Taxes, the Deficit/Debt, and the Fiscal Cliff

[HeloDude]

If you, as a Congressman, want to reign in spending, don't appropriate the money in the first place! If you, as a citizen want Congress to stop spending, only elect Congressmen who promise to do so. It doesn't take a box-checking AAD to figure that out.

So are you trying to say that every dollar spent by the federal government in each fiscal year was a result of specific appropriations made by the Congress the year prior to when it was spent?

[nsplayr]

No, obviously not. I'm of the belief that even if you disagree with past spending, you still need to pay for it. Your Congress and your country "bought" whatever they bought (goods, services, whatever) and you have to pay for the things you buy. Bottom line.

Pay our bills, change the course of future spending/revenue equations, and give our children a better situation than was given to us by our parents.

[HeloDude]

No, obviously not. I'm of the belief that even if you disagree with past spending, you still need to pay for it. Your Congress and your country "bought" whatever they bought (goods, services, whatever) and you have to pay for the things you buy. Bottom line.

Pay our bills, change the course of future spending/revenue equations, and give our children a better situation than was given to us by our parents.

Then I think you need re-phrase what your wrote earlier concerning how if the Congressmen want to reign in spending then they shouldn't appropriate it in the first place. That's the problem with these big government programs (ie Obamacare), very hard to change/do away with once it's been passed and implemented. But let's be honest--big liberals like yourself love it.

We're screwing the future generations.

[FallingOsh]

No, obviously not. I'm of the belief that even if you disagree with past spending, you still need to pay for it. Your Congress and your country "bought" whatever they bought (goods, services, whatever) and you have to pay for the things you buy. Bottom line. Pay our bills, change the course of future spending/revenue equations, and give our children a better situation than was given to us by our parents.

Well clearly this line of thinking doesn't work. All you're suggesting is that we continue to do what we've been doing. They didn't "buy" anything. They put it on credit and want to settle it with more credit. "Just pay for what we appropriated and we promise to do better in the future." Yeah right. GFY.

Playing chicken with the debt limit resulted in the largest budget cuts from this administration. I realize that it's dangerous, but that should tell you something about the mindset of those in Washington. It literally takes shutting down the government to force spending changes with those idiots. You are naive, stupid, or both if you think policy makers are just going change without incentive.

How's this for making you feel better? https://www.washingtonpost.com/blogs/federal-eye/wp/2013/01/15/tsp-used-for-debt-ceiling-relief/

[nsplayr]

Well clearly this line of thinking doesn't work. All you're suggesting is that we continue to do what we've been doing. They didn't "buy" anything. They put it on credit and want to settle it with more credit. "Just pay for what we appropriated and we promise to do better in the future." Yeah right. GFY.

They didn't buy anything? Sorry, you must not have seen all those airplanes, social security checks, national parks, etc. etc. etc. The government provides (or more like pays for) good and services used by the people. Those are real things with real value. The people and companies the government buys those things from deserve to be paid. The fact that the government borrowed the money to pay for things doesn't make the need to repay any less.

Playing chicken with the debt limit resulted in the largest budget cuts from this administration. I realize that it's dangerous, but that should tell you something about the mindset of those in Washington.

Agreed that it's dangerous but maybe not on degree. I'm arguing it's extremely dangerous and should not be done by either party, ever. Nor should it even exist in the first place. Saying that it's a good incentive does not outweigh, in my mind at least, the fact that it's a dangerous incentive.

It literally takes shutting down the government to force spending changes with those idiots.

Shutting down the government is something entirely different than failing to raise the debt ceiling. It's not good but it's much better. Failing to raise the debt ceiling would also have the effect of shutting down the government as Congress directed or Treasury likely started prioritizing spending to prevent an actual, no-shit default to our creditors.

