The Republican-controlled House and the Democrat-controlled Senate have both passed debt-ceiling/budget-reduction plans that the other chamber has rejected. Go ahead, read them both. Then try telling me that the federal budget is just like a family budget.
We cannot craft effective fiscal policy with folksy Noemisms about playing Monopoly with Booker. Macroeconomics is not microeconomics.
But as Doug Wiken pointed out earlier this month, even the flimsy family budget analogy says that we should solve the problem, not concoct wild Rube Goldberg vehicles for ideology like the bills currently floundering in Congress. If we were on the road and the family van blew a tire, we wouldn't sit in the ditch recalculating our 401K contributions. We'd put on a spare, go to the shop, and fix or replace the tire.
The problem right now is the debt ceiling. The solution right now is to raise it. Congress should thus amend H.R. 2693 by striking everything after the enacting clause except Section 401, leaving a simple one-sentence bill:
SEC. 401. PUBLIC DEBT.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking the dollar limitation contained in that subsection and inserting `$16,994,000,000,000'.
That's all we need today, kids. We can fight about everything else tomorrow.
Your headline says it all, and explains perfectly why we must have real, meaningful cuts that (a) bring this out-of-control spending under control and (b) seriously reduce our $14 TRILLION debt, before we even consider raiding the debt ceiling.
The reason is that if we raise the debt ceiling now without those requirements in place, all we'll get later is a bunch of childish games that accomplishes nothing to get our fiscal hemorrhaging under control.
See, even you can stumble onto some truth sometimes when you aren't careful.
Wrong, Bob. The debt ceiling is an arbitrary number, dictated by no economic reasoning. It is a trigger for political theater and potential economic chaos. We might do just as well to repeal it completely and focus our political energy on real solutions.
Speaking of arbitrary numbers and bad analogies to family budgets, maybe we should calculate the debt ceiling the way we calculate lending limits for families. Suppose we said the federal government's debt service costs should not exceed 36% of its revenue, just as you shouldn't be spending more than 36% of your income on your mortgage and other debt service. Uncle Sam's interst payments this year will approach $500 billion. Uncle Sam's revenue for this fiscal year is $4.5 trillion. $500B in interest payments would thus be 11% of our federal revenue.
I suspect this analysis requires much more work. I welcome deeper tinkering of those numbers by you, esteemed readers.
There is no tomorrow. There is no tomorrow. There is no tomorrow.
Apollo Creed
I have absolutely no confidence in ANY politician in Washington. According to the latest news reports, the lack of any agreement will drive the country into recession, reducing tax revenues further. By sticking to their hard line positions, they are making things worse not better.
What would Bill do?
Yeah and the sun may or may not come out tomorrow. But as usual Bob Ellis reminds that crazy people will still be crazy.
Bob's military service entitles him to lifelong federal compensation and access to medical care; cuts to the VA could hurt that security.
Thanks for your service, Mr. Ellis.
Go outside and play, South Dakota.
Michael,
I'm guessing that your question is rhetorical, but just in case it wasn't: Bill Clinton would listen to Cory
http://slatest.slate.com/posts/2011/07/19/bill_clinton_14th_amendment_constitution_clinton_says_he_d_use_c.html
I believe Bill Janklow would speed away from the situation with sirens blaring
Cory, your bandaid approach suggestion is what both inept parties have done for decades. Everyone kicks the can down the road to the next administration. When is the best time for spending control? When times are tough, nobody wants to make it tougher. When times are good and growing, nobody cares. As it stands, the national debt would cost each of us citizens around $140,000 today. We need to tie the national debt to a figure such as a percentage of GDP or annual tax revenue. When we apply for a home loan, the lender knows which percentage of debt/income ratio offers the greatest opportunity for successful payback. Our national debt should be treated the same, although the debt/income ratio may be different for government than it is for a household. Simply raising the debt ceiling does nothing except kick the can and shirk responsibility. Those days are over.
Ezra Klein: Bush tax cuts will terminate regardless of debt deal: http://www.washingtonpost.com/blogs/ezra-klein/post/democrats-will-lose-now-but-they-can-win-later/2011/07/11/gIQARfWOlI_blog.html
"Everyone kicks the can down the road to the next administration. "
The problem with the current collection of Republican wingnut loons is that they are crapping in the can.
http://www.reuters.com/article/2011/07/31/us-usa-debt-deal-idUSTRE76U1IL20110731
As I said, Rod, we can sit here in the ditch all day and gripe about what a rotten driver I am or how you shouldn't be whipping cookies and wearing down the tires. But we aren't going to resolve all of our issues here in the ditch. We need to get to town. We need to patch the tire (yes, a band-aid will do fine for now). Raise the debt ceiling, cool off, and let's all come back and concentrate on a reasonable, long-lasting solution later.
Or are the Republicans simply determined to not let a (manufactured) crisis go to waste?
