. That simply cannot happen.

It was fairly clear that I wasn't doing that. Bearing "no small part" of the blame is not bearing "squarely and solely" the blame.

Correlation and causation. With real personal income rising 14%, the lowest levels of unemployment and poverty in 30 years, it's pretty hard to make the case that a reduction in public spending forced people to dramatically increase their personal debt. A much more likely explanation is that better personal circumstances allowed them to take on more debt. As the largest aspect of personal debt dwarfing all others is the mortgage, and the fact that the private mortgage lenders went absolutely insane during this time period, it is almost certainly a symptom of the future financial crisis, not the cause of it. And even then, the first two years that mortgage backed securities surged were '98 and '99, then a lull in 2000 - and then tripling in the first years of the Dubya administration.

What's more, the gdp to private debt ratio was the lowest it's been in the last 30 years under Clinton.

Adding endless debt is not a positive outcome and will eventually destroy an economy. Keynesian economics state that you should cut when necessary and spend when necessary. Instead we run constant deficits. A balanced budget in 1933 or 1943 would have been insane. Or indeed during the pandemic. One in 2023 would be welcome. The debt to GDP ratio has been on an ever increasing spiral, so that means more and more of the federal budget goes simply to making interest payments on it. That will be $342 billion last year alone, or about 12% of the total budget. That number has to be balanced against the growth of the economy, because if it grows significantly faster than the economy, it can have a significant impact.

And the debt service is definitely going to dramatically raise this year, as we've seen the fed interest rate going from 0.25% a year ago to 4.75%. The CBO projects the debt service this year at $640 billion. Page 11: https://www.cbo.gov/system/files/2023-02/58848-Outlook.pdf

Internal debt doesn't have to be paid back. Foreign debt may - they can call the debt due. Interest on the debt has to. Taxation and bonds are optional? Not if you don't want the service on the debt to eat the entire budget. Obama was specifically citing China holding US debt. And finding a single clip of a campaign speech in dark red North Dakota 15 years ago is not indicative of either Obama's policies or the Democrats as a whole. Republicans routinely cite this in speech after speech.

But sure, let me know how American politics work. LOL.

Yes, no country ever faced bankruptcy due to hyperinflation when other countries held significant portions of their debt. Interest rates aren't raised on internal debt when you default on payments. Budgets can't be eaten entirely by burgeoning debt service. The US economy being destroyed by hyperinflation wouldn't plunge the world into another great depression, and external debt holders wouldn't try to get their money out.

The US is more resistant to this type of thing than most, but don't talk to me about 'right wing talking points' when you literally cited a guy who wrote a book called 'Bought and Paid For, the Unholy Alliance of Barak Obama and Wall Street' for your main contention. Gasparino wrote this book while working for Fox News and writing for the NY Post. Please.

Yet you posted a link that goes on about that at length, and that person referenced an opinion piece by a piece of shit right wing ideologue. So maybe it wasn't as clear as you thought.