If the GOP said "We're gonna raise the debt ceiling, but the spending has got to stop so we're not doing a CR or a new appropriations bill to fund government operations until we pass a budget/cut spending/whatever" then great, do that if that's what you think you need to do as a party to get what you're looking for in terms of policy. The effects would be bad, but our creditors would get paid and the markets and credit rating agencies wouldn't have near as much of a reason to sh*t on us all collectively. Government shutdowns happen from time to time, defaults on sovereign debt do not, at least not in America.

You are naive, stupid, or both if you think policy makers are just going change without incentive.

There can be plenty of inventives that are not so collectively dangerous. The President in his press conference said he's looking for 1.5T in deficit reduction, seems like there should be some room for the GOP to work with that and get something agreeable to both sides. Despite the caricatures there is a desire on the part of most Democrats to curtail government spending and reduce the deficit and debt. Even if you don't believe that, I still argue the threat of financial suicide is not worth the benefit of squeezing the administration for additional spending cuts. This is supposed to be governing, not a kamikaze mission.

How's this for making you feel better? https://www.washingto...ceiling-relief/

Not f-ing good, but ya know what causes Treasury to do this? NOT RAISING THE DEBT CEILING! We've already "hit" the debt ceiling, Treasury has just gotten real good at shifting things around between different accounts to buy Congress a couple more weeks/months because we play this stupid "are we gonna raise it" game so often. If you're concerned about these slight-of-hand accounting tactics that potentially affect your TSP account, tell Congress to raise the debt ceiling immediately and Treasury will stop taking these "extraordinary measures."

Edited January 16, 2013 by nsplayr

[Fuzz]

There should be a Constitutional Amendment giving the power to raise the federal debt ceiling to the state legislatures (i.e. Congress must send a referendum to the state legislature and receive a majority or 2/3s vote of all the legislatures to raise it). Like Nsplyr pointed out giving someone a limit and also the ability to raise it at whim doesn't really do much.

[FallingOsh]

They didn't buy anything? .... The fact that the government borrowed the money to pay for things doesn't make the need to repay any less.

Buying implies paying for and owning. Purchasing on credit and using more credit to pay off the credit does not constitue buying and owning. Just my opinion I guess.

The President in his press conference said he's looking for 1.5T in deficit reduction, seems like there should be some room for the GOP to work with that and get something agreeable to both sides.

Surprisingly, the President in his press conference was playing political games. Did you see how he got to the $1.5T in reduction? First of all, he claims the economy needs a 4T deficit reduction over the next decade which translate to 400B a year. Since his deficits run about 1.5T per year, I have no idea how a third of that in reduction is something to brag about. So how did you get to 1.5T from 4T? Well, he claims he's already reduced it by 2T "and if you add the interest that we won’t be paying, because of less spending and increased revenue, it adds up to about $2.5 trillion." Are you following that? The economy needs a 4T cut but we've saved 2 which is kinda like 2.5, therefore we only need 1.5T cut over the next 10 years. All of these numbers games are really irrelevant since, in your words, the President is "looking for 1.5T in deficit reductions" but hasn't actually met them. Yes... the GOP should be bending over backwards to match that effort...

Despite the caricatures there is a desire on the part of most Democrats to curtail government spending and reduce the deficit and debt. Even if you don't believe that.

I don't.

Not f-ing good, but ya know what causes Treasury to do this? NOT RAISING THE DEBT CEILING! We've already "hit" the debt ceiling, Treasury has just gotten real good at shifting things around between different accounts to buy Congress a couple more weeks/months because we play this stupid "are we gonna raise it" game so often. If you're concerned about these slight-of-hand accounting tactics that potentially affect your TSP account, tell Congress to raise the debt ceiling immediately and Treasury will stop taking these "extraordinary measures."

ugh... Sometimes I think you must be joking.

[dream big]

Man, those dirty Republicans, trying to prevent the debt ceiling from being raised.

This "president" has no credibility lecturing Americans to raise the debt ceiling.

[nsplayr]

Buying implies paying for and owning. Purchasing on credit and using more credit to pay off the credit does not constitue buying and owning. Just my opinion I guess.

