“You’ve had the federal government out of work for close to two weeks; that’s about $24 billion a month. Every month, you have enough saved in salaries alone that you’re covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That’s manageable for some time.”
A surprisingly broad section of the Republican Party is convinced that a threat once taken as economic fact may not exist — or at least may not be so serious. Some question the Treasury’s drop-dead deadline of Oct. 17. Some government services might have to be curtailed, they concede. “But I think the real date, candidly, the date that’s highly problematic for our nation, is Nov. 1,” said Senator Bob Corker, Republican of Tennessee.
Others say there is no deadline at all — that daily tax receipts would be more than enough to pay off Treasury bonds as they come due.
“It really is irresponsible of the president to try to scare the markets,” said Senator Rand Paul, Republican of Kentucky. “If you don’t raise your debt ceiling, all you’re saying is, ‘We’re going to be balancing our budget.’ So if you put it in those terms, all these scary terms of, ‘Oh my goodness, the world’s going to end’ — if we balance the budget, the world’s going to end? Why don’t we spend what comes in?”
“If you propose it that way,” he said of not raising the debt limit, “the American public will say that sounds like a pretty reasonable idea.”
And while Representative Trent Franks, Republican of Arizona, conceded that a government that could no longer borrow money would have to curtail some of its contracting, he said Democrats should not get carried away.
“It’s like everything else here,” he said. “People on both sides of every argument seem to employ hyperbole when they could just state the truth and it would still be of significant consequence.”
54 comments:
The president of the US is not king.
His job description via the US constitution requires that he negotiate with the 3 branches of government. Period.
Obama won't do it because he's an arrogant narcissistic dictator.
Interesting. I wonder if this meme could pan out big.
How about a media blitz where congress members make 15 commercials spelling it out simply.
I get tired of the Chicken Littles [not ours though] who run around saying "But what about Wall Street and the stock markets"!
15-minute
Obama won't pay the debt service.
No consequence deters him.
Remember the GM and Chrylser bondholders.
The law was 100% on their side.
Obama was not.
They got stiffed.
The law was 100% on their side.
Hey now, that was the law of the land at the time. Obama just changed the law. That's why the bondholders got stiffed.
I checked my wheelbarrow, yesterday, and it works just fine.
My summary of Carell and Hathaway Get Smart
Steady deadpan analyst wins over Hathaway's feminist.
Last pic is a frame-break outtake.
Come on GOP - get with it.
There's enough tac receipts to pay the debt service. There are NOT enough tax receipts to pay debt service, Social Security, Medicare and basic defense services.
Leland said...
Ref: The law was 100% on their side.
Hey now, that was the law of the land at the time. Obama just changed the law. That's why the bondholders got stiffed.
Why yes he did...just like he unilaterally changed the Affordable Care Act law that said everything starts 01 Jan 2014. Obama decided that businesses would not be required to met the specifications of the law until 2015, and some of those exempted & waived forever, but individuals would still be required to comply in 2014....as the PPACA stipulates for all of the above.
No new legislation is necessary, because it is all in how the Executive Branch interprets the vague law, and it is designed to be that way...law by regulation. The SCOTUS agreed...a fee for non-performance is not classified as a tax, usually something applied to performance, not a penalty.
When will the populace wake up and realize we are on the cusp of a pure autocracy where no legislature or court is necessary? That the opposition in Congress is reduced to futile attempts to change two laws that have no sunset date by a temporary measure that does end arbitrarily in less than 90 days.
President Princess Peacock figures we never will, nor is there any mechanism now for enforcement of anything contrary to his wishes.
Correction: "....a fee for non-performance is NOW classified as a tax ..."
We always have enough money to pay our debt service
I'm not sure it is that simple. While the average daily tax receipts greatly exceed the average daily debt service amount, neither is spread out evenly. If they keep spending as if the debt limit will be raised, right up until the day we hit it, we may well have a span of time during which we do not have the cash to pay the debt service. This could easily be avoided by proper management by the executive branch.
Unfortunately, proper management is in short supply in the executive branch.
when they could just state the truth and it would still be of significant consequence.
The truth doesn't feed the propaganda machine though.
Ignorance is Bliss said...
We always have enough money to pay our debt service
I'm not sure it is that simple. While the average daily tax receipts greatly exceed the average daily debt service amount, neither is spread out evenly. If they keep spending as if the debt limit will be raised, right up until the day we hit it,
I think you're overthinking their point. They mean there's enough income to pay debt service as long as we pay that first. Default is only a possibility if the cash available is used for other government spending before interest and redemption.
rhhardin said: "Obama won't pay the debt service.
No consequence deters him."
This is the real problem. Any other President would and has done what it takes to lessen the damage, but they also didn't close down parts of the government just for the obvious reason of hurting Americans. This guy is just despicable. He will punish 90 year old WWII vets and dishonor soldiers dying under his command. He'll do anything no matter how stupid or destructive, because "I won."