No mas...Take care of the problem NOW! The only way you are going to get Congress to do anything is to hold their feet to the fire.
http://grijalva.house.gov/index.cfm?sectionid=13&parentid=5§iontree=5,13&itemid=1063
The problem with socialism is you eventually run out of other people's money Mragaret Thatcher.
Like it or not Corey we are there now, and real cuts need to be made.
Mrs. Thatcher single-handedly made the UK one of the world's largest debtor nations by selling off the state's assets: http://en.wikipedia.org/wiki/Margaret_Thatcher#Privatisation
These people (and I mean the whole crew, all 536 of them including the President) are due for vacation on August 8, right? If we default, they'll have to stay in Washington until they can make a deal. If market disruptions occur, even if they get a deal by August 8, where will they go? Certainly not back to face their constituents! Maybe to Vegas, except for the President, who, I guess, will go to Martha's Vineyard. Meanwhile the other three-hundred-and-some-odd-million Americans can go to h***.
Our tax bills are the lowest they've been since 1950 (link below). http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm
Tim, it's a nice soundbite, but are we really there? What actual money have we run out of? Did our $15 trillion GDP suddenly disappear? The debt ceiling is arbitrary and economically meaningless. Raise it.
I would have to respectfully disagree with out host, as well it seems does Standard & Poor http://finance.yahoo.com/news/SP-official-Credible-deficit-apf-858247074.html?x=0&sec=topStories&pos=1&asset=&ccode=
We have a spending problem in Congress, the sign of that problem is the massive debt that hangs around our economy's neck like a huge weight.
Rep. Nelson: I agree that continued massive deficits pose a risk to our long-term fiscal viability. I agree that we should work toward balancing our budget. However, there remains sharp disagreement on how to achieve that goal.
Meanwhile, most sane members of Congress agree that we need to raise the debt ceiling to meet the obligations we've already incurred. We should thus have two bills: first, raise the debt ceiling, as stated above, in one sentence. No riders, no monkey business, no conditions. Just do what needs to be done right now.
We must continue the conversation about paying our bills. We must come up with a viable plan. But as the last month has shown, the GOP's effort to manufacture a crisis and play Rahm Emanuel has not produced workable solutions. Let's take care of the immediate need, then stay at the drawing board and solve the long-term need.
Cory,
We face several short term pitfalls that will have grave effects on our nation if we do not cut deep now. If the world fully turns from the dollar, it will be a cold day before it ever goes back. That luxury benefits us beyond the immediate understandings of most Americans.
This problem was not unforseen. Numerous members of Congress were voted in with the voters explicit instructions to cut the spending and get our nation's finances in order.
The promises to cut spending later, if we raise the debt to allow more spending now, reminds me of that dishonest fellow Wimpy who promised to repay cheeseburgers tommorow for one today...
God bless..
John, "Our tax bills are the lowest they’ve been since 1950" is something I completely agree with. On a Federal level, our income tax bills are lower thanks to tax cuts in the past 20 years. Taxes are too low to maintain what we expect of our government now that baby-boomers are retiring and fewer wage earners will be there to support them into old age. I'd no different than when declining birth rates affected our schools so dramatically.
I'm one of those odd Republicans who feels an income tax increase is needed as part of the debt reduction puzzle, but it needs to come in the form of a minimum tax (10%) for those earning $250,000 or more, regardless of deductions. And, it shouldn't happen until unnecessary spending and massive cuts occur first. Cut costs, reassess needs, then add income taxes last if needed. Your thoughts?
Can't argue, but the Teabaggers won't go for it.
The Tea Party caucus must learn how to "lose a battle to win the war." I doubt they can do it. They'll self-destruct instead.
The way things trend now, I believe that within the next 20 years, changing demographics will bring about either a left-wing "social democratic state" or else a right-wing "social Darwinist state" in this country.
The choice is ours. Even as a Republican, I'd rather live in a German-like society circa 2011, than in a German-like society circa 1931.
Spin, contort, distort, slither: However you slice the squirming monster, the poor will get chopped up the worst. 'T has alvays been thus, ever since civilization began.
Stace, Moody and S&P have zero credibility here. Their bogus AAA ratings to the financial institutions are what caused the collapse of the market in the first place, triggering TARP, Stimulus, etc.
There is no more dependable borrower than the United States of America, period. Everyone in the market knows this. And for the Tea Party to pretend otherwise borders on treason.
America is a empire past its peak. We think we can not go broke and have gotten arrogant. We need to get serious and not just go out and play.
Rod, Bill, Stan, agreed! "Taxed Enough Already" is a selfish and deceptive slogan. We are not broke; the debt ceiling creates that appearance artificially, even though it has no connection with our real national wealth. ANd the Tea Party caucus isn't built for compromise or constructive solutions. They are the Nazis (and I'm making an analogy to their political tactics and kampf mindset, not accusing them of pure evil), convinced they are engaged in the ultimate battle, convinced everyone else is the enemy. But they are on the losing side of demographics. We "social democrats" just need to keep our heads and our principles and stand against them.
