Debt ceiling limit

[Cappster]

Okay fellas. What is your take on raising the debt ceiling, lowering/raising taxes, paying/not paying on our loans, etc... ? If we choose to default on our loans, wouldn't that be grounds for someone to declare war on us? I was watching a senate committee hearing last week where they had a panel of economists (didn't catch from where) and they said we need to do two things to get the economy going in the right direction again: One is to raise the debt ceiling so we do not default on our loan, because we choose not to pay our bills and two, let the Bush tax cuts expire (which is essentially saying do nothing). I found that to be rather intriguing to say the least.

[The Hogster]

The Republicans are playing political games with the debt ceiling. They understand that the American people don't understand what it means for the most part.

Put simply, our debt is money that has already been spent, a lot of it being spent during Bush's presidency. For example, Wars. When we went to war in Iraq & Afghanistan, we of course needed to pay for it. We've done that by taking out loans from other countries, and issuing treasury bills. Now that it's time to repay those loans, we run the risk of going bankrupt if we (i) repay those loans without (ii) raising the debt ceiling so the country can continue to run.

Essentially, the Republicans & Democrats have sat at a table for the past decade, ordered food (wars, prescription drug benefits, tax cuts (which most people don't understand is a spending issue, health care, social security etc). Now the Republicans are threatening to get up from the table without paying the bill.

Why? Because it would make Obama look bad. The fallout would be blamed squarely on him because most people don't understand that the country has already spent this money on various things across several administrations. They'll view it relative to their own understanding and treat it like Obama's spending caused our credit card to get declined.

The interesting thing to me is that Republicans claim to be more patriotic than Dems, but playing chicken with the debt ceiling during a recession would have dire consequences on the U.S. economy and the global economy. They're willing to play with the average American's portfolio, retirement accounts, job security etc to score a political victory--making Obama look bad.

The Dems are no better because they don't even have the balls to tell the American people what's going on.

[Red_One43]

The National Debt and the Constitution
Share | by Gene Veith on July 4, 2011

in America,Economics,Government

As we wrestle with the national debt and as Congress debates over whether to raise the debt limit or risk default, we should consider what the Constitution says about the issue. First, Congress does have the right to borrow money:

‘The Congress shall have power … To borrow money on the credit of the United States.’ Article I, Section 8

But read on to the 14th Amendment and you find this:

‘The validity of the public debt of the United States … shall not be questioned.’ 14th Amendment, Section 4

The 14th Amendment deals with the wreckage of the Civil War, giving citizenship to former slaves by virtue of their having been born here (another controversial issue in the immigration debate, though clearly addressed in the Constitution) among other things. Article 4 repudiated the debt of the Confederacy, but in doing so it affirmed that the United States will always honor its debts.

This was a brilliant addition, serving as the basis for the idea that U.S. bonds are backed by the “full faith and credit” of the United States of America, meaning they are a rock solid investment. It isn’t just our full faith and credit that backs them but the Constitution itself. It would be unconstitutional to default on our loans.

But, as some experts are saying now in the midst of the debt ceiling negotiations in Congress, the 14th Amendment would render all of that moot. There is no need to raise the debt ceiling because the Constitution provides that all debt that we incur must be paid. The money that our lawmakers are squabbling over has already been spent and has been authorized by statute. According to the 14th Amendment, that debt has to be honored.

Debt can certainly be too high and need to be controlled. But the 14th Amendment means that whatever we borrow must be paid back. According to some attorneys, if the current negotiations to raise the debt ceiling break down, to prevent the country from going into default, the President simply needs to sign an executive order invoking the 14th Amendment and keep borrowing money to pay our obligations, despite what Congress does.


Do you see any flaws in this legal reasoning?

Hogster do you see any flaws in this argument?

http://www.geneveith.com/2011/07/04/the ... stitution/

Related Articles:

http://laws-n-sausages.com/2011/07/01/c ... stitution/

http://jonathanturley.org/2011/07/09/do ... t-ceiling/

[The Hogster]

I find no flaws in the Constitutional basis for raising the limit at all. Republicans seem to pick and choose when they want to uphold the Constitution. At the end of the day, the U.S. spends WAYYY to much. But, neither party ever does anything to fix it. They both make it worse. For instance, Republicans (in theory) a smaller government and less taxes. That's a great theory. But, they ignore the reality that (i) they can't eliminate most of the government, and (ii) cutting taxes without cutting spending only makes things worse. Bush cut taxes, but kept spending on things Republicans value. The Democrats raise taxes, but also spend too much in other areas.

