Debt Limit

[SubGod22]

Open Letter to John Boehner from Andrew Napolitano:

http://www.tenthamendmentcenter.com/...-a-penny-more/

I've always liked the Judge.

[RoyalShock]

Not being a financial guy, what does it really mean that the Soc. Sec. Trust Fund holds 17.9% of U.S. Debt? Is that why Obama chose to use SS in his fear mongering?

On the surface, it looks like proof that program needs to be completely reformed. How the heck did anyone think that buying U.S. debt wouldn't sink the SS trust fund? Is there any real return on that investment after inflation?

[1979Shocker]

Gang of six rolls out debt proposal

By: CNN Congressional Producer Ted Barrett

Washington (CNN) - A bipartisan Senate plan to slash the nation's debt by about $3.7 trillion over the next ten years got a largely positive reception Tuesday when presented to about 50 senators in a closed meeting in the Capitol.

The plan was offered by the so-called Gang of Six debt negotiators. However, with some final details still left to sort out on the long-sought compromise, it was not clear if the proposal would have enough support – or time - to play a role in separate congressional negotiations to increase the debt ceiling by August 2nd.

[Maggie]

The Gang of Six Budget Effort - Problems, Questions and the Potential for Promising Reforms

Paul Ryan's initial analysis of the "Gang of Six" plan.

[Maggie]

Missing the Debt by Yuval Levin

Why I oppose the Gang of Six plan by Keith Hennessey

Both of these are must reads. In National Review Online, Levin writes,

“That debt explosion—which will be at the heart of our politics in the coming years—is different and unprecedented, and we have seen in recent months that the Left is completely unprepared to understand it, and the Right (with much help from the indispensable Paul Ryan) is only starting to grasp it. Simply put, that debate is all about health-care entitlements. And I mean all… Our debt explosion is a health-entitlement explosion, and to address it we have to fix the fundamental structure of our health entitlements. That means above all replacing the fee for service structure of Medicare, which is the chief driver of inefficiency across our health-care system.”

Keith Hennessey weighs in on the so-called Gang of Six plan, providing 17 – yes, 17 –reasons why it is “absolutely terrible fiscal policy.”

Both men back up their judgments with care, precision and measured arguments. But take a look for yourself.

[RoyalShock]

I'm so sick of hearing the can being kicked down the street. And it appears more and more likely that sound isn't going to stop any time soon.

[SubGod22]

Senate Votes to Set Aside 'Cut, Cap and Balance' Plan Proposed by House GOP

The Democratic criticism of the plan, which would require a Balanced Budget Amendment to be voted on after cutting federal spending and capping the amount Congress could increase future expenses without corresponding cuts, infuriated GOP members who say it is exactly what President Obama asked for in a debt deal.

"The Democrat-led Senate's failure to both produce a budget and pass the Cut, Cap, and Balance Act of 2011 underscores the Democrats' irresponsible commitment to the status quo," Sen. John Cornyn, R-Texas, said in a statement after voting for the bill. "While the president and Senator Reid refuse to produce a plan to deal with our debt crisis, Republicans will keep working to meet the nation’s fiscal challenges."

"Senate Democrats have defied the will of the American people who overwhelmingly support real spending cuts, caps on future spending, and a balanced budget to create a better environment for private-sector job growth," House Speaker John Boehner said.

"Republicans are standing with the American people and, as I’ve said before, will not pass a bill that fails to cut spending by more than it increases the debt limit, restrain future spending, or that raises taxes on families and job creators," Boehner, R-Ohio, continued.

I'm not the least bit surprised. I've yet to see the Dems present ANYTHING that could be of any real substance. They only seem to want to raise taxes and keep spending. They don't seem to be willing to commit to real cuts in spending. If the status quo continues, this country is going to face some really hard times. Doing what we should do will be hard enough, waiting for it to kick us in the face is going to be a lot worse.

[Maggie]

I'm so sick of hearing the can being kicked down the street. And it appears more and more likely that sound isn't going to stop any time soon.

