Taxes, the Deficit/Debt, and the Fiscal Cliff

[Fuzz]

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.

Shhhh don't say that, then the democrats can't use their scare tactics on the public.

[lloyd christmas]

...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.

Thats exactly right. I would pay the bill. That would be my responsibilty because my dumbass wife spent money we dont have on fucking shoes.

I've fixed the rest for you.

"Taking the credit card from that bitch" is telling Congress to stop spending money they dont have. Raising the debt ceiling would be like pretending the bill will never come due and hanging up the phone when Mastercard calls you up wondering WTF".

[czecksikhs]

Everyone knows how this ends: a $2T debt ceiling increase to carry us through 2014 with future promises of spending cuts and tax increases. Maybe even a new fiscal cliff, because this time we'll really mean it.

Why does a system that requires $100B/month in debt above and beyond what we are able to actually pay for not deserve to get kicked straight in the teeth and fail? Default big now rather than default enormous down the line.

[nsplayr]

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.

Our bills are more than out debts if you're just looking narrowly at interest on our current 16 trillion dollar debt. We could absolutely pay that with our revenues, no problem. But there's much, much more that needs to be paid that I'm assuming you're in favor of...

I'm guessing you're mil so your salary is a "government debt" that may not get paid if the debt ceiling is not raised and Congress/Treasury doesn't prioritize it. Would you like to get paid or should we just blow the whole system up? Your elderly parents' medicare payments and social security checks are "government debts" that might not get paid, same deal. Would they and their doctors like to get paid, or should we just default now, cause ya know, let's just let the bad stuff happen. You get the picture.

Statements like that are absolutely intended to make people fearful of taking that course of action because that course of action would be extremely bad for the country. They also happen to be absolutely true possible outcomes of not raising the debt ceiling.

And don't just ask Democrats since you won't believe them, ask most Republicans or nearly all economists if they think it's a good idea not to raise the debt ceiling. Get back to me with what they say.

Edited January 18, 2013 by nsplayr

[FallingOsh]

So you're worried that debt poses a real long-term threat to your retirement and government-backed savings accounts (i.e. TSP)?

No. I would not trust the government with my retirement plan in the first place and this is exactly why.

Let's not be so worried about the long-term threat that we miss the near-term threat.

And there it is, right there. Let's not be worried about the long-term. This same thing happened two years ago and here we are again. The government doesn't care about the long term. Ever. They're only concerned with what is happening right now and how that will affect the next election cycle. "Pay it right now and deal with the real problem later" has not, does not, and will not work.

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... 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.

Don't start that personalize guilt trip bullshit. If you or anyone else trusts the government with your future or your retirement then I highly suggest you reevaluate.

And please yourself

hammer someone in the face?

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.

Congress appropriates more money than it takes in and then raises the debt limit to cover it. I'm well aware of the fucked up cycle that causes this year after year after year. Every year they say we MUST HAVE THIS BUDGET PASSED OR THE ECONOMY WILL COLLAPSE AND PEOPLE WILL STARVE and then a year or two later the same people say we MUST RAISE THE DEBT LIMIT TO PAY OUR BILLS OR THE ECONOMY WILL COLLAPSE AND PEOPLE WILL STARVE. The cycle has to be broken somewhere.

[nsplayr]

No. I would not trust the government with my retirement plan in the first place and this is exactly why.

So are you that self-sufficient farmer out in Montana with valuable metals and well-stocked pantries of food and supplies? That guy, despite being called crazy, would be well positioned to deal with the consequences you seem to welcome. If you're a more average person though, with money in savings accounts, the stock market, the bond market, real estate, etc., I don't think you would be well served by inducing the disaster you're courting.

And there it is, right there. Let's not be worried about the long-term. This same thing happened two years ago and here we are again. The government doesn't care about the long term. Ever. They're only concerned with what is happening right now and how that will affect the next election cycle. "Pay it right now and deal with the real problem later" has not, does not, and will not work.

Let's not be so concerned with the long-term problem that we blow ourselves up in the short term. There's a difference between my statement and yours. You're 100% right that most politicians aren't able to worry about the long-term when they take their votes and our debt path is unsustainable, but that means we need to FIX the system, not DESTROY the system.

Don't start that personalize guilt trip bullshit. If you or anyone else trusts the government with your future or your retirement then I highly suggest you reevaluate.

