Government Shutdown

[carlfense]

That is exactly the problem, things are bassakwards. Raising the debt ceiling SHOULD allow more spending and capping or reducing it SHOULD limit spending. That is how it is supposed to work, anyplace other than in good ole Washington DC anyway.

 

And, indirectly it does/will allow more spending. they realize that they can simply pass bills that have a cost attached and then go back later and raise the ceiling.

What? The money is already spent and raising the debt ceiling doesn't authorize spending a single additional cent.

 

Outside of good ole Washington DC, what happens if you don't pay your bills?

[JJ Husker]

That is exactly the problem, things are bassakwards. Raising the debt ceiling SHOULD allow more spending and capping or reducing it SHOULD limit spending. That is how it is supposed to work, anyplace other than in good ole Washington DC anyway.

 

And, indirectly it does/will allow more spending. they realize that they can simply pass bills that have a cost attached and then go back later and raise the ceiling.

What? The money is already spent and raising the debt ceiling doesn't authorize spending a single additional cent.

 

Outside of good ole Washington DC, what happens if you don't pay your bills?

I am not arguing that Carl. I know what you are saying is the way things are. My point is, if this spending and subsequent paying worked the way it should, they would already have a way to pay for them at the same time they decided to spend the money. A person can't go out and buy a million dollar home on a fry cook income and then two years later simply decide to raise their debt ceiling. If they could (as in the way it seems to work in DC), the following year they might decide to buy a stable full of Mazerattis and then raise their debt ceiling again down the road. Do you get what I'm saying now?

[BigRedBuster]

You must have missed this part.

 

That is exactly the problem, things are bassakwards.

 

In my business, the bank has given me a spending limit. If I then commit to more bills than my cash and borrowing will pay.....sorry....something has to give. Now, my bank MAY decide to up my loan but they don't have to.

 

What happens then is when I commit to spending the money, I have to KNOW how I'm going to pay for them under my bank imposed spending limit.

 

In Washington...heck....let's just spend like mad scientists because we know when push comes to shove, we will raise the debt ceiling. We will keep our voters happy because we will be spending money on them and we can keep the power they gave us the money to get.

 

It really is a F**ed up system. Heck, we can't even pass a budget on the front end and we still borrow more and more on the back end.

 

I think it was the Israeli Prime Minister that was talking about their system. If they don't produce a budget, last year's budget is automatically enforced for 6 months. At the end of the 6 months, if there still isn't a budget, all elected officials immediately are thrown into a new election. He said...."We ALWAYS get a budget".

[carlfense]

A person can't go out and buy a million dollar home on a fry cook income and then two years later simply decide to raise their debt ceiling.

Sure they could . . . they just need to find someone willing to loan them the money. The U.S. government doesn't have trouble obtaining credit.

 

(Edit: definitely not saying that it would be a good idea.)

 

If they could (as in the way it seems to work in DC), the following year they might decide to buy a stable full of Mazerattis and then raise their debt ceiling again down the road. Do you get what I'm saying now?

No. I really don't. If you're saying that we should spend less and bring in more revenue, I agree. If you're saying that any of this is related to paying for debt already incurred . . . well I don't know what you're talking about.

[zoogs]

How the federal government operates as an economic entity probably doesn't really translate to personal household or business analogies very well.

[carlfense]

How the federal government operates as an economic entity probably doesn't really translate to personal household or business analogies very well.

Very true.

[JJ Husker]

A person can't go out and buy a million dollar home on a fry cook income and then two years later simply decide to raise their debt ceiling.

Sure they could . . . they just need to find someone willing to loan them the money. The U.S. government doesn't have trouble obtaining credit.

 

(Edit: definitely not saying that it would be a good idea.)

 

If they could (as in the way it seems to work in DC), the following year they might decide to buy a stable full of Mazerattis and then raise their debt ceiling again down the road. Do you get what I'm saying now?

No. I really don't. If you're saying that we should spend less and bring in more revenue, I agree. If you're saying that any of this is related to paying for debt already incurred . . . well I don't know what you're talking about.

You've got it but are just too used to arguing with me. I am saying the way they go about it is what causes the problem. The bold is where you looked like you might have it. Absolutely it is not a good idea to spend money you don't have and can only hope to get by borrowing. And, I don't care if it is an individual, a business, or the federal government. The only difference is scale and how big of a problem it is.

 

I'm not saying it is related to paying for debt already incurred. I'm saying if they want to incur debt by deciding to spend on something then they need to make that decision at the same time they agree to spend the money, not at a later date when all they have to do to drive us further into debt is whine "but we already spent this money so we have to do it". The time to decide not to go into debt needs to occur at the same time, or precede, actually spending the money.