Republicans are just talking down the crisis to hurt Obama ;)
The thing to remember, obvious to men at least in 2008, is that Obama is a piece of shit.
He does what he wants because the press doesn't ever hold him accountable or question any of his motives.
We need a Republican president just to get the press to do their job.
If I knew how bad this guy was gonna be, I would have voted repeatedly....using Eric Holder's name.
People can understand this concept. If you have to borrow money to pay for things, perhaps you should curtail buying things.
Spend less rather than borrow to spend more. Find ways to cut your budget. Live within your means. All principles that the ordinary person has to live with. Why shouldn't the government do the same?
Each budget line item should be looked at scrupulously and determined necessary to be funded at the existing level, could be combined with another duplicate or overlapping agency or if it is necessary at all.
If the Federal Government would give back many of the items that they have appropriated from the States, it would go a long way to creating a smaller Federal Budget and make people happier to have things.....like the Parks.....back into local control.
None of this will happen of course because we are ruled by avaricious dunces.
Republicans should be on television and radio every single day highlighting exactly why Urkel won't come to the table. Put it on him and move the bullshit off of them. They won't do it because they are the fail of communications.
Rand Paul is right. We can pay all our debts without raising the debt ceiling. We just can't do it AND pay for all the other spending out there.
The President has the legal authority (both constitutionally and by statute) to prioritize debt payments over all other spending. Whether he chooses to use it, or defaults and blames the Republicans, is up to him.
A contracted government in this regard is a good thing. The fluff and fat would start to fall off. I'm for it.
Dust Bunny Queen said...
If the Federal Government would give back many of the items that they have appropriated from the States, it would go a long way to creating a smaller Federal Budget and make people happier to have things.....like the Parks.....back into local control.
This will never happen, in fact preventing this is one of the primary motivations of the left. If this were to occur the long term effects of leftist policy on economic performance would become clear to the public and they would never win another election.
If the entire US deteriorates they can blame it on not enough government control. Their control of media and academia ensure they'll remain competitive even in poor economic circumstances, as long as the counterfactual proving them wrong doesn't exist.
Spending addicts don't "curtail," they go bankrupt. Of course the United States is already bankrupt and is running on fumes. When China and Japan pass on the issuance of American debt it will be over.
Spend less rather than borrow to spend more. Find ways to cut your budget. Live within your means. All principles that the ordinary person has to live with. Why shouldn't the government do the same?
Okay, so what are you going to cut? I haven't looked at the 2013 "budget", but I did look at 2012's. In that FY, if you cut ALL non-discretionary non-defense spending, you would have still been running a deficit. That means no border agents (okay, they've been told to not do their jobs anyway), no FBI, no FDA, none of it. And still running a deficit. That means cutting defense, or cutting SS and MC.
So, are you going to cut back on the troops, or SS checks to grandma and grandpa, or cut off their HC?
I'm not saying things can't be done, and I'm sure as hell not saying things shouldn't be done. But the fact is that it isn't easy, and given the voter dynamics in this country, most pols would be voting themselves out of a job if they did start making hard choices. You'd end up with a Congress full of Alan Graysons.
So if cutting is what you want the pols to do, you need to start by convincing other voters what to cut. And to do that, you need to SAY what you will cut.
This was my biggest problem with the Romney/Ryan ticket last year, they wouldn't give any clues as to what they would cut, not even in broad outline. (Cutting "waste and fraud" would be a drop in the bucket next to trillion dollar deficits.) If you won't give people an idea about what you believe needs to be done, you will NOT have built the support for making the cuts when the time comes, and you will get thrashed come the next election cycle. Elections ARE part of the process of governing the country, and they are the time when pols build most of their political capital with the public.
The two biggest areas for improving the nation's finances are in cutting back on defense (which Republicans have been loathe to do since at least Reagan, save for the first Bush, and it helped cost him his job), and by increasing taxes. Those are the two BIG areas where the budget can be impacted.
But the party that touts its fiscal responsibility is against cutting the one or raising the other. Neither side wants to cut SS or MC. Interest payments can't be cut. And non-discretionary non-defense spending isn't enough to get things in shape, unless you cut all of it, and not even then most of the time.
Spending addicts don't "curtail," they go bankrupt. Of course the United States is already bankrupt and is running on fumes. When China and Japan pass on the issuance of American debt it will be over.
Japan and China own less than an eighth of US federal debt, last time I checked. (I admit this was over a year ago, but I doubt their positions have changed all that much.) The FED owns more than that, if memory serves, and will keep buying as long as they need to.
The Social Security Trust Fund probably holds the most US federal debt.
