US Federal Government Shutdown | Shutdown Shutdown, Debt Ceiling Raised

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Vestal said:
what is talked about behind closed doors is totally different from what we read bi would assume Obama will basically offer a method of which to put a clean cr on the table allowing Boehner yo save face.
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This is probably right. The problem remains though that the small but power group of republicans who will never accept anything less than significant delays or defunding of the ACA.

In the end I think this all comes down to Boehner having some courage, relying on democrats to pass bills thru the house, and maybe even risking his speakership,
 
RDreamer said:
Sure, spend it on jobs like infrastructure.

But yes it's that simple that spending more money on fucking anything right now would be better than not raising the debt ceiling.
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Totally agree with you on point #1, and the last part of #2. But I don't agree that throwing money around aimlessly will ultimately solve anything.
 
FlashFlooder said:
The entire point of my response (and I feel I was pretty clear about it) is this:

While you are correct that the 'cutting the credit card' approach will do nothing to solve the current crisis, it (or something like it) is a necessary step if we are ever going to get back to the days of responsible spending by our government. This whole "they can print money, therefore have a blank check" mentality is only going to dig us deeper and deeper into a hole.

So again, "cutting the card" won't help us avoid this crisis but it will help us avoid this same crisis next year, and the next...

So, to answer your simple question. I guess the credit card company would send me to collections after a while, and then I'd declare bankruptcy and my debt would be forgiven. Where does that leave us?




I never said anything about cutting up the bill. Please read what I actually wrote.
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There is nothing wrong with responsible debt. Fully taxing for present day spending is typically a poor way to pay for government functions unless you are a government that does not have good credit. But that would be reflected on both the interest rate of your treasury bonds and the demand for them.

The us governments debt has been lower then its trend growth rate for over twenty years now and the demand for our long term treasury bills shows that the world still puts good faith in the American dollar and our governments ability to repay those obligations. Feel free to find me a real world economic metric that shows our current spending level and debt is on the brink of catastrophe?


If we were truly at the edge if some fiscal cliff the market would be warning us.

Furthermore I'm not even sure what any of this has to do with the current situation which is a case of republicans holding hostage the American economy as a means to enact legislative change. Which should be noted is actually creating economic growth slowdowns the more this lingers which actually is hurting our ability to sustain spending and continue growth.
 
marrec said:
It would actually be a few days AFTER 10/17 that we'd be in danger of default on anything.

And, technically, we'll probably not run up into the debt ceiling now for a few more days because of the shutdown, so realistically we're looking at 10/19 before we HAVE to do something, and 10/21 before we default on anything.

That's, of course, just theory based on what happened last time.
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My impression is that 10/17 is when borrowing authority runs out, but that we'd still have enough tax revenue to pay off our creditors, so in that sense there's no default on the horizon. The debt ceiling seems more like a super-shutdown where the government will have to prioritize payments, with a whole bunch of money not being disbursed. Still better than just not paying our creditors, though the chaos is probably gonna spook them a bit.
 
animlboogy said:
Maybe. Either way I think you're a good example of the style of argument for people in support of this nonsense.

Anyway, I'd still like you to explain your premise. How does defaulting on debts or even simply cutting government spending during a recession help anyone who isn't trying to pay less taxes?
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Maybe? C'mon, comically so. It's good to be able to laugh at yourself sometimes, you know.
Hopefully you have a better example than me, because I actually DON'T support "this nonsense".

1. I don't think we should default on our debt.
2. I'm not as concerned with how much our government spends in aggregate as I am with HOW it spends it. If we need money for universal healthcare, why don't we just take it out of the NSA's domestic spying budget? would be an oversimplified example of my philosophy.
3. This would benefit everyone in our society. But you did show your hand by obviously casting me as the asshole Republican who wants to pay less taxes.

I'd just like to remind you that some people don't feel the need to draw battle lines and stand firmly on one side or the other when it comes to politics. Don't assume I'm "the enemy" just because I might disagree with one of your points.
 
Kak.efes said:
Why even meet with these people? They're subverting the democratic process, and you reward them with a place at the table?
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Its a misconception that we don't have to negotiate. We want to country to run.
 
