Debt ceiling hit

[Jason_McCullough]

That’s based on some long-term studies of a number of countries. I consider the figure quite reliable. I was agreeing with Lum in any case - 1% is bad, but not a disaster, and it’s LONG term growth, it is NOT what is dictating the anaemic economic recovery from the recession.

And capital accumulation is, if anything, a problem in the West. (Let’s not talk about China, I’d be here all day)

Which study? US overall economic long-term growth is like 3%, including population growth; it seems extraordinarily unlikely a one-time injection of 10 trillion is going to increase long-run growth rate by a third.

[JeffL]

Their maximally bad outcome is “taxes go up.”

Probably the best chance Democrats will have to pull this stunt is the end of next year, when the Bush tax cuts expire. The last time that happened Democrats were able to extract some concessions (notably an extension of unemployment benefits for a year). We’ll see what they can get next time around.

From a higher level view: liberals by and large aren’t willing to see the hostage (e,g, the US economy) get shot. Conservatives are. As long as that dynamic persists, conservatives can continue to pull stunts like this.

On the last point - I don’t think all conservatives are willing to allow, e.g., the country to go into default. The Tea Party? Yeah, they are. But I think the rest of the party realized that the Democrats would fold and played their hand, i.e. went all in, knowing Obama and the Democrats would fold. But you point is valid, as long as the tea party and their ilk know the Democrats will fold, they are going to win every single time.

Worst case scenario for the Republicans is, of course, that they lose their jobs/get voted out. So worst case scenario for them is not taxes go up. Worst case scenario for them is taxes go up and they get blamed by their constituents for that. But ultimately, worst case scenario for them is they lose their support.

Support can be broken down into two things: financial/campaign fund support, and voter support.

Since most of their financial support is Wall Street/Business, there’s a slight hint of a small glimmer of an opportunity from recent events: The Wall Street Journal has attacked them, some GOP Senators have been saying their business based supporters have been very vocal in telling them how pissed they are that the party seems to not care about the country defaulting and pissed at the utter ignorance shown by the Tea Party in proclaiming A: nah, the country won’t really default, and B: even if it does, it’s just no big deal, after all, look at all the other countries that only have a AA rating and they survive just fine. Recent comments on Minnesota NPR about this, with some businesses telling their Reps/Senators hey, get these loonies under control or we pull our support. Of course, the problem is that these same supporters need to somehow see the Democrats as a better investment, and the lack of unity and effective messaging and also general philosophy on that side is not seen as business friendly.

On the other side, the voters: how do you get the people voting them in to turn on them? Certainly, it has happened in the recent past, re: the loss of the Senate and a lot of House seats a few years ago. I think you can almost write off the loonies behind the Tea Party - many of them are complaining today that passage of the House bill yesterday was a betrayal! Sigh - these people are like arguing with someone who is convinced the moon landing was a government con game. And I’m not sure of the demographics - are there enough looney voters to give these extremists their seats, i.e. do they need some amount of “normal” votes too? I don’t know.

But the rest of the Republicans are the real problem, in my opinion. The reason they let the tea party dictate the rules is they fear that these guys might be strong enough to take them out in the primaries. They saw it happen to some of their colleagues. Somehow, the “normal” Republicans need to be convinced that they are more likely to lose voters than gain voters by going along with the Tea Party.

(And I have to run to a meeting, much to anyone’s relief who has read this far, LOL! So more later…)

[Wallapuctus]

The Dems should just make posters of the most hateful, vomitous celebrities out there and the amount of taxes they paid last year.

I wouldn’t be surprised to learn that Paris Hilton paid no taxes. Tax Paris Hilton should be their campaign motto.

[Houngan]

The Dems should just make posters of the most hateful, vomitous celebrities out there and the amount of taxes they paid last year.

I wouldn’t be surprised to learn that Paris Hilton paid no taxes. Tax Paris Hilton should be their campaign motto.

Er, celebrities aren’t publically-held companies despite how the media treats them, they do have a right to privacy.

H.

[Menzo]

Wanna know something awesome (and funny, and sad)?

This debt ceiling bru-ha-ha has already cost us $1.7 billion in extra interest payments

[Alistair]

It was interesting that the British were able to borrow more cheaply than the USA at a few points, despite the fact their economic woes are greater.