It's a see saw. Both ideologies would work in theory, but in reality neither does. The only quick thing a Republican Congress and Admin can do is cut taxes. So they do. Then duh, we are in debt.

The only quick thing the Dems can do is spend money on various programs. They do, but that doesn't get us out of debt if they can't get revenue from taxes.

When you have a Republican House, & a Dem president and Senate (narrowly) you have a country held hostage for political food fighting. It's awful.

[Cappster]

If we default on our loan payments, does that mean the United States will be in foreclosure and our debtors will liquidate our assets and divvy up our parcels of land to take ownership over? I am trying to humor myself here, but what happens when we, as individuals, either choose not to pay or cannot pay our bills? Our accounts are closed, foreclosed, bankrupt, etc... and we lose the ability for ourselves to determine how we are going to pay back the loan.

I don't see why it is such a cluster #^&@% of an idea to take steps in reigning in spending and to generate more revenue (let Bush tax cuts expire). Increase in revenue and reducing spending to where we are back in the black = reducing the deficit.

It really baffles me why some of the tea partiers I know, who hover in and around the middle class, believe the rich will create jobs if they get more tax breaks. So if we give more money back to the rich, with the kindness in their hearts, the will disperse the funds back to us, the little guys, because they create jobs as part of their plan to make the world a happy and harmonious place to live. Doesn't that sound like capitalistic-socialism? If that were the case, oil companies and banks should be hiring in rapid fire succession.

I agree with your sentiment, Hogster. The dems and repubs are like rival gangs fighting over the same turf. Neither want to do whats right for the neighborhood, but they want to rule the city streets where they reap the benefits of their of their selfish actions.

Another thing that irks me is how they will spend all of the time and energy going after Roger Clemens, because he lied to them about steroid use (which I find amusing that they totally messed up on that case), but are not focused on issues that really matter. They are never put on trial for lying to us, the American people, whose lively hoods are at stake, but will put a roid head on trial for over an instance that really means nothing in the overall spectrum of things.

[Countertrey]

Soooo... instead of letting people who invest keep THEIR money (it is NOT the government's money...) you want the government to confiscate MORE of it so that they can increase the roles of the non-productive 50% who, not only pay NO taxes, but CONSUME large quantities of the federal budget in government wealth shifting schemes such as "Earned Income Tax Credits" and "FREE" cell phones (btw, they are not free... those of us who pay taxes are paying for them). Yeah... I can see how that will solve the problem better than increasing the motivation to use private money to create private investment, resulting in employment opportunities increasing, and more people actually paying taxes, buying things, and paying more taxes...

[The Hogster]

Soooo... instead of letting people who invest keep THEIR money (it is NOT the government's money...) you want the government to confiscate MORE of it so that they can increase the roles of the non-productive 50% who, not only pay NO taxes, but CONSUME large quantities of the federal budget in government wealth shifting schemes such as "Earned Income Tax Credits" and "FREE" cell phones (btw, they are not free... those of us who pay taxes are paying for them). Yeah... I can see how that will solve the problem better than increasing the motivation to use private money to create private investment, resulting in employment opportunities increasing, and more people actually paying taxes, buying things, and paying more taxes...

Counter, the debt ceiling has nothing to do with that. I agree with you. But, did things operate the way you want under Bush?? Point is, all of this crap sounds good in theory. But if you vote ideologically, you're not a part of the solution.

[KazooSkinsFan]

The Republicans are playing political games with the debt ceiling

Pure, unadulterated ideology is hating rich people so much that Democrats would actually raise taxes in the middle of a deep recession no matter how many more people will lose their jobs because of it.

[The Hogster]

Our economy in 90 seconds.

http://www.youtube.com/watch?feature=pl ... TzMqm2TwgE

[Cappster]

The Republicans are playing political games with the debt ceiling

Pure, unadulterated ideology is hating rich people so much that Democrats would actually raise taxes in the middle of a deep recession no matter how many more people will lose their jobs because of it.

How many jobs were created with the *temporary* Bush tax cuts? We need to cut spending and increase revenue. The question is what gets cut (Iraq and Afghanistan would be nice) and who should pay more loophole free taxes (the insanely wealthy). Which brings me to another point in that our tax laws need to be simplified.