Kak.efes said:
Why even meet with these people? They're subverting the democratic process, and you reward them with a place at the table?
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They were elected to a seat at the table. That they're choosing to use that seat to fling mashed potatoes at people they don't like is unfortunate, but you have to make at least a token effort to get them to knock that shit off and behave for appearance's sake. Ignoring them won't make them go away, unfortunately, and with the debt ceiling a couple of weeks off their opportunity to behave poorly is only going to get bigger.
 
I hope obama invites these people into the room, asks boehner to wear clown nose, stand on the table and start juggling while the rest of the republicans play musical chairs around him. That's about if. Meeting dismissed.
 
Jonm1010 said:
There is nothing wrong with responsible debt. Fully taxing for present day spending is typically a poor way to pay for government functions unless you are a government that does not have good credit. But that would be reflected on both the interest rate of your treasury bonds and the demand for them.

The us governments debt has been lower then its trend growth rate for over twenty years now and the demand for our long term treasury bills shows that the world still puts good faith in the American dollar and our governments ability to repay those obligations. Feel free to find me a real world economic metric that shows our current spending level and debt is on the brink of catastrophe?


If we were truly at the edge if some fiscal cliff the market would be warning us.

Furthermore I'm not even sure what any of this has to do with the current situation which is a case of republicans holding hostage the American economy as a means to enact legislative change. Which should be noted is actually creating economic growth slowdowns the more this lingers which actually is hurting our ability to sustain spending and continue growth.
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Great post, but I gotta disagree heartily with the bolded part. You're talking about the same propped-up, manipulated market I'm thinking about here? The market that reacted so negatively to HINTS of tapered spending by the Fed that they did a 180?

Also, I don't necessarily feel that we are on the BRINK OF CATASTROPHE (!!!!!!), but I do feel that our government is out of control (ever-increasing scope and power) and one of the reasons this has come to pass is that they have unlimited funds with which to operate.
 
Amibguous Cad said:
My impression is that 10/17 is when borrowing authority runs out, but that we'd still have enough tax revenue to pay off our creditors, so in that sense there's no default on the horizon. The debt ceiling seems more like a super-shutdown where the government will have to prioritize payments, with a whole bunch of money not being disbursed. Still better than just not paying our creditors, though the chaos is probably gonna spook them a bit.
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There is a default on the horizon, it just may not happen exactly on the 17th. The monthly tax revenue cannot keep up with monthly spending and financing the federal government does. It is not sustainible. They may be able to juggle for a little while but only in the very short term.
 
FlashFlooder said:
The entire point of my response (and I feel I was pretty clear about it) is this:

While you are correct that the 'cutting the credit card' approach will do nothing to solve the current crisis, it (or something like it) is a necessary step if we are ever going to get back to the days of responsible spending by our government. This whole "they can print money, therefore have a blank check" mentality is only going to dig us deeper and deeper into a hole.

So again, "cutting the card" won't help us avoid this crisis but it will help us avoid this same crisis next year, and the next...
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What evidence do you have that the debt is spinning out of control? The US runs a deficit consistent with an economy that grows a few percentage points per year. My understanding of the issue is that our debt-to-GDP ratio is consistent with other developed countries. Most of the worries about fiscal stability were long-term stuff about entitlements, with social security as the population ages and medicare/aid as health costs ballooned, but at least some of that has been fixed with Obamacare starting to bend the cost curve.
 
Jonm1010 said:
The us governments debt has been lower then its trend growth rate for over twenty years now and the demand for our long term treasury bills shows that the world still puts good faith in the American dollar and our governments ability to repay those obligations. Feel free to find me a real world economic metric that shows our current spending level and debt is on the brink of catastrophe?

If we were truly at the edge if some fiscal cliff the market would be warning us..
Click to expand...

Somebody is warning us... first US Treasury auction of the month... (higher yield means less demand)

pzJB7sN.jpg


The real immediate danger of this whole debt debacle is yields rising to the point where the interest to the debt consumes close to $500 BILLION dollars per year (that is at 4% of the 10-yr bond that wqas trading recently at 3%). At that point, the Fed has no choice but to keep (and increase) QE for forever.
 