[asspennies]

Wanna know something awesome (and funny, and sad)?

This debt ceiling bru-ha-ha has already cost us $1.7 billion in extra interest payments

The article has been corrected - the figure is actually $17 million.

[Papageno]

BTW, just this morning on NPR I heard some Republican politician (I wish I could remember who it was) mention how they’re going to continue using these debt-ceiling increase votes to blackmail the country until we get to a balanced budget. So the extortion isn’t over, folks.

[Andy_Bates]

You’re overgeneralizing and oversimplifying. The US has a very large debt. The US also has a very large economy. The US debt is about a little less than 100% the total yearly GDP. By comparison:

http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt

It’s a problem, yes. It’s not a critical earth-shattering we-must-destroy-the-world-to-save-it problem.
…
The debt problem in the US is dramatically overstated by ideologues who want to leverage it to demolish the government.

I’m amazed that you can say this with a straight face, while simultaneously asserting that if one single vote fails, the entire U.S. economy (and possibly the world) will collapse. The very fact that the debt could be leveraged to demolish the government shows that it is a critical problem.

[Shmtur]

I’m amazed that you can say this with a straight face, while simultaneously asserting that if one single vote fails, the entire U.S. economy (and possibly the world) will collapse. The very fact that the debt could be leveraged to demolish the government shows that it is a critical problem.

There’s a huge difference between a critical problem and a self inflicted wound, Andy.

[Papageno]

I’m amazed that you can say this with a straight face, while simultaneously asserting that if one single vote fails, the entire U.S. economy (and possibly the world) will collapse. The very fact that the debt could be leveraged to demolish the government shows that it is a critical problem.

The debt is not the problem per se, unless the interest payments on it grow so onerous that they crowd out annual spending for everything else we as a nation want to spend money on through our federal government. The thing that actually would threaten, nay, tank the U.S. economy is a sudden 40% drop in spending by the federal government as a result of the debt ceiling increase not being approved and the President not resorting to declaring the whole thing unconstitutional under the 14th Amendment and continuing to spend as Congress has already mandated, or resorting to platinum coin seigniorage or something like it.

Re: the national debt–remember people, ALL IT IS is a way for people/institutions to earn a super-safe return on USD they already have for a given period of time. It is the net savings in USD of the non-US Govt. sector, period.

[Andy_Bates]

There’s a huge difference between a critical problem and a self inflicted wound, Andy.

To continue the analogy, you couldn’t get a self-inflicted wound if the gun were not already loaded and cocked.

The debt is not the problem per se, unless the interest payments on it grow so onerous that they crowd out annual spending for everything else we as a nation want to spend money on through our federal government.

Which would happen if, say, the U.S. credit rating were suddenly lowered as a result of one failed debt increase. In other words, it is a problem.

[Anders_Hallin]

Andy, did you know that you’re one vote away from giving all your nuclear weapons to North Korea? :O

[Houngan]

I’m in the middle on this. Right now, this very instant, the debt isn’t something we need to worry about because we’ve got a wolf at the door, whereas the debt is a bear on the next mountain. But even with the spending cuts just passed we’re going to whack 20T in debt by 2020 most likely, and $800BN service on the debt every year is nothing to sneeze at, even hoping that the interest rate holds steady.

Really the grownup thing to realize is that we have to do it all; cut spending, raise revenues, fix healthcare, and adjust Social Security if we really want to do more than keep our heads above water. But there’s an order of attack that the GOP can’t seem to grasp, and the first step is to fix the goddamned recession and unemployment, which takes spending.

H.

[Andy_Bates]

Andy, did you know that you’re one vote away from giving all your nuclear weapons to North Korea? :O

If our nuclear weapons would automatically go to North Korea unless we failed to vote against it, then I would agree.

I’m in the middle on this. Right now, this very instant, the debt isn’t something we need to worry about because we’ve got a wolf at the door, whereas the debt is a bear on the next mountain. But even with the spending cuts just passed we’re going to whack 20T in debt by 2020 most likely, and $800BN service on the debt every year is nothing to sneeze at, even hoping that the interest rate holds steady.

That’s the part that concerns me: If our interest rate goes up at all, or our credit rating is downgraded, then the problem becomes exponentially worse.

