I know it's too early to tell if this is going to become a typical pattern or not, but now that the Republicans have finally stood up to Obama and shown that they aren't going to be pushed around, do we have some hope that they'll also say "NO" on this debt ceiling increase issue?
Obama's modus operandi has been to hurt the American people as badly as he can whenever he doesn't get everything he wants in hopes of making the other side look bad. Amazingly, he actually came right out and SAID SO to Senator Colburn of Oklahoma when this "sequester" deal came up. And now, he's at it again with these latest tactics---trying to close parks and restricting access to open-air monuments/memorials. Indeed, I've never seen a president take it to this level. Anyway, now that the American public is onto him and people see through what he's doing, I wonder what he'll pull next, and will the responsible members of congress keep having the courage to not back down to his bullying and arrogance? I hope to God that the answer is yes.
The real fun is that the Treasury Secretary has now stated he's been using "extraordinary" measures to avoid hitting the debt ceiling for several months. Last time that happened, it meant federal employees' pension plan contributions didn't go to the pension plan, they were "borrowed" by the Treasury.
Meanwhile, the Secretary of Defense just determined that some 315,000 civilian DoD employees are vital to the functioning of the Republic, and they're being recalled. What's interesting is that if these folks were that vital, shouldn't they have been "excepted employees" under the shutdown furlough. Those are folks whose jobs are important enough that they can be ordered to work, without current pay, under threat of disciplinary action. And if the Senate passes the Congressional back pay bill from yesterday, that's 315,000 folks who got four unearned paid days off. Yeah it's stressful to be suddenly told not to come to work, and lose your pay, but the excepted employees got the pay shortage without the free time.
Unfortunately, under the conveniently strict interpretation of providing for the common defense and promoting the general welfare apparently in use just now, anything that benefits the Middle Class that isn't military or law enforcement related simply isn't going to happen.
As to the "back pay", a really paranoid person might opine that the number of "sequestration furlough" days will mysteriously increase to average out at one furlough day per federal pay period from the time an appropiation bill is passed until the end of the current fiscal year.
I have a framed Zimbabwe One Hundred Billion Dollar note on my home office wall. When it was legal tender, that $100,000,000,000 note was worth around two dimes.
While I agree that over a long term period, governments should spend less than they earn - I'm not sure why you'd honestly want the US to default on its debt.
Looking at the international experience of other countries that have defaulted, it'd be a generation to recover. High interest. Low investment. Low economic growth. A dollar worth nothing (aka your savings and buying power, gone).
Last time the Republicans threatened to block the debt ceiling increase, the US credit rating was downgraded (making credit more expensive, meaning more of the US budget is needed to repay the loans - a stupid own-goal). US economic growth slowed - just from the threat of default.
Here in Australia, the Australian dollar soared to $1.10 US (the ten year average is around 70c) and crushed our recovering manufacturing sector.
A man takes stock of their finances and makes a plan to prioritise and reduce spending, increase income and pay down debt. They do not have a tantrum and refuse to pay their debts. Would you hire that guy? Would you do business with that guy? Of course not. If the US defaults, the world will see the US as that guy.
If the US defaults, you'll suffer. Your children will suffer. Here in Australia, I might suffer and my children will suffer.
The US won't default - your politicians will blink and won't scuttle their own country - but I don't get why anyone would actually cheer these guys on.
So who's saying anything about defaulting on the national debt? That has nothing to do with this issue. If you had a cousin who was living wildly beyond his means, spending money lavishly on elegant trips, throwing money away at every cause or issue imaginable, sticking his nose into other people's affairs and trying to manipulate them by offering outrageous amounts of "funding" for doing what he wants, all the while living in opulence and splendor, would you buy it if he told you he had to borrow more money from you or he was going to let his house go into foreclosure? Or would you tell him to change his spending habits? That's all we want our leaders in congress to do. You are in Australia and probably can't even begin to fathom how high our national debt is now---but suffice it to say it's astronomical. We simply can't keep doing this--and the time to put the skids on it is RIGHT NOW.
Except that austerity measures have been shown time and time again to destroy economic recoveries from recessions.
I also think you vastly mis-characterize the nature of our government spending, and where the majority of it goes.
Yes we need to change our spending habits, but the time to clamp down is not the day the rent, utilities, and car insurance are due.
Had the house republicans been willing to come to the table for budget talks in any of the months previous to this (they flatly turned down 18 invitations in the past 3 months), I might think they were serious about fixing things.
As it is, this just looks like petulant grandstanding. And unfortunately, the effect of our decisions will have global impact. Even just dicking around in the days leading up to the deadline could affect our credit rating, as well as global financial markets. We could well trigger a relapsed recession, even if they do raise the debt ceiling in the end.
Liam, assuming you're correct (and that's a big assumption) about Republicans not being willing to negotiate, what would you propose as a solution? Do you realize that we're now over SIXTEEN TRILLION (with a T, Sir) dollars in debt? So raising our debt ceiling shouldn't even be on the table for discussion. When you talk about Republicans supposedly not being willing to "negotiate", keep in mind that even in Congress, there are people who would still consider that as a solution.