I sure as hell trust my next paycheck to the government because I owe Uncle Sam at least 2 more years of my time and energy. I was kind of operating under the assumption that during those two years of working hard I would be paid. And I also trust much of my savings to the stock and bond markets, both of which would be negatively affected by a U.S. government default or even a significant slowdown in government spending (i.e. British-style austerity measures). Again, are you or the average American for that matter so radically different that you can really afford to weather the consequences of what you're proposing?

The cycle has to be broken somewhere.

Congress is great at creating disasters for themselves, like the fiscal cliff and the debt ceiling. That doesn't mean we should just throw ourselves head-first into those disasters, to me that means we need better Congressmen.

Edited January 18, 2013 by nsplayr

[Magnum]

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...

Option B would be better...if the gov't actually did the analysis to determine the trash removal was no longer affordable. The problem is, the government hasn't done this in 4 or 5 years (ie pass a budget). When people default on debt, creditors come after them, assets are liquidated and bills are paid. After that pain, those people have the opportunity to repeat their poor decisions of the past or learn and change. I'm not advocating creating pain for the country if there are other options. But the way we are going, some generation(s) of Americans will have to feel the pain. I think its only fair that those affected are the ones that created the poor situation.

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.

Continually raising the debt ceiling without having a balanced spending plan does cause us to incur more national debt. Since we have been running a deficit each year, and since we haven't passed a budget, the continuing resolution keeps us at a deficit each year a budget fails to pass. Right now, the debt ceiling is the only thing keeping the debt in check. Yes the debt ceiling affects bills due. Why would the spenders ever want to pass a budget if they could always count on a C.R. to keep spending at the same levels?

[nsplayr]

I'm not advocating creating pain for the country if there are other options.

Agreed and I'm saying there are clearly other more sensible options.

Raise the debt ceiling and pass a Balanced Budget Amendment to the Constitution, raise the debt ceiling and shut down the government until a balanced budget is proposed and passed, etc. etc. But start with #1 so we don't shoot ourselves in the face before we even get started fixing the problem.

Not everyone feels this way apparently. Let's chop our balls off right away because we might get kicked in them some years down the road...

Why would the spenders ever want to pass a budget if they could always count on a C.R. to keep spending at the same levels?

Except that's not what happens very often at all. Almost every single budget Congress has ever passed has not been a balanced budget, just as a thought.

If you really want to force them to do this apparently very difficult task, either elect new Congressmen or pass a Balanced Budget Amendment that compels them to do so by law or both. In the meantime, let's pay our bills that we're already racked up.

[pawnman]

...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.

Raising the debt ceiling is more like getting the credit limit raised on the Visa so you can take out a cash advance to pay the Mastercard.

[Guest one]

Can we all agree not to use any credit card analogies anymore?

[nsplayr]

Looks like the problems is solved again, for now.

House GOP Agrees to Life Debt Ceiling for 3 Months.

It includes this:

To add muscle to their efforts to bring Senate Democrats to the table, House Republicans will include a provision in the debt ceiling legislation that says lawmakers will not be paid if they do not pass a budget blueprint.

I actually kinda like it, although actually changing Congressional pay like that doesn't appear to be Constitutional.

Edited January 18, 2013 by nsplayr

[Butters]

Can we all agree not to use any credit card analogies anymore?

We would, but someone just figured out the Feds get reward points for using their credit card. So, raising the debt ceiling will make us more money.

[Prozac]

Looks like the problems is solved again, for now.

House GOP Agrees to Life Debt Ceiling for 3 Months.

It includes this:

I actually kinda like it, although actually changing Congressional pay like that doesn't appear to be Constitutional.

How about we just withhold their pay until they pass something?

[nsplayr]

How about we just withhold their pay until they pass something?

That's exactly what the House proposal would do, withhold Congressional pay unless the Senate passed a budget. Not really sure that's GTG considering the 27th Amendment but I like the idea regardless.

[Slander]

Not really sure that's GTG considering the 27th Amendment but I like the idea regardless.

True, but they can pass unconstitutional laws. Someone has to sue to have them over-turned. The person who sues has to be someone that the law has unconstitutionally affected; so in this case someone from congress would have to sue congress for withholding their pay until they passed something. I'd like to be the opponent in that person's next campaign...

[nsplayr]

True, but they can pass unconstitutional laws. Someone has to sue to have them over-turned. The person who sues has to be someone that the law has unconstitutionally affected; so in this case someone from congress would have to sue congress for withholding their pay until they passed something. I'd like to be the opponent in that person's next campaign...