Really the grownup thing to realize is that we have to do it all; cut spending, raise revenues, fix healthcare, and adjust Social Security if we really want to do more than keep our heads above water. But there’s an order of attack that the GOP can’t seem to grasp, and the first step is to fix the goddamned recession and unemployment, which takes spending.

You could inject more money into the economy by increasing government spending, or you could inject more money into the economy by reducing taxes. It all depends on whether you think that the private sector is the best way to determine how that money is spent, or the Federal Government.

[Soapyfrog]

If our nuclear weapons would automatically go to North Korea unless we failed to vote against it, then I would agree.

The debt ceiling is an arbitrary self-imposed limit. That’s why not raising it is a self inflicted wound. It’s also pointless; congress will just raise the debt ceiling whenever it wants to, and apparently now also wielding it as a political weapon.

America does not come off looking very good after all of this.

[Papageno]

I’m in the middle on this. Right now, this very instant, the debt isn’t something we need to worry about because we’ve got a wolf at the door, whereas the debt is a bear on the next mountain. But even with the spending cuts just passed we’re going to whack 20T in debt by 2020 most likely, and $800BN service on the debt every year is nothing to sneeze at, even hoping that the interest rate holds steady.

Really the grownup thing to realize is that we have to do it all; cut spending, raise revenues, fix healthcare, and adjust Social Security if we really want to do more than keep our heads above water. But there’s an order of attack that the GOP can’t seem to grasp, and the first step is to fix the goddamned recession and unemployment, which takes spending.

H.

Obviously, Houngan, you’re right, more stimulus and hence growth is a good part of the answer–I don’t have a problem with it being tax cuts as long as it’s payroll tax cuts on the lower tiers of income–those people will spend that money which is what will get us back to decent growth. Tax cuts for people who have a lot of money already is as useful as pushing on a string. Or of course we could do some serious repairs and upgrades to infrastructure, which are sorely needed. Whatever. The other way is probably more efficient, market-wise.

And Andy, the answer to the debt downgrade problem is to just take the debt-ceiling gun away from Congress-- if they freaking approve spending, then implicitly they’re approving whatever means are at the Executive’s disposal to carry out the spending. If that means borrowing because they refuse to raise enough revenues, so be it.

[Linoleum]

I’m amazed that you can say this with a straight face, while simultaneously asserting that if one single vote fails, the entire U.S. economy (and possibly the world) will collapse. The very fact that the debt could be leveraged to demolish the government shows that it is a critical problem.

By this ‘brilliant’ logic, the fact that the US government has a budget is a fatal flaw. That the GOP can leverage approval of a budget to shutdown the government is a critical problem. Clearly we need to abolish budgeting! Hell, the US could be running a surplus and it could still happen, how amazingly flawed is that?

[inactive_user]

You could inject more money into the economy by increasing government spending, or you could inject more money into the economy by reducing taxes. It all depends on whether you think that the private sector is the best way to determine how that money is spent, or the Federal Government.

This is a bit of a canard, and it drives me kinda crazy. Is it “hurr gov’t spending! Inefficient!” when we give the states money to repair their crumbling infrastructure? How inefficient is the public outlay-through-tax-cut when you give it to a wealthy person or business that sits on that money in no-risk investments because that looks slightly better on their balance sheets and they have no confidence to invest it back into our shitty economy?

It’s been shown over and over and OVER that giving money (or tax cuts) to lower income folks has a far more immediate effect on the economy than cutting taxes on the rich or lowering corporate tax rates (on the ones that, y’know, pay taxes at all). Plus you prevent people from starving, which I suppose is a net negative from certain perspective.

[theblackw0lf]

It was interesting that Obama’s remarks made the some complaints many of us have. Like “why the hell are we talking about deficits when we need jobs”?

Despite Debt Deal Antics, Obama Not Giving Up On His Agenda

“In the coming months, I will continue also to fight for what the American people care most about: new jobs, higher wages, and faster economic growth,” Obama said. “While Washington has been absorbed in this debate about deficits, people across the country are asking: what can we do to help the father looking for work? What are we going to do for the single mom who has seen her hours cut back at the hospital? What are we going to do to make it easier for businesses to put up that now hiring sign?”

“So voters may have chosen divided government, but they sure didn’t vote for dysfunctional government,” he added. “They want us to solve problems. They want us to get this economy growing and adding jobs.”