So let me get this straight, unless you out-right own something and/or paid cash for it, you don't actually own it? If you bought a new laptop and paid for it with a credit card (and didn't pay off the balance), you don't actually own that laptop? I would bet if someone stole it you'd argue otherwise to your insurance company...I guess I'm not tracking.

Surprisingly, the President in his press conference was playing political games....all of these numbers games are really irrelevant since, in your words, the President is "looking for 1.5T in deficit reductions" but hasn't actually met them...yes...the GOP should be bending over backwards to match that effort...

Of course he was "playing political games" at the press conference, that's what politicians tend to do. Disagree with the numbers if you'd like, what are the numbers you want to use for the increased revenues and lower spending enacted by the 111th &112th Congresses and signed the President?

And on your last point, you say the President tells the American people he's looking to cut spending and you're advice is the GOP shouldn't try to fulfill that wish given their stated desire to do the same? Seems like that's a better situation than trying to work with someone saying debt and deficits aren't problems, that wouldn't sign a single dollar in cuts, etc. Believe it or not, putting the details and negotiating tactics aside, there is not 100% disagreement between the two parties on this (or any) issue.

ugh... Sometimes I think you must be joking.

I'm not joking, what did I say that was inaccurate? Can you explain why the Treasury suspending investment in the G fund? What event or looming problem might be causing that accounting move?

[nsplayr]

What Will Happen If We Don't Raise the Debt Ceiling.

[TreeA10]

I think I'd rather just keep going down the road of fiscal insanity with no budget, no credit limit, and keep borrowing against my kids future. What could possibly go wrong?

[pawnman]

I think I'd rather just keep going down the road of fiscal insanity with no budget, no credit limit, and keep borrowing against my kids future. What could possibly go wrong?

It's worked so far, right? There's no way other countries will stop lending us money, we're a super-power!

[HeloDude]

You do realize that 70% of the debt is owned domestically, right? No, of course you don't.

You do realize that the percentage of debt owned by foreign countries/investors is not constant, right? No, of course you don't.

When 'W' and the GOP ran up the deficit from 2001 to 2007 it looks like the foreign debt (as a percentage of total debt) went from 30% to 43%...sounds like during this time (and afterwards), we were asking foreign countries to fund a higher percentage of our debt compared to years past. It looks like it has stayed constant as a percentage from 2008 to 2011, but that just means that the foreign debt value itself still greatly increased because the debt has increased, or should I say more correctly, it has exploded.

BL: We rely very heavily on foreign countries/investors to fund our out of control debt and I don't see this stopping anytime soon, and if does, we are screwed.

https://seekingalpha....u-s-bond-yields

[HeloDude]

Oh, wow, how embarrassing for you. Your attempt to condescend to me completely backfired because we're talking about total debt, not just publicly traded debt. Foreign-owned debt is 34% as of the end of FY 2012.

So you concur that the rate changes (ie not constant), as I said? I'm glad you are in agreement. I'm also glad you realize that Pawman was correct--we get a significant portion of a financed debt from foreign sources.

Keep going--you're almost there!

[FallingOsh]

So let me get this straight, unless you out-right own something and/or paid cash for it, you don't actually own it? If you bought a new laptop and paid for it with a credit card (and didn't pay off the balance), you don't actually own that laptop? I would bet if someone stole it you'd argue otherwise to your insurance company...I guess I'm not tracking.

No, you are clearly not tracking. If you purchase something on credit, you do not own it outright. The person or entity who extended you the credit owns it. You do not own a house you mortgaged; the bank owns it. Just because Airman Dumbass drives a $65,000 BMW does not mean he owns it.

And on your last point, you say the President tells the American people he's looking to cut spending and you're advice is the GOP shouldn't try to fulfill that wish given their stated desire to do the same?

I'm saying "looking" for $1.5T in cuts over 10 years is a useless, petty claim. Even if he quit "looking" for it and "found" it, 1.5 over 10 years wouldn't even begin to make a dent.