 

And Zoogs- The problem IS how Washington does it currently doesn't translate to household or business analogies. If they ran our government like a responsible household or business, we wouldn't have the debt that we do. Don't let them convince you that something magic happens when the numbers get huge and at that point responsible decision making gets thrown out the window. People always want to say that it's not the same thing when it comes to government spending. I agree, it's not the same the way they do it. But it should be the same. If I want to buy that million dollar home, is it unreasonable for me to have to acquire that loan before I sign for the house? No, not only is it not unreasonable it should absolutely be that way. These bozos agreed to buy the house and at a later time (the raising of the debt ceiling) it occurred to them that they would have to borrow more to pay for that prior decision. It's lunacy.

[tschu]

The federal government's debt is nowhere even close to being at a problem level. That's just a fact. GOP thinks our spending is way out of control when in fact our country's finances are in a 100% reasonable situation. In fact the credit rating drop was not due to financial reasons whatsoever; it was purely political (and warranted, as we've seen this month)

[JJ Husker]

The federal government's debt is nowhere even close to being at a problem level. That's just a fact. GOP thinks our spending is way out of control when in fact our country's finances are in a 100% reasonable situation. In fact the credit rating drop was not due to financial reasons whatsoever; it was purely political (and warranted, as we've seen this month)

 

Ok Mr expert, if the debt is not at a problem level, what amount would be a problem level?

 

Oh nevermind. If you think our financial situation is 100% reasonable, I really have no desire to know what you think about it. Btw- Moodys has already said that they expect the government will continue to make principle and interest payments whether or not the debt ceiling is raised. They have no concerns of default.

[tschu]

I'm not the expert, I just know how to listen to the ones who are. Our debt and overall financial situation (not including the shutdown mess of course) is 100% reasonable. It is *large* in the same way that a family with a mortgage has a large amount of debt, but we're nowhere close to it being unmanageable. And we will never pay off all of our debt because we will never have to pay off all of our debt, ever. We borrow at good interest rates and pay back at a later date when the government's revenue is larger, when inflation has decreased the relative value owed, etc. It's really a great deal for us. This cycle will continue until the US ceases to exist. Analogies comparing the government's budget to a person's budget are not very accurate. If spending ever got way out of control to the point where we are struggling to make our payments, then it would be a problem, but we aren't remotely close to that yet nor will we ever be close. Now that doesn't mean we shouldn't cut down on government waste and continue to make good responsible budgets as a nation, but it also means that the GOP nonsense about how a Democratic budget will bankrupt the country and whatnot are unfounded. And now that the GOP has shifted gears away from Obamacare and onto the budget total itself, here we are, discussing this silliness.

 

As far as default - will we default, I don't know, I doubt it, but nobody seems to know exactly how we have it set up as far as paying bills goes. With hundreds of millions of bills to pay each month, the logistics of figuring out which bills are debt payments that need to be paid first and then paying them could be difficult and I've read conflicting reports on whether or not this can be done. But assuming that we can (which I think we can) the problem then lies with funding everything else, which will mean massive cuts and massive problems. All sorts of fun.

[tschu]

Ok Mr expert, if the debt is not at a problem level, what amount would be a problem level?

 

um..

 

Moodys has already said that they expect the government will continue to make principle and interest payments whether or not the debt ceiling is raised. They have no concerns of default.

 

I think you just proved my point yourself. A problem debt level would be one we would struggle to make payments on, and according to you (and Moody's!) we are just fine making payments even among this colossal mess.

[tschu]

Which again is why I pointed out that our S&P credit downgrading was not due to our actual finances, it was due to politics.

 

"The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy." (haha, they called it!)

[sd'sker]

Nobody Understands Debt

 

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

 

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

 

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

 

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

 

But isn’t this time different? Not as much as you think.

 

It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.

[JJ Husker]

Two points

1- I will never be able to look at our financial situation the way you and so many others do. That might be saying more about my stubborness than any reality of the situation. I try to simplify things and I know for a fact that we would be in a better situation with only $5T debt instead of $17T. Once you accept that it is only a matter of extrapolation to determine less debt is better and more is worse. I understand the theory of borrowing now and paying after inflation has de devalued the debt but even so, debt should never be desirable. This is just my logic and has nothing to do with political parties.

 

2- I recall the cries of the sky is falling at the time of the sequester. Dems said reducing/limiting our spending was going to ruin the country and cause mass chaos. Did the sh#t hit the fan? No it didn't, and I have the feeling we also wouldn't notice anything but possible long term improvement if the debt ceiling didn't get raised. They spend too much and , more specifically, waste too much for a little belt tightening to not be a good thing for our financial health. We are living the high life at the expense of our children. It is no more than a gigantic pyramid scheme. If it is so viable, why are pyramid schemes illegal?

[JJ Husker]

Sdsker- It's not that I'm concerned about paying off the debt and bringing the balance to zero. It's an ethical concern that we are living beyond our means now and passing the bill for that to our childrens children. Also, inflation hurts the poor a lot more than it hurts the rich. It just strikes me as quite selfish of us to pass the payment to future generations and saddle the poor with even more dire circumstances.