Yea, I've made that point before that it's not up to Congress to determine what's Constitutional. You'd think in most cases they wouldn't pass things blatently and obviously unconstitutional, but I guess those determinations are subjective and in this case, yea, don't think any members are gonna sue to get their money or they will quickly be relieved of the burden of having to worry about getting paycheck as a member of Congress!

Edited January 19, 2013 by nsplayr

[nsplayr]

Even if he quit "looking" for it and "found" it, 1.5 over 10 years wouldn't even begin to make a dent.

Thought I remembered someone saying this...that $1.5T in cuts "wouldn't even begin to make a dent."

Here's why our political leaders are "looking" for that level of debt reduction over the next decade. Cliff notes version:

The debt ratio cannot rise forever. If it did, that would shrink the amount of national saving available for private investment, ultimately impairing productivity growth and, in turn, living standards. Alternatively, if foreign capital offsets the shortfall in domestic capital, the profits from that investment will go abroad; either way, U.S. living standards would suffer. In a crisis, international credit markets might refuse to lend to the U.S. public or private sectors at a reasonable price. These problems would occur if the debt ratio became too high. While no one knows what “too high” means for the United States, a debt ratio that rises in both good times and bad will become increasingly problematic.

This addresses your concerns, which are concerns that pretty much every reasonable person has. So then...

Achieving $1.4 trillion in additional deficit savings would stabilize the debt at about 73 percent of GDP by 2018. Some analysts prefer a lower debt ratio, such as 60 percent of GDP, a goal that the European Union and the International Monetary Fund adopted some years ago. No economic evidence supports this — or any other — specific target, however, and IMF staff have made clear that the 60 percent criterion is an arbitrary one. In addition, even if such a target were the best one before the recent severe economic downturn pushed up debt substantially in most advanced countries, it would not necessarily be an appropriate target for debt over the next ten years, given the severity of the downturn and continued economic weakness. The critical goal now is to stabilize the debt in the coming decade.

Stabilizing the debt during this decade will not permanently solve our fiscal problems; policymakers will need to enact additional deficit reduction for the long term. But it would represent an important accomplishment.

This is why it's still important to get something close to the $1.5T; it's not to "solve" the problem of debt, it's to stabilize it, solving will take more work, just like any major problem you can't turn the Titanic on a dime.

And we'd still have a shit-ton of debt at 60% of GDP, but it's generally agreed upon that such a ratio is a favorable goal...i.e. the goal is not to get to 0% like it would be with a household budget featuring a bunch of consumer debt. The household analogies really are gross over-simplifications that aren't really helping.

Edited January 20, 2013 by nsplayr

[Buddy Spike]

So King Obama's first Inauguration cost over $170 million. With the nation $16T in debt, LFPR at the lowest it has been since 1981, and a looming debt crisis, what are today's festivities going to cost the taxpayer? Is it worth it?

Let them eat cake!

[AnimalMother]

It's a lot of money to waste, especially with Comrade Obama so vehemently opposed to raising the debt ceiling. Wait, sorry, that was 2006. Oh well, in either case I'm sure 08 and 12 will pale in comparison to his inauguration in '16.

[FallingOsh]

Thought I remembered someone saying this...that $1.5T in cuts "wouldn't even begin to make a dent."

It doesn't begin to make a dent, no matter how you frame it.

This is why it's still important to get something close to the $1.5T; it's not to "solve" the problem of debt, it's to stabilize it, solving will take more work, just like any major problem you can't turn the Titanic on a dime.

And only a politician or an idiot would champion deficit reduction of $1.5B per year when the deficit is $1.5T per year. They've made it pretty clear that sovling the debt problem is out of the question. Excellent analogy using the Titanic though.

And we'd still have a shit-ton of debt at 60% of GDP,

Yes, we would. And it will be even worse at 73% which is what your quote stated as a goal. 60% would be a miracle at this point.

but it's generally agreed upon that such a ratio is a favorable goal...

By "generally agreed upon," do you mean supported by absolutely no economic data and considered arbitrary by the IMF... because that's what your article calls it. (which is irrelevant anyway since we're not shooting for 60 as a goal, remember)

i.e. the goal is not to get to 0%

Apparently the goal is to get to 73%, which is 13 points higher than some arbitrary number supported by no economic data.

The household analogies really are gross over-simplifications that aren't really helping.