I'm not joking, what did I say that was inaccurate? Can you explain why the Treasury suspending investment in the G fund? What event or looming problem might be causing that accounting move?

It's your logic that kills me. "If you're concerned about these slight-of-hand accounting tactics that potentially affect your TSP account, tell Congress to raise the debt ceiling immediately and Treasury will stop taking these "extraordinary measures." I'm concerned about shittly slight of hand accounting so I should be in favor of continually raising the debt limit. Just let them keep doing what they're doing or they'll be forced to take our pensions. It's not their fault, it's mine for not supporting more national debt, right?

[TreeA10]

And TreeA10 is implying that not raising the debt limit now and making a destructive, symbolic gesture against spending and debt is somehow preferable to raising the debt limit now, and fighting the budget battle in the appropriate context. The first point is dishonest at best, because while it may be true many years from now, it is completely untrue in the short term. The second point is just a flat out ridiculous position to take..

There has been no fighting the budget battle in any form of an appropriate context. The Senate has not passed a budget in 3 years to avoid the discussion and nobody, even his own party, voted for the President's budget. Not much of a fight there.

The "fair share" of taxes imposed on the "millionaires" making more than $400,000 is not going to fix the spending problem. Raising taxes on "millionaires" making more than $250,000 is not going to fix the spending problem. Raising taxes on everyone is not going to fix the spending problem. And the Senate and the President have put what serious spending cuts on the table? That would be none.

As far as a ridiculous position to take, please check SARCASM DETECTOR - ON.

[nsplayr]

No, you are clearly not tracking. If you purchase something on credit, you do not own it outright. The person or entity who extended you the credit owns it. You do not own a house you mortgaged; the bank owns it. Just because Airman Dumbass drives a $65,000 BMW does not mean he owns it.

We've moved well beyond the original point. Here was the original point: the government should pay it's bills, no questions asked. If we want to reduce debt and deficits in the future, stop spending so much or raise more revenue (or both). Not paying your bills is like trying to reduce spending in the past, it just doesn't make sense.

If I'm a contractor providing trash removal services for say, Hurlburt Field, I come and make my weekly pickups and bill the base on the first of the next month for the previous month's services. I provided those services, me and my trucks actually came to base and actually provided value. I do so with the assumption that I will be repaid for those services. Whether Congres is borrowing that money to pay me or actually has gold in Ft. Knox, I don't particularly care. Congress via the DOD budget has indeed appropriated money to pay for those services at HRT and I as the provider of those services bill the government and expect to be repaid.

Is the best way to reduce spending: A) decide not to pay me, the trash contractor, for services previously rendered and consequences be damned or B) pay the bills already incurred and decide maybe the base can no longer afford trash removal services, and choosing not renewing my contract for the future? I'll tell you what my opinion would be as that trash contractor...

It's your logic that kills me. "If you're concerned about these slight-of-hand accounting tactics that potentially affect your TSP account, tell Congress to raise the debt ceiling immediately and Treasury will stop taking these "extraordinary measures." I'm concerned about shittly slight of hand accounting so I should be in favor of continually raising the debt limit. Just let them keep doing what they're doing or they'll be forced to take our pensions. It's not their fault, it's mine for not supporting more national debt, right?

So you're worried that debt poses a real long-term threat to your retirement and government-backed savings accounts (i.e. TSP)? I agree, that's true. But ya know what else, not raising the debt ceiling posses a real near-term threat to those very same accounts!

You want the government to be fiscally solvent so it can honor the pension commitments it may have made to you and have the ability to deposit your TSP money into your checking account when the time comes right? Let's not be so worried about the long-term threat that we miss the near-term threat. Raise the debt ceiling tomorrow and Treasury will stop taking their "extraordinary measures" that include messing around with the G fund the very same day. Once that near-term threat to your funds is resolved we can address the long-term threats.