For sure, Cory. These "hold their feet to the fire" folks should be "burned at the stake" come election time, not as witches, but rather as witch hunters. A pox on their houses.
As for today, the correct vote on the debt ceiling vote is NO.
If the Tea Party people want this goofball measure, let THEM vote it in. The bill you propose could (and should) be pushed through Congress in an hour.
Cory,
Why do you support spending increases for the wealthy? That is what makes the rich richer, monopolies bigger, and the little guys smaller...bigger governmment.
@Bill Roughly 40% of every dollar spent by the US Government, is borrowed. It has been over 2++ years since we have had a budget. What credit agency in their right mind would say that is reliable? Our national economy is in the toilet and flushing fast on the tide of government spending.
We have a government spending problem that is killing our economy.
Don't take my word for it though, listen to the indicators that show this course of throwing BILLIONS away is NOT working: http://www.businessweek.com/news/2011-08-01/u-s-economy-manufacturing-almost-stalls-as-orders-decrease.html
Let's ask the market, Stace: have people stopped buying T-bills?
According to one of the investment gurus, T-bills are among the best and safest investments right now (and there aren't many), right up there with gold and Swiss francs.
The debt ceiling is, in my opinion, a recursive farce. How can any entity impose a credit limit on itself? Just a way for power-grabbers to work hidden agendas! T-bills are government debt, right?
Yup, Stan, and that's my point. I can certainly down Stace's road to the prospect of America's credit degrading. I certainly want to avoid that. But the debt ceiling has no mathematical relation to the actual state of our credit. If people still hold T-bills in the high regard you describe, then there should be no debt crisis right now.
I have a T-Bill mutual fund. And it is paying zero percent interest. Again Cory, why do you want to make the rich richer by making their government bigger?
Perception is reality. We can argue till we are blue in the face; however, the perception of the world is that the USA is headed down the path of Greece. Our economy continues to tank, our debt continues to grow, who in their right mind would consider that promising individually let alone on an international scale? We lose our AAA rating, it will have long term adverse implications for the USA.
Statehood for Mexico.
Prove that we teaching the wrong test.
Rep. Nelson,
I agree that loss of the bond rating will be harmful if not catastrophic. I agree that the debt is too large.
I have a two fold problem with the Tea Party scorched earth tactic, however.
First, they are willing to risk default by using a silly, self-imposed but very real debt ceiling mechanism. Default was/is an immediate risk to the AAA bond rating.
Second, America may agree that the debt is too large, but it hasn't agreed how and where to cut. It's not just going to be a liberal vs. conservative issue. For example, no tax increase folk and neo-cons are going to have to fight about defense. As a self-described moderate, I'm going to be making some alliances with those conservatives who seek to limit foreign military adventures.
The results of the 2010 election should have been seen as the start of the conversation not the end. Controlling one legislative house in Washington DC while the other party controls the other legislative house and the executive mansion imposes limits that don't exist is a one party state like South Dakota.
@LK More important than our agreement that the debt is too large, those that will downgrade our rating believe our deficit is too large and have indicated they will downgrade us if we do not reduce: http://www.usatoday.com/money/economy/2011-07-27-rating-agencies-us-debt_n.htm
Voters sent a distinct message to DC last election via the massive amount of newly elected representatives that were elected in 2010. They were elected on a tidal wave of voter interest in cutting spending & lowering our nation's debt as the best way to get the USA back on a productive path. That was almost a year ago. The President & rest of Congress who want to increase spending & increase the debt ceiling, cannot now claim that this is a last minute stance or a contrived emergency.
Those for raising the debt ceiling claim that we can cover the additional debt payments if we raise the debt ceiling via our current revenue collection; however, claim we cannot pay our debt & be forced to default if we cut and do not raise the ceiling? Something is wrong with that logic.
When an idividual or entity's credit ceiling is set/met, it does not trigger automatic default.
It would take a conscious act to default on our debt when we have revenue still coming, esp in that they claim we can even cover increased debt payments if we raised the debt ceiling.
I am curious if there are any brake marks leading to the edges of the cliffs in Greece, or if they simply floored it like a real life "Thelma & Louise?"
I think we can agree that we at least have a couple brake marks leading into the future of our nation.
Stace needs to get in out of the sun.
Vice President Biden: http://www.thedailybeast.com/cheats/2011/08/01/biden-calls-tea-partiers-terrorists.html
@Bill Your portly penpal clearly has the common sense to come in out of the elements; however, the jury is out on those that advocate the dancing in the rain rhetoric of raising the debt ceiling with continuing showers of govt spending. Maybe they will get in luck & draw the Anthony jury who can bless them with their wisdom... :-D
I probably should just let this tread die, but I want to hear Rep. Nelson's.view on these theses that seem far more sane than the recent Tea Party bombast
http://articles.cnn.com/2011-08-01/opinion/frum.debt.republicans_1_government-spending-unemployment-insurance-tax-increases?_s=PM:OPINION