The debt ceiling, are we being lied to?

Is that hype about the debt ceiling just another lie by the Washington political elites?

It's real easy to tell when politicans are lying.

They move their lips.

Yes they are lying.

Raising the debt ceiling is very important.

Politicians won't be able to fulfill their [-]kickback[/-] political campaign contribution obligations if they aren't able to make due on their pork promises.

Rashomon.

I don't think they're lying. Nobody's really sure what will happen if the debt ceiling isn't raised.

Reading (yesterdays) FT today, there were some interesting speculations. They say that a short-term "technical" default would probably not cause too much damage, but that a downgrade of the US credit rating (which may happen regardless) could potentially even collapse the world economy, because that's the baseline and it would have a knock-on effect on all other bonds.
But I've also read convincing arguments that what the rating agencies say doesn't even matter.

Most likely, it's better to be on the safe side - avoid brinkmanship, while reducing the deficit in a sensible way.

What most people don't realize is that the debt ceiling is a totally artificial construct. Denmark is the only other democratic nation that puts itself through this song and dance.

Yes, it's a lie. Everything about politics is another game abstraction to achieve what could be called the most boring game session in existence.

You might as well believe in world peace or any hypothetical situation in porn.

If we've gotten to the point where failing to turn big government into bigger government leads to disaster, we've already gone over the edge.

It's amazed me it's taken this long to get past this thing, as far as I'm concerned the thing shouldn't exist in the first place. If you don't like the spending bill, don't fucking vote for it. But don't vote in favor of it, with full knowledge of the revenues expected and existing debt, with full knowledge of the fact that it's to fund the government through the rest of the fiscal year, and then come back 3 months later and say "well, we don't want to pay for all that shit we voted for."

Tough shit, you should have thought of that before you voted in favor of the spending resolutions. Raise the debt ceiling, and come back with a better plan next fiscal year. But the credit of the United States Government and the financial security of your citizenry is not your political bargaining chip.

No, we've gotten to disaster when we have to argue over whether or not we're going to pay for the shit we said we would. It's amazing to me that the "party of fiscal responsibility" is threatening to not pay what it agreed to.

^Completely disagree. We the taxpayers are on the hook for a lot of that debt; Congress should not have the luxury to run the bill up as high as they want. There should be a political discussion EVERY TIME someone proposes raising the debt limit.

The disconnect between the will of the people and elected representatives should be fixed at budget time, not when it's time to pay the bills. I get your point, but it's disingenuous for the same people who approved the spending to balk at paying for it, especially when there's hardly a mandate from the people to do so.

Funny, when I run out of money I don't get a credit raise or anything like that. I HAVE TO STOP SPENDING. I still have to pay my bills. I just don't get to play anymore.
Therefore the politicians should do the same thing. Pay the bills and put a stop to the pork/play spending.

You're not from around here, are you?

I have to wonder why a nominal default is considered worse than a value default. 1971, we started paying back foreign-held debt with devalued dollars, and the world economy didn't collapse.

Besides which, there's $1.6 trillion in Federal Reserve-held debt that no one would be affected by a default on. The Fed could just forgive it and write it off and moot the whole crisis (at least until next year), but they won't. Why is that, I wonder...

Okay, if you want to play the "government is exactly like people" game, let's go. Imagine you have a bunch of bills that you already agreed to pay, your credit card is maxed, and the amount of money you have to pay those bills is less than the amount of the bills, how do you proceed?

A. Have your lender to increase your credit limit while you renegotiate your obligations.
B. Declare bankruptcy.
C. Pay more important bills first, and let the less important ones go to collections.
D. Pay bills as they come in until you run out of money, and upon getting new money pay the ones in arrears continuing until such time as things go to collections or you renegotiate your obligations.

If you answer A, you've raised the debt ceiling. If you answer B, you've defaulted. If you answer C, you've given the executive branch of the government the broad power to ignore appropriations bills as it sees fit. If you answered D, you likely paid social security and national debt interest, but failed to pay for something else that was due after you ran out of money, better hope it wasn't important.

Because every country whose inflation was higher than the interest rate on its treasury bonds would be in default.

Because people would figure out what a huge accounting sham the Fed is, duh.

That's a very dodgy proposition. The Fed might be the only ones losing money by such a default, but it would most certainly cause rating agencies to re-examine the AAA credit rating.

Fed wouldn't lose any money, it just refunds the interest anyways. It would just require them to use reserve requirement ratios to manage the money supply instead of selling or buying bonds in the open market.

Or:

E. Stop spending money on new shit. Cancel all the recurring subscriptions and services that you can do without. Contact your current creditors and show that them that you're taking steps to get your finances in order, and would they renegotiate terms of payment so that they were being paid something, regularly, until such a time that you can make your previously contracted payments. Quit buying new shit and make due with what you've got.


Curiously, the government's solution has too often been:

F. Walk into your boss's office with a big stick, grab him by the lapels and tell him that, due to your freewheeling spending you cannot maintain the lifestyle to which you've become accustomed and he is going to give you a raise or you'll hurt him.

While government is the only entity which can get away with doing such a thing, option F doesn't ever solve problems, because inevitably, it doesn't know the meaning of "responsible spending", let alone "accountability"....

Fixed that for you.

You still don't get to INCREASE spending on things that don't need to be spent on. You don't go and BUY something new and pretty and expensive because you have the increased credit limit.
YOU PAY YOUR BILLS. YOU CONTINUE TO SPEND ONLY WHAT YOU NEED TO EAT AND LIVE. YOU CURTAIL FRIVOLOUS SPENDING.
I have YET to see Congress/Senate become frugal, pay the bills and get the debt paid down when they raise the Debt Ceiling.
Instead I've seen them act worse than a kid with a brand new credit card.

Economics =/= Accountancy

"We're broke!"

"Wait . . . I have an idea. We'll spend more money! That'll fix it!"

"Genius!!"

There is a progressive apologist who is a contributing writer to our hometown newspaper who not only made that case, but said that the Democrats saved capitalism by doing so.

It's Three Stooges logic. Larry says there's a leak in the boat, so Moe has him make another hole to let the water back out.

I have three words to say on this topic:


BALANCED BUDGET AMENDMENT

Have you read the proposed balanced budget amendment? It's a fucking joke. Basically if there is a national security threat, and both the house and senate agree by a simple majority, the budget doesn't have to be balanced.

Talk about an excuse to go find trouble. It doesn't even require a declaration of war.

Good God, have you seen the latest? This is from the Huffington Post -

In essence, since Congress is completely unwilling to DO ITS FUCKING JOB and straighten out the country's finances, there's now a proposal to create a small committee to pass unpopular legislation and deprive the regular Congress of the ability to amend or debate.

I do believe that if this becomes fact, the time will have come for the torches and pitchforks.