Finally, given the way debt is issued, and the way the US banking system operates, certain banks and other financial institutions will keep buying debt issuances, as they are required to do so as so-called primary dealers. Of late, that has been a sweet deal, because the amounts of debt being issued have been huge, and they are turning around and selling it to the Fed post-haste, making a small mark-up. Those mark-ups are huge, but the amount of volume is so large it still amounts to a very favorable deal.
So if cutting is what you want the pols to do, you need to start by convincing other voters what to cut. And to do that, you need to SAY what you will cut.
Without actually looking at the budget, I would feel confident that there is at least 5 to 8% waste and corruption in every department. I would also get rid of the spend it or lose it codicil in the budgets that give incentive to go on a big spending spree in the last months of the fiscal year. There should instead be a reward or incentive for coming in UNDER budget.
In addition there are multiple agencies that are a duplication or overlapping and could be combined.
To make these types of changes would have to be incremental and not a sweeping ax cutting.
Each department should be looked at in depth and individually. I would seriously look into the vanity projects that Congress routinely votes on to honor themselves and the vast amounts of money spent on ridiculous studies or studies that should be done by the private sector.
The NPS isn't very popular or appreciated right now. I bet the public wouldn't be too adverse to firing some of those assholes who have time to act as petty Nazis :-) We could start with this department. Next.....the IRS!
But you are right. Just saying CUT, without at least some specifics is not going to get support. Especially from the general public which has the collective IQ of spoiled yogurt.
The Choom Gang is also trying to scare all the little old ladies over Social Security.
Needless to say, Democrats give slime a bad name.
deborah said...
We need a Republican president just to get the press to do their job.
No, then they just go make up stuff that's fake, but accurate.
Icepick said...
So if cutting is what you want the pols to do, you need to start by convincing other voters what to cut. And to do that, you need to SAY what you will cut.
Agreed. Social security is ~20% of our budget. Medicare is another ~12%.
Someone needs to address our seniors directly, and say to them:
Look, I know that you were promised these benefits. But the politicians who made those promises had no right to give away your children's and grandchildren's money. In order to reduce the burden that you have placed on your children and grandchildren, we need to a) means-test, b) raise the retirement age, c) limit medicare spending on a cost-benefit basis.
You're the grown-ups in this society. Start acting like it. Start voting like it.
Re: Social Security......we need to a) means-test, b) raise the retirement age, c) limit medicare spending on a cost-benefit basis.
Those might be some solutions and depending on the cut off or limits that are chosen are probably acceptable to most seniors who are of moderate means and certainly should be applied to those who are currently wealthy. Warren Buffett....that's right you asshole....I'm lookin' at you!
But I have to say as a person who has paid into SS and Medicare for the last 46 years....and STILL paying into the system. If you aren't going to make good on the money that you FORCED me and my employers to pay into the system, just cut me a check. Give me back the principle and a modest 3% annual return. I estimate that to be at least $559,000. Gimme...and I won't ask for more. Deal? Also give my husband his deposits back and we will be more than able to cease being a burden on all 'yall
It would have been nice to be able to opt out of the system and invest my own money. But....not allowed. It seems the government and you want to have your cake and eat it too. Or rather...my cake that I paid for and then keep the cake and give it in the form of WELFARE, SSI, Disability (which is rife with fraud) to others. Sorry. I paid for that cake. I at least want some of it.
You might also want to change the rule that says if you do NOT want to accept or participate in Medicare at the age of 65 you forfit your Social Security. In other words.....if I don't want to be on Medicare, say I can afford to buy my own insurance, then I have to give up getting Medicare. The government is holding seniors hostage and forcing most seniors into both systems.
I mean...give up collecting Social Security if I don't want to participate in Medicare.
Also.....you might want to get rid of the punitive fines and increases in Medicare if you delay signing up or participating (PAYING) for Part B.
The system is crazy.
It seems the government and you want to have your cake and eat it too.
I don't want to eat any of your cake, or anyone else's either. But I certainly don't want my children saddled with my generation's debts. I've only been paying in for ~30 years, but I'd happily give up that money in exchange for removing the burden of Social Security and Medicare from my children.
At a bare minimum both Social Security and Medicare should be reformed so that what each generation takes out is limited to the amount that they put in, plus any interest that it actually earned, minus the costs of administering the program.
Society should be oriented towards ensuring a better future. While I don't think it should be in the business of redistributing wealth, at the very least it should not be redistributing wealth from the young adults, who are ( hopefully ) starting and raising families, to the old, who are not.
If you want to be supported in your old age, raise children who are productive members of society who can then support you. Don't expect my children to support your retirement.
Icepick, you're making too much sense.
And DBQ, a lump sum payout is a brilliant idea. If it did come to fruition, it would end up being less than you and your employers contribution, but would probably be more than just yours. T
According to the "Penny Plan" if the spending was cut back one percent per year, we would have a balanced budget in 5 years. At least that's what I heard Rand Paul say today.