The "can" gets kicked "down the road" - :D

Yeah - I share your frustration. For a couple reasons.

[wsushox1]

I am not educated enough on this issue, to take a side, however I think the term "taking sides" is a poor term to use when, from what I have vaguely heard, the countries economic stability is on the line.


I see that alot of people, on this forum, have dissent for what the democrats are proposing.

If you had complete control over the debt limit/deficit reduction, what would you do?

[Maggie]

I am not educated enough on this issue, to take a side, however I think the term "taking sides" is a poor term to use when, from what I have vaguely heard, the countries economic stability is on the line.


I see that alot of people, on this forum, have dissent for what the democrats are proposing.

If you had complete control over the debt limit/deficit reduction, what would you do?

Please tell me what the Democrats have proposed, in writing. I don't mean leaks from these private meetings, I don't mean meaningless rhetoric or meandering speaches - I mean legislation, or suggested legislation that can be properly scored and evaluated on the merits.

Keep in mind the real issue is not this "deadline" in August. The real problem is not default, but the but the overall debt which is fueled by entitlements. If President Obama simply got what he wanted, a clean increase in the debt ceiling, the United States would still be in danger of lossing its AAA rating.

[Ixiah]

On one of the politics sites its pointed out why Obama refuses to have another short-term raise of the debt limit. He wants to kick the can far enough down the road that it will not come up between now and the next presidential election.

[wsushox1]

The best situation is for the Nikkei to lose about 8% tonight then for investors to get uneasy and for the American markets to drop around 10% tomorrow. Then maybe we can see what kind of deal can get done.


Regardless of whether or not the defaulting will have any factual harmful effects or not is irrelevant, if investors and the public believe it will, then it will. Confidence is a finnicky thing.

There is no getting around that.

[SubGod22]

Major cuts in spending have to happen. Otherwise, even with a rise in the limit, we're doing this all over again in the near future. Gov't is way too big and spends way too much. Entitlements have to be dealt with.

[Maggie]

The best situation is for the Nikkei to lose about 8% tonight then for investors to get uneasy and for the American markets to drop around 10% tomorrow. Then maybe we can see what kind of deal can get done.


Regardless of whether or not the defaulting will have any factual harmful effects or not is irrelevant, if investors and the public believe it will, then it will. Confidence is a finnicky thing.

There is no getting around that.

Your premise is wrong. The question is not whether default would have adverse affects. Of course it would – I know of no one that says otherwise. The markets would have reacted long ago if it were the case that default was an issue. But the United States will not default, they will pay their bond holders – and have the money to do so – the August deadline is fictitious.

The reason the United States is getting downgrade warnings is not the threat of default but because of the overall long term fiscal situation. That means these rating agencies (whatever you think about their utility) are actually waiting to see signs that our government is serious about addressing these issues. The same is true of the PIGS in Europe. If the United States loses its AAA status – you will see serious economic consequences.

Now I am not so naive as to expect the federal government to address all these issues during this debt limit debate. And frankly, aside from the Ryan budget (which also has its flaws), none of the current plans “solve” this problem. But the government must show a willingness to address these issues – that means real cuts, not smoke and mirrors – that means real cuts NOW, not promises to do so in the future (through some new committee or whatever).

The debt debate is simply leverage for the GOP to get started down this road – the road to realism. And it will be a thorny venture – for these entitlements are the life blood of progressives/liberals/Democratic politicians.

[RoyalShock]

I actually saw a video last week of Kansas freshman Rep. Tim Huelskamp questioning the chairman of the Social Security Admin. Huelskamp had a graph that showed August revenue projections exceeding budgetary expenses. So there is no danger of default or Soc. Sec. checks not going out in August.

The way it was explained is that revenues start declining in the late months (Nov & Dec), but because numbers are often reported as a monthly average there is the appearance that funds won't be available, triggering additional debt. Bottom line is, the funds are there. Furthermore, as I understand it, debt service, military and entitlements get paid first. Discretionary spending is what might suffer.

Obama's fear-mongering (lying) might have legs, if this discussion were taking place closer to the holidays.