Amibguous Cad said:
My impression is that 10/17 is when borrowing authority runs out, but that we'd still have enough tax revenue to pay off our creditors, so in that sense there's no default on the horizon. The debt ceiling seems more like a super-shutdown where the government will have to prioritize payments, with a whole bunch of money not being disbursed. Still better than just not paying our creditors, though the chaos is probably gonna spook them a bit.
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We will have enough money on hand to pay for half a day. Likely less since a large portion of the government can't collect revenue right now on account of being closed.
 
Amibguous Cad said:
What evidence do you have that the debt is spinning out of control? The US runs a deficit consistent with an economy that grows a few percentage points per year. My understanding of the issue is that our debt-to-GDP ratio is consistent with other developed countries. Most of the worries about fiscal stability were long-term stuff about entitlements, with social security as the population ages and medicare/aid as health costs ballooned, but at least some of that has been fixed with Obamacare starting to bend the cost curve.
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The weakening dollar. Even loonies are worth more now!

It is a matter of fact that cutting spending during a recession assists the recession.
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Can I get a citation here? I know it's a generally accepted concept, but if you're going to state it as fact I'd like to see a source.
 
FlashFlooder said:
Just "more spending"? Doesn't matter what it's spent on, or if it's spent efficiently? It's really that simple?
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Yes, more spending. Government spending is the only mechanism by which US dollars enter the economy. We are currently experiencing low aggregate demand because people do not have enough dollars to spend. Consumption is by far the largest part of the US's economy. Consumption drives investment and employment. Consider that a business that sees a decline in sales will not be expanding in production or hiring. A business that sees increasing sales will expand and hire.

Now, to your question of whether it matters what it is spent on or spent efficiently. Somewhat, but not much. The value of government spending in terms of increasing aggregate demand and improving the economy depends upon whether that money is in turn spent again by its initial recipient. Money that is simply stowed in a bank account will not increase aggregate demand or help the economy. Thus, the most effective form of spending for purposes of increasing the economy picture is spending directed towards people with lower incomes, who typically spend all of the income they receive back into the economy.

Opining about how responsible government spending is requires some knowledge of macroeconomics as well as the monetary system in place. You have been conditioned to believe that government spending is irresponsible. It is not true. In fact, reducing government spending is almost always the more irresponsible course. Right now, reducing government spending is downright reckless.

Because the US government is the sole issuer of its currency, the US government's debt is illusory. In any event, the US owes almost of all of its debt either to itself or to American citizens, which makes it a fiscal wash.
 
FlashFlooder said:
Great post, but I gotta disagree heartily with the bolded part. You're talking about the same propped-up, manipulated market I'm thinking about here? The market that reacted so negatively to HINTS of tapered spending by the Fed that they did a 180?

Also, I don't necessarily feel that we are on the BRINK OF CATASTROPHE (!!!!!!), but I do feel that our government is out of control (ever-increasing scope and power) and one of the reasons this has come to pass is that they have unlimited funds with which to operate.
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What's the fed got to do with it? The argument isn't that, if our debt were such a big problem we'd be seeing negative effects on the economy at large - there are too many variables to determine whether that's the case or not. The argument is that investors have made specific bets around the validity of US debt and the likelihood of it growing out of control, and they've been pretty consistent in not worrying about it.

Riskier loans require higher interest rates, right? Hence the whole credit score thing. If the loan is risky, interest rates are high, whereas if you're pretty sure you're going to get paid back, the interest rate is low. If the debt were on an unsustainably high trajectory, we'd expect investors to demand higher interest rates as the problem becomes more pronounced. Instead, interest rates on government bonds is staggeringly low - in fact, adjusted for inflation, they have a negative expected return - that is, the paltry interest doesn't keep up with inflation. Investors are basically paying uncle sam to keep their money safe - more reasons why financing the government with debt is a prudent move.
 
FlashFlooder said:
That's closer to the 'anecdotal' side of the evidence scale, I'm afraid.

BTW, I'm not trying to be an ass here. I would really like to see what's been written / studied about the matter.
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The principle that reductions in government spending are a drag on economic growth is not the least bit controversial. It is right in the uncontroversial formula for calculating economic growth: GDP = C + I + G + (X - M), where C = private consumption, I = gross investment, G = government spending, X = exports, and M = imports.