I've been through a number of business adjustments that required cutting cost by 30 - 80%. The alternative was 100%, so we went with the lower number.
At a bare minimum both Social Security and Medicare should be reformed so that what each generation takes out is limited to the amount that they put in, plus any interest that it actually earned, minus the costs of administering the program.
I am not likely to take out anywhere near as much as I put in, unless I have some sort of catastrophic illness. So far...knock wood...I'm healthy as a horse. No medications. No issues. Clean bill of health. But to be on the safe side, I plan to take out a medicare sup plan when the time comes.
I would LOVE to get back what I put in with a modest 3% annually compounded return. 3% is what you would have gotten in an average portfolio of bank certificates of deposit over those years. In reality, I could have gotten a much higher return by just investing systematically in an index fund. S&P or Nasdaq or Dow Jones among others. Really low management costs and much higher return that that pitiful SS fund.
Bush proposed something like this for just a very VERY small portion of SS deposits for the younger people on an elective basis. The Dems made out like he was trying to do something horrible, when this plan would have been the best interest of younger people. Every way you turn, the Dems are screwing the young and enslaving the minorities by trapping them into failed systems or making them so dependent on government that they are helpless.
I refuse to pay some idiot who can't even get as much return as a mindless CD portfolio. The return in the Social Security Trust (ha ha ha) fund is horrible. Why should I have to pay some bloated incompetent fat bureaucrat to do a shitty job.
You know who really gets screwed by the SS system are black people who have worked and payed into the system, because statistically, they die before using their benefits. Also single people because their benefits also are lost and reabsorbed into the SS system.
Bush proposed something like this for just a very VERY small portion of SS deposits for the younger people on an elective basis. The Dems made out like he was trying to do something horrible, when this plan would have been the best interest of younger people. Every way you turn, the Dems are screwing the young and enslaving the minorities by trapping them into failed systems or making them so dependent on government that they are helpless.
The Dems didn't fear monger the young, they fear mongered the AARP folks that if we took some money out of the system, we'd be pushing granny off a cliff.
Thing is that was almost 10 years ago. The young weren't nearly as engaged in SS/Medicare politics as they are now. I think if Rand Paul (and possibly only him) proposed something like this, the young would make their voices heard louder than last time. Age warfare. That's something I can get behind.
DBQ said...
I would LOVE to get back what I put in with a modest 3% annually compounded return. 3% is what you would have gotten in an average portfolio of bank certificates of deposit over those years. In reality, I could have gotten a much higher return by just investing systematically in an index fund. S&P or Nasdaq or Dow Jones among others. Really low management costs and much higher return that that pitiful SS fund.
You, and to a lesser extent*, I, have been screwed over by ours and our parent's generation, and the politicians we and they have elected. That does not give us the right to screw over the next generation.
*a lesser extent only because I haven't been getting screwed for as long. Assuming things don't change, ( and I assume they won't ) by the time I reach your age I will have been just as screwed.
The Constitution prevents the government from simply voting to seize your money. In practice the Courts let the government get away with pretty much anything these days, but on paper, at least, they are forbidden from seizing your investment savings.
They are NOT forbidden from cancelling your Social Security payments. No matter how much you may have paid into the system over the years, if they decide to simply keep the money and pay you nothing they can do so simply by passing a law. Heck, these days it could probably be done by Presidential fiat.
So whenever anyone tells you that Social Security is safe and investments are risky, keep that in mind. The money you invest is yours. The taxes you pay into the Social Security "trust fund" are not. The benefits you're promised are not. People talk about the rate of return on the Social Security "investment". Well, the rate of return is a guaranteed -100%. You may ultimately receive benefits, but they won't be a return on that investment. :)
At a bare minimum both Social Security and Medicare should be reformed so that what each generation takes out is limited to the amount that they put in, plus any interest that it actually earned, minus the costs of administering the program.
This doesn't account for disability payments, currently 135 billion a year and growing as advocates convert it to a minimum income program.
RE: SS. If we switched to the Galveston Plan for funding we'd ALL be waaaay ahead. Google, go see (too lazy to link)
The shutdown is great for the privates' sector!
We need a Republican president just to get the press to do their job.
I agree. FOXNews did a much better job during Bush's terms in office!
Lol. Even Deb's going all "Screw the 1st amendment!" now. The right wing has lost whatever mind it had.
Republicans versus The Chamber!
Against evolution.
Against obstetricians.
Against the Chamber of Commerce.
Republicans in "active" mode: Find things that work and shut them down!
Republicans against the world.
A "shutdown" of the federal government is negatively affecting a city that exists solely to serve the federal government?
My goodness. This is an unexpected development! However will the "private sector" survive? :)
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