Of course they're oversimplifications. They're analogies. If anyone atually ran their personal lives like congress then they would be dead, bankrupt, in prison, or all of the above.

[HU&W]

Our debt "problem" is the amount relative to our GDP and ability to service those interest payments.

That logic might work if revenues were based on the GDP. They're not.

This is why libertarianism will never win in this country, because their political views essentially hinge on telling 100 million plus people that they're not contributing and should go unfuck themselves.

FIFY

[Grabby]

Joe,

The disgust is not towards a specific race or wealth class. It's towards a mindset. If 100 million people (by your math) out of ~275mil do nothing but take, then demand even more to be handed to them, how in the ###### is this sustainable? It has become an outright epidemic which will destroy our country in short order if not taken care of ASAP. I think most of the lemmings feel an entitlement, and based off the fact that they are either American, or are at least living here, that somehow they are exempt from both under-consuming as well as the consequences of their repeated poor decisions.

You site the poor plight of a single woman with two kids and a shitty job. Well guess what, if you don't graduate high school and have multiple kids out of wedlock before the age of 20, you probably are going to be in a shitty situation. By bantering to the absolute lowest common denominator, your perpetuate the ideal that non-contributors mistakes will be covered by those that sacrifice and achieve. Unfortunately in the real world (a non-socialist world, at least), eventually when you take too much for too long from those who make sound choices in life, the incentive to continue working hard and "paying in" disappears, and there is either a dramatic fall in the overall self-worth of a populous, or a mass exodus. Either way the outcome is the same: the lazy and selfish reap what they sowed.

So how would I tell a single mother she needs to prioritize her expenditures, to include Medicaid? The same way I would to my son if he was ever dumb enough to put himself in the same boat..."You made continuing truly awful decisions which, as hard as they are to accept at the moment, You have to live with. Hopefully, in time, you will accept these as personal responsibilities, and make better choices in the future".

Daniel Patrick Moynihan foreshadowed the current state of our nation decades ago - "A declining society accepts as normal the bad things that are not normal"

[lloyd christmas]

Joe,

The disgust is not towards a specific race or wealth class. It's towards a mindset. If 100 million people (by your math) out of ~275mil do nothing but take, then demand even more to be handed to them, how in the ###### is this sustainable? It has become an outright epidemic which will destroy our country in short order if not taken care of ASAP. I think most of the lemmings feel an entitlement, and based off the fact that they are either American, or are at least living here, that somehow they are exempt from both under-consuming as well as the consequences of their repeated poor decisions.

You site the poor plight of a single woman with two kids and a shitty job. Well guess what, if you don't graduate high school and have multiple kids out of wedlock before the age of 20, you probably are going to be in a shitty situation. By bantering to the absolute lowest common denominator, your perpetuate the ideal that non-contributors mistakes will be covered by those that sacrifice and achieve. Unfortunately in the real world (a non-socialist world, at least), eventually when you take too much for too long from those who make sound choices in life, the incentive to continue working hard and "paying in" disappears, and there is either a dramatic fall in the overall self-worth of a populous, or a mass exodus. Either way the outcome is the same: the lazy and selfish reap what they sowed.

So how would I tell a single mother she needs to prioritize her expenditures, to include Medicaid? The same way I would to my son if he was ever dumb enough to put himself in the same boat..."You made continuing truly awful decisions which, as hard as they are to accept at the moment, You have to live with. Hopefully, in time, you will accept these as personal responsibilities, and make better choices in the future".

Daniel Patrick Moynihan foreshadowed the current state of our nation decades ago - "A declining society accepts as normal the bad things that are not normal"

Very well said. I wonder what people like Joe are going to say when this country's economy fails. And at this pace, it will fail. Period. Our culture is so far gone its embarrassing. And it happened in less than 3 generations.

[nsplayr]

I wonder what people like Joe are going to say when this country's economy fails. And at this pace, it will fail. Period. Our culture is so far gone its embarrassing. And it happened in less than 3 generations.

This is the other reason political views like this will never be winners...a persistent belief that the country will fail or is about to fail and that we should all be fearful for our inevitable downfall. Not a great message to sell to an American people who want...you guessed it...hope. The Right used to be able to provide that hope, haven't seen it lately. Rubio was going for a hopeful message in his SOTU response, not one like what you're saying above, I actually applaud that.

[HeloDude]

This is the other reason political views like this will never be winners...

Got it--politics at all costs over principles and a realistic view of what is happening to the country. You are correct, the Dems have this one down.