[Cappster]

Our economy in 90 seconds.

http://www.youtube.com/watch?feature=pl ... TzMqm2TwgE

Middle class vs. middle class. The classic smokescreen the wealthy use to keep us fighting each other and relieving themselves of having to fight against us, the middle class.

[Red_One43]

Our economy in 90 seconds.

http://www.youtube.com/watch?feature=pl ... TzMqm2TwgE

Thanks for the post.

I get "the only way we can have a strong economy is with a stong middle class." Does Reich have a proposal of how to get a strong middle class?

[Irn-Bru]

Fixed it for you:

But if you vote, you're not a part of the solution.

[KazooSkinsFan]

The Republicans are playing political games with the debt ceiling

Pure, unadulterated ideology is hating rich people so much that Democrats would actually raise taxes in the middle of a deep recession no matter how many more people will lose their jobs because of it.

How many jobs were created with the *temporary* Bush tax cuts? We need to cut spending and increase revenue. The question is what gets cut (Iraq and Afghanistan would be nice) and who should pay more loophole free taxes (the insanely wealthy). Which brings me to another point in that our tax laws need to be simplified.

Earning $250K a year gets more and more impressive. Obama called them the "Most Wealthy" and you call them "Insanely Wealthy." Earning $250K is a nice living, but it's not wealthy at all.

And you raise tax revenue by cutting them, not increasing them. Increasing taxes reduces the size of the economy and makes people work harder to avoid them. Cutting taxes increases the size of the economy and people work less hard to avoid them. If you don't buy it, I'll let you explain how the field of economics is wrong and why all empirical data in history confirms it. Reagan for example had one of the largest tax cuts in history and over the course of his two administrations Federal receipts...wait for it...doubled. The problem was as today Congress could spend it as fast as it came in...and more...

[KazooSkinsFan]

Our economy in 90 seconds.

http://www.youtube.com/watch?feature=pl ... TzMqm2TwgE

Bazooka Joe knows more about economics then Robert Reich. I do like how you decry "ideology" then call a flaming socialist to the stand as your expert witness. Apparently ideology didn't mean ideology, it meant conservative. Believing that socialism works in spite of all empirical data proving it doesn't isn't "ideology." Since we're discussing fiscal issues, yes, I am a conservative in this discussion.

[KazooSkinsFan]

Fixed it for you:

But if you vote, you're not a part of the solution.

I do see the conflict that voting for a politician, any politician, is putting someone who wants power in office. Which means you're voting for someone who works against you. I'm not not clear how not voting solves that. In fact it seems that you're really in the end casting a vote for the politician who wants the most power and is willing to buy votes with lies and other people's money to get it.

[Cappster]

The Republicans are playing political games with the debt ceiling

Pure, unadulterated ideology is hating rich people so much that Democrats would actually raise taxes in the middle of a deep recession no matter how many more people will lose their jobs because of it.

How many jobs were created with the *temporary* Bush tax cuts? We need to cut spending and increase revenue. The question is what gets cut (Iraq and Afghanistan would be nice) and who should pay more loophole free taxes (the insanely wealthy). Which brings me to another point in that our tax laws need to be simplified.

Earning $250K a year gets more and more impressive. Obama called them the "Most Wealthy" and you call them "Insanely Wealthy." Earning $250K is a nice living, but it's not wealthy at all.

And you raise tax revenue by cutting them, not increasing them. Increasing taxes reduces the size of the economy and makes people work harder to avoid them. Cutting taxes increases the size of the economy and people work less hard to avoid them. If you don't buy it, I'll let you explain how the field of economics is wrong and why all empirical data in history confirms it. Reagan for example had one of the largest tax cuts in history and over the course of his two administrations Federal receipts...wait for it...doubled. The problem was as today Congress could spend it as fast as it came in...and more...

Lets look at recent history. Ten years of Bush tax cuts have done what to spur job growth? And its good you mention Reaganomics. here is a decent read:

http://www.cbsnews.com/8301-503544_162- ... 03544.html

[Red_One43]

That was a good read indeed. I found it hard to believe that Alan Simpson actually said that that Reagan raised taxes 11 times, so I researched further:

Simpson said he confronted anti-tax crusader Grover Norquist when the commission met and they exchanged words over the legacy of Ronald Reagan, claimed by both as their personal hero. When Reagan was president, he raised taxes 11 times, Simpson said, a bit of history that made Norquist squirm.