If you are going to claim that decreasing G increases GDP, you will have to articulate how reducing G boosts C, I, and/or X-M by more than G is reduced. If you cannot articulate this, you have to ask yourself why it is that you believe that reducing government spending can improve economic growth.

Any economic analyst who is remotely employable will factor government spending reductions as a negative in assessing future economic outlook under normal circumstances.
 
empty vessel said:
The principle that reductions in government spending are a drag on economic growth is not the least bit controversial. It is right in the uncontroversial formula for calculating economic growth: GDP = C + I + G + (X - M), where C = private consumption, I = gross investment, G = government spending, X = exports, and M = imports.

If you are going to claim that decreasing G increases GDP, you will have to articulate how reducing G boosts C, I, and/or X-M by more than G is reduced. If you cannot articulate this, you have to ask yourself why it is that you believe that reducing government spending can improve economic growth.
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Quick addendum to this, with fiat currency, decreasing G almost necessarily decreases C, at least in the short term.
 
marrec said:
What hole?!

Where?

What's at the bottom of this hypothetical hole? What are the repercussions of digging this insane imaginary hole?! Are we building a BBQ pit? Installing a pool?

WHAT HOLE?!
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As a Keynesian, I'm all in favour of the Treasury encouraging people to dig some holes!
 
Finally, someone has posted an article about this!

When the two major political parties are having repeated trouble "coming together," there's probably something more to it than refusing to compromise. Indeed, if compromise proves to be difficult in almost all circumstances, maybe the system encourages them to stay put.

The Constitution is at fault, and it's no longer a suitable governing document for the country.
It's hard to discuss these issues calmly, given that the Constitution and the Federalist Papers have taken on a Holy Scripture-like role in American political debate. One does not debate if they're right, but only the proper way to interpret them on a given matter, which is then presumed to be correct.

We're basically the only country that does this. Angela Merkel does not stay awake at night, asking herself, "What would Bismarck do?" Camillo Benso and Giuseppe Garibaldi are not assumed infallible when Italians discuss politics. Canadians do not cite John Macdonald when discussing tax policy. The only parallel that comes close is Venezuela and Simón Bolivar, which probably isn't a comparison most Americans would embrace.

But obviously the Founding Fathers were wrong about all kinds of stuff. Today, few Americans think it's acceptable to kidnap African people, ship them to America and then compel them through torture and beatings to perform agricultural labor.

Madison is also wrong about how best to safeguard democracy in a diverse republic. The thesis of Federalist 51 is that elections alone are insufficient to guard against the possibility that a government will encroach upon the rights of citizens, either by a majority faction oppressing others or through all-out tyranny. "A dependence on the people is, no doubt, the primary control on the government," Madison writes, "but experience has taught mankind the necessity of auxiliary precautions."​
 
FlashFlooder said:
The weakening dollar. Even loonies are worth more now!



Can I get a citation here? I know it's a generally accepted concept, but if you're going to state it as fact I'd like to see a source.
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Try this for a start. http://en.wikipedia.org/wiki/Keynesian_economics

Stronger currencies aren't necessarily good things for the economy - a weak dollar, for example, helps tourism and makes our exports cheaper to other countries, though it makes imports more expensive. More to the point, it's only tangentially related to the debt problem, or lack thereof, and has much more to do with the strength of our export sector and trade flows in general.

You know, I can't really think of a good, layman's introduction to all of these sorts of things. Textbook econ 101 tends to include a lot of stuff that isn't really germane to a political understanding of how these things happen, but it really feels like I should be able to point someone at a 50-page PDF that explains things like how the fed operates and how currency exchange works and stuff, but I can't really come up with one. Back when I was more libertarian-inclined I could point people at Economics in One Lesson (still well worth a read, but don't take it as gospel), but I can't really think of a progressive counterpart to it. Anyone know of anything similar?
 
We're too entrenched in American Exceptionalism to even begin to think about the faults of the constitution. Even if you do get someone to admit that, "it's not perfect" it will be followed up with, "but it's the best in the world."
 
Sanky Panky said:
Somebody is warning us... first US Treasury auction of the month... (higher yield means less demand)

pzJB7sN.jpg


The real immediate danger of this whole debt debacle is yields rising to the point where the interest to the debt consumes close to $500 BILLION dollars per year (that is at 4% of the 10-yr bond that wqas trading recently at 3%). At that point, the Fed has no choice but to keep (and increase) QE for forever.
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I think you are gonna need more then one datat point on the 4 week bond that likely is related to the shutdown.
 