Furthermore, you question my analogy between out-of-control government spending when we've got a skyrocketing national debt and a cousin who wants to borrow more money to pay the mortgage when he won't quit spending. All arrogance aside, I think the comparison is spot-on, and I'd be curious to know where you think it breaks down.
I don't make a habit of knowingly spouting falsehoods - the House Republicans repeatedly (at least 18 times, I last saw reported) declined budget talks "without a hostage" - in Rand Paul's words. And wouldn't even name committee members to come to the table.
The debt ceiling wouldn't be on the table for discussion, if the house and senate would actually negotiate and get a budget passed. But when they don't, and we are against the wire to pay bills, then it becomes an unfortunate option to consider.
It is not your analogy that is wrong, but the way you characterize the spending - e.g.
"spending money lavishly on elegant trips, throwing money away at every cause or issue imaginable, sticking his nose into other people's affairs and trying to manipulate them by offering outrageous amounts of "funding" for doing what he wants, all the while living in opulence and splendor"
You make that sound like this is due to Obama specifically - though perhaps I am making assumptions based on your past opinions. If so, I apologize.
Most of the federal budget money is in Department of Defense, Treasury, Health and Human Services, Social Security. Everything else - Nasa, Labor, Transportation, Dept of State, office of the President, EPA, Interior, etc. Don't even add up to ONE of the big Four items. Not to mention, pretty much all of those things need Congress to approve spending on - so you can't lay this all on your erstwhile cousin.
Can those be trimmed, sure. But if you don't tackle the big items in a meaningful way, that's pretty much a textbook example of being "penny wise and pound foolish." And a CR to keep the lights on, or a Debt Ceiling boost to keep things from tanking because they didn't do their jobs earlier in the year - are not the times to have the discussion they've been avoiding, demanding concessions (and complaining about not negotiation) when they, and their lack of negotiation when there was actual time to make a meaningful effort, are the a big part of what got us here.
Which part, about austerity during a recession causing issues? That's just history - I cannot think of a single example of austerity measures implemented as part of an economic recovery that worked.
Given the employment and wage figures around the country, I don't think anyone can really say we are not still in a recession, regardless of what the markets think. That's not real money, in an functional way to 99.5% of Americans.
Ah - yah. Very true.
Unfortunately, austerity would just compound the problems, I fear.
I guess the question is whether paying people (with borrowed $) to do useful things is good; to do useless things; and to do harmful things.
The country would benefit immediately if the administration would furlough the Park Police blockade private businesses that generate tax revenue and cordon off scenic overlooks to make tourists go home unhappy rather than patronizing nearby businesses.
Simply giving cash bonuses to groups friendly to the administration, as happened in Stimulus I, does enable them to buy nice things for themselves, so it's nice for them. But if they'd spent the money building bridges and seawalls, we'd have bridges and seawalls.
Ceasing to borrow money is not defaulting. Borrowing money until you can't pay your creditors any more -- that's defaulting.
The House has passed a bill saying that even if we hit the debt ceiling (which we actually did this past summer - that's an interesting story), we'll still pay service on the debt. The Senate refused to vote on it.
You might wonder why the House would bother preventing something that can't happen. For one thing, the Constitution of the US says that "The validity of the public debt of the United States... shall not be questioned." The US takes in some $250 billion per month, and debt service costs $20 billion. It's insane to think that the US can't pay its bills without borrowing (and if it can't, we're already too late).
But Obama could choose to spend all that $250 billion on something else. It violates the Constitution, but what are we going to do, impeach and remove him? He can do whatever he wants.
And now for that interesting story. Midway in July, someone noticed that the public debt had been one exact figure since May. The administration decided to borrow more money, but not to count it in the debt. The bonds they sold come due real soon now. Perfect opportunity to push the country right up to the brink of default (while threatening to do it, as he has done), so that panicked Republicans will give Obama whatever he wants to escape the blame. We have to rely on his character: to trust that he would never hurt the public for the advantage of blaming Republicans for the pain.
To use your words, it may be insane to think it, but the US is forecast to default on 15 November, when the US government will be short about US$108bn.
The public debt has been "one exact figure" since May because the US government hasn't borrowed any more money. The extraordinary measures basically allows dipping into the US' own savings and funds. On November 15, it won't be that you won't be able to service your debts, it's that you'll have spent all the money you had in the bank.
Details can be found here: http://www.cbo.gov/publication/44324 which your CNS link talks about without actually looking at how the extraordinary measures accomplished this (piss poor journalism, but each to their own).
It's pretty rich blaming this on Obama. GW Bush did it several times without a single blip on anyone's radar. After all, it is required to be raised based on already approved spending.
The government shutdown - fine - politics played to the extreme, but the debt limit should be bipartisan rubber stamp. The impacts are real both in the United States and worldwide, this is serious, and not a political plaything.