“I knew Ronald Reagan and you, Grover, are no Ronald Reagan,” Simpson said he told the president of Americans for Tax Reform, who famously said his goal was to make government small enough it could be drowned in a bathtub. Reagan didn’t raise taxes to give Norquist something to complain about, Simpson said. “He probably did it to make the country run.”

“We’ve never had a war with no tax to support it, including the Revolution,” Simpson said, after pointing out that taxes account for an increasingly smaller share of the economy.

http://www.outsidethebeltway.com/alan-s ... orthodoxy/

[Red_One43]

1. Reagan was a serial tax raiser. As governor of California, Reagan “signed into law the largest tax increase in the history of any state up till then.” Meanwhile, state spending nearly doubled. As president, Reagan “raised taxes in seven of his eight years in office,” including four times in just two years. As former GOP Senator Alan Simpson, who called Reagan “a dear friend,” told NPR, “Ronald Reagan raised taxes 11 times in his administration — I was there.” “Reagan was never afraid to raise taxes,” said historian Douglas Brinkley, who edited Reagan’s memoir. Reagan the anti-tax zealot is “false mythology,” Brinkley said.

2. Reagan nearly tripled the federal budget deficit. During the Reagan years, the debt increased to nearly $3 trillion, “roughly three times as much as the first 80 years of the century had done altogether.” Reagan enacted a major tax cut his first year in office and government revenue dropped off precipitously. Despite the conservative myth that tax cuts somehow increase revenue, the government went deeper into debt and Reagan had to raise taxes just a year after he enacted his tax cut. Despite ten more tax hikes on everything from gasoline to corporate income, Reagan was never able to get the deficit under control.

3. Unemployment soared after Reagan’s 1981 tax cuts. Unemployment jumped to 10.8 percent after Reagan enacted his much-touted tax cut, and it took years for the rate to get back down to its previous level. Meanwhile, income inequality exploded. Despite the myth that Reagan presided over an era of unmatched economic boom for all Americans, Reagan disproportionately taxed the poor and middle class, but the economic growth of the 1980′s did little help them. “Since 1980, median household income has risen only 30 percent, adjusted for inflation, while average incomes at the top have tripled or quadrupled,” the New York Times’ David Leonhardt noted.

4. Reagan grew the size of the federal government tremendously. Reagan promised “to move boldly, decisively, and quickly to control the runaway growth of federal spending,” but federal spending “ballooned” under Reagan. He bailed out Social Security in 1983 after attempting to privatize it, and set up a progressive taxation system to keep it funded into the future. He promised to cut government agencies like the Department of Energy and Education but ended up adding one of the largest — the Department of Veterans’ Affairs, which today has a budget of nearly $90 billion and close to 300,000 employees. He also hiked defense spending by over $100 billion a year to a level not seen since the height of the Vietnam war.

http://thinkprogress.org/politics/2011/ ... entennial/

[Red_One43]

Our economy in 90 seconds.

http://www.youtube.com/watch?feature=pl ... TzMqm2TwgE

Thanks for the post.

I get "the only way we can have a strong economy is with a stong middle class." Does Reich have a proposal of how to get a strong middle class?

Conclusion: “So you see? The only way we can have a strong economy is with a strong middle class.”

Here's a counterpoint to Reich:

Only way? No. A strong economy depends on numerous factors including, but not limited to: massive spending cuts, lower taxes, repayment of the national debt, a balanced budget, smaller government, and a little bit of truth-telling here and there. Another idea: out-of-the-box thinking that might encourage government spending in a way that actually would create jobs, instead of wasting taxpayer money.

http://biggovernment.com/lmeyers/2011/0 ... ert-reich/

[Countertrey]

What wrong with reich is that he's just wrong... always has been, and always will be.

[Red_One43]

A Democrat President can leaves office with a budget surplus and a Republican President, right after him, leaves with a deficit. One thing often left out of this discussion is, even though Clinton left with a surplus, the national debt still increased by $400 billion. The answer to our deficit ceiling issue will need to come from the center.