It seems extremely unwise on a personal level to seek a default on U.S. government debt when you're personal retirement is highly tied to accounts and future promises that are part of that government debt. If you were a self-sustaining farmer who lived totally off the grid up in Montana and had a stockpile of gold, silver and provisions, you might have more credibility saying you don't really care if the system self-immolates because you'd still be GTG. I'm betting as an active duty military officer who draws his pay and may want to draw retirement benefits in the future from that government, the consequences of default would be a little more severe for you and all/most of us here.

And please yourself if you still think raising the debt ceiling causes us to incur more national debt. Debt is incurred when and only when Congress appropriates more money than it takes in over a given time period. That fundamental misunderstanding may be the root of the problem here.

Edited January 17, 2013 by nsplayr

[nsplayr]

And the Senate and the President have put what serious spending cuts on the table? That would be none.

I believe the Budget Control Act of 2011 is still the law of the land (with some modifications from the latest "fiscal cliff" deal). That act was passed by the Democratic Senate, the Republican House, and signed by President Obama. Here's what the CBO says:

The Budget Control Act of 2011 (enacted on August 2 as Public Law 112-25) made several changes to federal programs and established budget enforcement mechanisms—including caps on future discretionary appropriations—that were estimated to reduce federal budget deficits by a total of at least $2.1 trillion over the 2012–2021 period.

So while 2.1 trillion in deficit reduction isn't nearly the entire scope of the problem, 2.1 trillion dollars sounds pretty "real" to me and the CBO...

Edited January 17, 2013 by nsplayr

[matmacwc]

The CBO that initially said Obamacare was budget neutral? Oh yah, that one. Keep trying dude, or keep watching CNN.

[nsplayr]

The CBO that initially said Obamacare was budget neutral? Oh yah, that one. Keep trying dude, or keep watching CNN.

I'm not fully versed on what the CBO said then and what their latest report on the ACA says now. To the point, are you saying the CBO is wrong in that case as well as this case (i.e. on the Budget Control Act) or that they're wrong all the time and shouldn't be trusted?

Or is this just another example of the know-nothing revival going on in some circles these days? Try countering what I present as fact with different facts, not with just "Well, they're wrong, haha!"

Edited January 18, 2013 by nsplayr

[Prozac]

Debt ceiling debate boiled down to a household analogy (since so many think that the govt works like the average household): Honey, until you stop buying so many shoes, I'm going to stop paying the credit card bills. Would you do this in your household? Is it worth ruining your credit? Do we need to reign in our shoe habit? Absolutely. Is this the way to go about it? Certainly not.

[Fuzz]

https://abcnews.go.com/blogs/politics/2012/08/president-obama-in-2009-pledged-to-veto-attempts-to-undo-medicare-cuts/

OBAMA: Yes. I actually have said that it is important for us to make sure this thing is deficit neutral, without tricks. I said I wouldn't sign a bill that didn't meet that criteria. And what I also said in that speech to the joint session was that I'm willing to put in some safeguards where if we don't obtain the savings that have been promised, that we've got to make adjustments in terms of the benefits, because the goal here is to reduce costs for families, give them more security, but do so in a way that is not adding to our deficit, that, in fact, over the long-term, if we can bend the cost curve, will reduce our deficit.

[lloyd christmas]

Debt ceiling debate boiled down to a household analogy (since so many think that the govt works like the average household): Honey, until you stop buying so many shoes, I'm going to stop paying the credit card bills. Would you do this in your household? Is it worth ruining your credit? Do we need to reign in our shoe habit? Absolutely. Is this the way to go about it? Certainly not.

Nope. I would take the credit card from that bitch.

[nsplayr]

Nope. I would take the credit card from that bitch.

...and then you would pay the bill.

"Taking the credit card from that bitch" is telling Congress to stop appropriating money. Not raising the debt ceiling would be like throwing the bill in the trash, pretending you don't owe it, and hanging up the phone when Mastercard calls you up wondering WTF.

[Vetter]

We wouldn't stop paying our bills if we didn't raise the debt ceiling. Stop saying that. We bring in enough revenue to service our debt.