12 comments on “Raising the Roof

  1. I think what pisses me off most about this discussion is the default conversation. Why or how the hell could that happen? The federal government has substantial cash flow from tax collections. Interest on the federal debt is about 10% of the federal budget, so why would the Treasury ever be late paying interest on US debt securities? Maturing securities could be rolled over without a debt limit increase. There is no doubt that not raising the debt limit will cause real chaos, because one third of the F2011 budget is planned to be funded by new debt. However, there is no way the President and Secretary of the Treasury would ever let the US default on a debt obligation. It will not happen.

    • Hey J. Alex,
      Your absolutely correct. There is NO reason we should go into default under any circumstance. This is nothing but a scare tactic. As far as the interest on our debt being 10%. I found several numbers and I know it changes day to day depending on the T-bill rates. I find 10% to be a bit high though, so for the purpose of this piece I chose the lowest number I found. Thanks for your comments.

    • Side note: I don’t know if I’d said this before, but I love your writing. Very expressive and passionate, with solid research to back up your claims. It’s a shame people like you are being pushed aside on TV shows for babbling heads morons we see on CNN, Fox News, MSNBC, etc.

      • Thanx J.Alex,
        Since I live and breath in the middle ground, I sometimes find myself attacked from both sides. It’s very nice to hear I’m not doing so bad occasionally.

  2. Scary stuff, H.C. If we find ourselves defaulting in any way, it will send shockwaves and jitters through markets all across the globe, even IF we can pay down our debt. The signal will be one of instability which is a bad thing, since that’s exactly what credit markets focus on.

    • It’s very scary. I was talking to one of our top economists here at my university. The subject was; where to hide our retirement money during the inevitable (his word) collapse of our economy. The feeling in the general market is; if we can’t deal with this relatively small problem, how will we deal with the major issues? I wouldn’t worry much about default, In fact, I believe we will have a deal of some sort even if it comes a few days after the deadline. The signal we’re sending IS far more scary. We’re talking about (Republican plan) cutting 85 billion a year out of a 1.4 trillion deficit? That’s like slowing down to 95 mph from 100mph before we hit the bridge.

  3. We had a 5 trillion debt when Clinton achieved a (somewhat disputed) surplus.

    By the end of Bush II, The Mistake, we had a 10 trillion deficit and worse, we had an attitude from the Republicans that if we have a terrorist attack – that our response to it – can be more debt and we don’t have to pay for it.

    Why…those fools even cut taxes AFTER they decided to have two wars and Medicare Part D.

    And NOW… NOW.. that we have the debt … we have all this blather about a “spending” problem without, as far as I can tell, a single list of 1.5 trillion in cuts from ANY Republican ….

    So the Republicans ran up the debt and now they say we have a “spending” problem.

    Well…. DUH… take a look at the DOD, Afghanistan, Iraq, Homeland Security, and Medicare Part D INCREASES in the budget.

    These realities do not seem to bother these guys.

    We OWE 14+ trillion and we ARE ADDING TO IT at the rate of 1.5 trillion a year – and the BEST these guys can come up with is to cut entitlements which are about 1/3 of the deficit.

    take note – check this chart:

    We currently take in barely 1.1 trillion in income taxes to fund the govt.

    We ARE SPENDING 1.5 trillion MORE than that.

    Of all the fiery rhetoric from Washington – Show me ONE SINGLE PLAN from the Republicans that address the 1.5 trillion deficit that they had a large part in creating.

    • Hi Veritas,
      Your reciting the Dem talking points very well, and there’s nothing inaccurate about them. Bush was a huge spender himself and deserves a large part of the blame. However, stupidity does not justify more stupidity. As bad as Bush was, the debt to GDP ratio was roughly 70% when Bush left and is now 98%. The house is mortgaged to the hilt. the problem is much worse now and that is the difference. To use one of the Reps talking points, the Dems really don’t have a outlined specific plan at all. The reason is; they know entitlements must be cut and they would MUCH rather have it be the Reps or better yet, the Tea Party do the cutting. As far as the entitlements only being 1/3 of the deficit (I noticed you chose “deficit” and not “budget”), I’m not arguing how the borrowing is outlaid since money is fungible and can be moved around. Entitlements do make up the majority of the budget and are the fastest growing part. It’s impossible to not address that. I’m not much into the blame game as both sides have been shoveling money to their constituents for some time now. In my view, both the spending and the tax cuts are to blame.

  4. One of my many frustrations with Congress is that its members don’t seem to understand that compromise is a critical component of their jobs. However, unlike the rest of us, who compromise daily in our professional and personal lives, it seems to elude our elected representatives.

    • Hey Teachermrw,
      Well said! Can we get you to run for Congress with, say, 534 like-minded people? It’s unfortunate that both parties have created such a toxic political environment that any compromise is viewed as capitulation. Maybe some of that is our own fault. Things have gotten so vicious.

  5. Nice post, Hip! Very “Moderate Centrist” of you. You covered all the angles with this one, including my belief that taxation – while noble and “fair” for people who can more than afford it – could have far reaching consequeces. Nicely done, bro.

    I wonder what you think of all the 14th amendment talk running around (for those who don’t know, there is vague language in the 14th amendment which may or may not allow the President to skip talks and raise the debt ceiling himself). If all else fails, I suspect Obama will go gangster and raise the ceiling on his own, flexing little used Presidential authority ala Bush. But I can foresee some political ramifications, especially if he does so with out cuts in spending (to satisfying Teabaggers and Neocons) or a hike in taxes (to satisfy Libs). This same scenario could play itself out again a few months down the road, probably still affect the country’s bond rating and play directly into the Republican game plan.

    Lots of politics to go around.

  6. Hey Dre,
    While I believe that President Obama could raise the debt ceiling through the 14th amendment, he would be ill-advised to do so. It would be seen as an attempt to usurp the authority and constitutional powers of Congress both by Congress and the general public. It would also make him look bad if it was later found by SCOTUS to be unconstitutional, which, considering the make-up, it probably would. He most certainly COULD do it though, as he could by executive authority. It’s kind of like the 4th amendment and the way it’s violated by drug enforcement for seizure of property. For years they violated the 4th amendmend until the SCOTUS declared that it was unconstitutional (They now “arrest” property instead of “seize”, sigh.) Short answer; It’s not unconstitutional until it’s declared unconstitutional. What I find scary is that we needed more taxes and strong cuts both, and it looks like we’ll get neither. Normal day in Congress, kick the can further down the road.

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