1) According to the Treasury Department, when George W. Bush took office in 2001 the national debt was $5.73 trillion and when Bush left office in 2009, the national debt had increased to $10.63 trillion. That’s a 85% increase of $4.9 trillion. Sen. Menendez is off by 13%, but he is correct in the underlying message that the national debt did significantly increase under George W. Bush. Thus, we rate Sen. Menendez’s statement MOSTLY TRUE.

2) According to the Congressional Budget Office, under former president Bill Clinton there was a budget surplus in 1999 ($1.9 billion) and in 2000 ($86.4 billion). But the surpluses in 1999 and 2000 were not enough to eliminate the national debt. When the federal government spends more money than it takes in, that’s a deficit. When the government takes in more money than it spends, that’s a surplus (Treasury Department budget FAQs). Though former president Bill Clinton had two consecutive surplus years, the U.S. national debt actually increased $400 billion over his term (1992 to 2000).

http://meetthefacts.com/2010/07/22/fact ... -his-term/

[UK Skins Fan]

Just don't ask us to lend you any money - there's none left over here. The Greeks have flushed it all away. And we've only just finished paying you guys for the war.

[Irn-Bru]

I do see the conflict that voting for a politician, any politician, is putting someone who wants power in office. Which means you're voting for someone who works against you. I'm not not clear how not voting solves that.

I'm not saying that staying home on election day solves the problem. (I think it's a pretty good first step, though, among others.)

In fact it seems that you're really in the end casting a vote for the politician who wants the most power and is willing to buy votes with lies and other people's money to get it.

I disagree. A little less than half of qualified voters stay home on election day. If what you are saying were true, then they are all "casting a vote for the politician who wants the most power and is willing, etc." in (for example) a presidential election. I don't think that's true at all. In the first place, if the statistics hold up then there'd be a near 50-50 split among them even if they did vote; but suddenly if they don't make that vote they are all in effect voting for one guy?

And how can you establish any correlation between voting for a guy and avoiding the politician who is lying or willing to do evil things to win votes? Before the 2000 election, what would you have thought of someone who said that Al Gore was likely to be a smaller government candidate than GWB? Well, there's a good chance they would have been right, though there was little if any way to know it at the time.

And if it's that difficult to figure out the effects of a vote for someone, I don't see how you can talk about what a non-vote means with any predictive power whatsoever.

No, I think it's just that 40% (or so) are simply not participating in the game, whatever their reasons. Best not to blame the victims.

[KazooSkinsFan]

The Republicans are playing political games with the debt ceiling

Pure, unadulterated ideology is hating rich people so much that Democrats would actually raise taxes in the middle of a deep recession no matter how many more people will lose their jobs because of it.

How many jobs were created with the *temporary* Bush tax cuts? We need to cut spending and increase revenue. The question is what gets cut (Iraq and Afghanistan would be nice) and who should pay more loophole free taxes (the insanely wealthy). Which brings me to another point in that our tax laws need to be simplified.

Earning $250K a year gets more and more impressive. Obama called them the "Most Wealthy" and you call them "Insanely Wealthy." Earning $250K is a nice living, but it's not wealthy at all.

And you raise tax revenue by cutting them, not increasing them. Increasing taxes reduces the size of the economy and makes people work harder to avoid them. Cutting taxes increases the size of the economy and people work less hard to avoid them. If you don't buy it, I'll let you explain how the field of economics is wrong and why all empirical data in history confirms it. Reagan for example had one of the largest tax cuts in history and over the course of his two administrations Federal receipts...wait for it...doubled. The problem was as today Congress could spend it as fast as it came in...and more...

Lets look at recent history. Ten years of Bush tax cuts have done what to spur job growth?/8301-503544_162-20030729-503544.html

Why should I defend Bush? You somehow thought I supported his policies? Based on what? I said raising taxes in a bad economy is moronic and all history and the field of economics shows that. Bush was a mixed bag, he raised taxes as well (e.g., Social Security) and greatly added to tax complexity, which has huge hidden costs of compliance as well as disincentives to efficiency. He also spent like a drunken sailor. More then one thing was going on in the economy so your strategy of saying he cut taxes so that's the only factor you're considering in jobs in his administration is way too simplistic.

As for Obama, sure, he actually thinks that private jets aren't legitimate corporate writeoffs for international companies. So, why isn't he flying commercial? He's a servent of the people, isn't he? Why do the people who create our economy not qualify for even a writeoff and he actually charges the people directly for his flying. Hypocrisy, your name is Obama.