Sanky Panky said:
Somebody is warning us... first US Treasury auction of the month... (higher yield means less demand)

pzJB7sN.jpg
Click to expand...

That graph comes from Zero Hedge, the Drudge of the financial world

The official data is at the Treasury.gov page, and it appears as statistical noise since the latest 52, 26 and 13-week auctions are unchanged or lower than the last.

The first google image result with this graph is a page that links to Prison Planet.
 
Jonm1010 said:
I think you are gonna need more then one datat point on the 4 week bond that likely is related to the shutdown.
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I think that's his point. It's ironic, because the Republicans have been warning about debt for ages now, but their actions seem to be close to precipitating the crisis they claim to be trying to prevent.
 
Sanky Panky said:
Somebody is warning us... first US Treasury auction of the month... (higher yield means less demand)

pzJB7sN.jpg


The real immediate danger of this whole debt debacle is yields rising to the point where the interest to the debt consumes close to $500 BILLION dollars per year (that is at 4% of the 10-yr bond that wqas trading recently at 3%). At that point, the Fed has no choice but to keep (and increase) QE for forever.
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...

And you're sure that has nothing to do with the ginned up crisis of the impending debt ceiling debacle and the present gov't shutdown buffoonery?
 
Byakuya769 said:
...

And you're sure that has nothing to do with the ginned up crisis of the impending debt ceiling debacle and the present gov't shutdown buffoonery?
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Of course it has everything to do with that. Bonds (debt), or any other investment within a country for that matter takes into account the political risks that exist. It affects the ability to repay or to earn returns. This coupled with unprecedented levels of debt accumulation (started in the 1980's), and there is no free ride in the market. That nothing has happened in 30 years of this (well debt bubbles and crisis are getting bigger and bigger) doesn't mean that nothing will come of it (as it has for centuries in the past).
 
Sanky Panky said:
Of course it has everything to do with that. Bonds (debt), or any other investment within a country for that matter takes into account the political risks that exist. It affects the ability to repay or to earn returns. This coupled with unprecedented levels of debt accumulation (started in the 1980's), and there is no free ride in the market. That nothing has happened in 30 years of this (well debt bubbles and crisis are getting bigger and bigger) doesn't mean that nothing will come of it (as it has for centuries in the past).
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You were responding the this:

Jonm1010 said:
There is nothing wrong with responsible debt. Fully taxing for present day spending is typically a poor way to pay for government functions unless you are a government that does not have good credit. But that would be reflected on both the interest rate of your treasury bonds and the demand for them.

The us governments debt has been lower then its trend growth rate for over twenty years now and the demand for our long term treasury bills shows that the world still puts good faith in the American dollar and our governments ability to repay those obligations. Feel free to find me a real world economic metric that shows our current spending level and debt is on the brink of catastrophe?


If we were truly at the edge if some fiscal cliff the market would be warning us.

Furthermore I'm not even sure what any of this has to do with the current situation which is a case of republicans holding hostage the American economy as a means to enact legislative change. Which should be noted is actually creating economic growth slowdowns the more this lingers which actually is hurting our ability to sustain spending and continue growth.
Click to expand...

I was assuming your post was to state that the size of the debt is to blame for your market "warning." I disagree with that (and that accepting that this isn't noise for the sake of discussion). What exactly are you asserting as the problem?
 
RE: Obamacare. This guy on FB is saying this. "I just don't see how forcing people to buy health insurance is going to help. I mean, we are still buying from private firms right? Is the government going to supplement the cost of what the insurance companies will loose on pretty existing conditions? If so then who is going to pay the government? I think there adding like 3% towards medicaid or something for the new healthcare... But that can't be enough... I just want details and I feel the republicans must know something we don't ... Because half the people I talk to are against and half are for it..."

Now, I know some of the reasons why it will help, but I don't have time (I'm at work just taking a small break) to find a decent link to describe this to him. Does anyone have one?
 
Democrats should of just went with single payer. They are encountering the same bullshit they tried to avoid with the bandaid of aca.

That's my british perspective on this Health care debacle anyway.
 
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