Honestly, what's the point of having a debt ceiling?
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bornnraisedoffCMR
Members Posts: 1,073 ✭✭
Senate Democrats Propose $1.9T Increase to U.S. Debt Limit
Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.
WASHINGTON -- Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.
The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats who, as the party in power, hold the responsibility for passing the legislation.
The record increase in the so-called debt limit is required because the budget deficit has spiraled out of control in the wake of a recession that cut tax revenues, the Wall Street bailout, and increased spending by the Democratic-controlled Congress. Last year's deficit hit a phenomenal $1.4 trillion, and the current year's deficit promises to be as high or higher.
Congress has never failed to increase the borrowing limit, but it will take 60 votes to pass the legislation under an agreement by top Senate leaders.
Getting 60 votes became more complicated after Sen.-elect Scott Brown's victory Tuesday in Massachusetts. Democrats will shortly have 59 Senate seats and will need at least one Republican to pass the legislation.
"We have gone to the restaurant. We have eaten the meal. Now the only question is whether we will pay the check," said Finance Committee Chairman Max Baucus, D-Mont. "We simply must do so."
The White House said the increase "is critically important to make sure that financing of federal government operations can continue without interruption and that the creditworthiness of the United States is not called into question," according to an official policy statement.
Less than a decade ago, $1.9 trillion would have been enough to finance the operations and programs of the federal government for an entire year.
Republican Sen. John Thune of South Dakota immediately offered an amendment to end the bank and Wall Street bailout, officially known as the Troubled Asset Relief Program, or TARP. Thune would prohibit further expenditure TARP funds and would require that all funds paid back be used to retire debt.
I mean, what's the point. The purpose of a debt ceiling is that you dont run up deficits past a certain point, if you do, you have to make cuts to pay for what you want to pay. Kinda like everyone runs their household budget, you make 3000 a month, and you have a credit card with a 1000 dollar limit, if you go over your income, u use your credit card, but you cant go over the limit. Imagine if ? can just raise the limit whenever you want.
The thing is, you gotta pay that ? back, just like we will have to pay back this 14 trillion, only thing is we cant afford it, I dont care who you tax, we all are gonna feel this. We wont even be able to pay the interest on that ? .
Obama ? up.
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bornnraisedoffCMR wrote: »I mean, what's the point. The purpose of a debt ceiling is that you dont run up deficits past a certain point, if you do, you have to make cuts to pay for what you want to pay. Kinda like everyone runs their household budget, you make 3000 a month, and you have a credit card with a 1000 dollar limit, if you go over your income, u use your credit card, but you cant go over the limit. Imagine if ? can just raise the limit whenever you want.
The thing is, you gotta pay that ? back, just like we will have to pay back this 14 trillion, only thing is we cant afford it, I dont care who you tax, we all are gonna feel this. We wont even be able to pay the interest on that ? .
Obama ? up.
If you have good credit this is somewhat untrue. Your credit card may have a limit , but once you approach it depending on your company you may recieve a call asking you if you would like to apply for a higher spending limit. Sounds crazy I know but it happens. Anyhow, I wish at this point Obama would have let wall street just dump itself in the ocean then what would you be saying then? Still blaming him for fukin sh*t up I'm sure. -
perspective@100 wrote: »If you have good credit this is somewhat untrue. Your credit card may have a limit , but once you approach it depending on your company you may recieve a call asking you if you would like to apply for a higher spending limit. Sounds crazy I know but it happens. Anyhow, I wish at this point Obama would have let wall street just dump itself in the ocean then what would you be saying then? Still blaming him for fukin sh*t up I'm sure.
No, I've had this done before back when I was running up my credit cards. It wasnt smart then, and it isnt smart for the govt to be doing it on our tab. -
Thats the problem, we can just raise the limit whenever. And nobody is thinking about paying any of this ? back anytime soon, Repubs or Dems.
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bornnraisedoffCMR wrote: »No, I've had this done before back when I was running up my credit cards. It wasnt smart then, and it isnt smart for the govt to be doing it on our tab.
So you figure we are at risk of going bankrupt? (By we I mean the fed gov) If so are we going to be able to auction off some states or what? -
perspective@100 wrote: »So you figure we are at risk of going bankrupt? (By we I mean the fed gov) If so are we going to be able to auction off some states or what?
Well be basically have 2 choices, both bad but will have to pick the lesser of the 2 bads.
Option 1: Negotiate with our creditors (China, Saudi Arabia, Japan, etc) and pretty much tell them hey, we are going to default on all the money you loaned us so lets negotiate a payment plan, we will pay you back 60 cent on the dollar. Will it hurt the dollar? Sure, but it will be manageable. Our credit rating will be ruined but, atleast will be able to rebuild our economy to a fundamentally sound level...where we are not dependent on other nations and have more of a consume/production balance. But this will force the government to cut spending drastically..Im talking eliminating entire departments. It will be a tough road but its the best option.
Option 2: Put our middle fingers in the air and say ? it. Put the printing presses into overdrive and pay our creditors back with worthless fiat currency that will be declining in value on a daily basis. This is be the worst obviously because this will lead to hyperinflation and what costs 5 dollars today will cost 500,000 dollars then. Unemployment out the ass, looting, riots, etc. And the govt will most likely implement some sort of martial law and draconian tax laws taking everybodies money, rationing food, price controls, etc. Im talking ? will be horrible, all I can say is get the hell outta this country if this happens. -
bornnraisedoffCMR wrote: »Well be basically have 2 choices, both bad but will have to pick the lesser of the 2 bads.
Option 1: Negotiate with our creditors (China, Saudi Arabia, Japan, etc) and pretty much tell them hey, we are going to default on all the money you loaned us so lets negotiate a payment plan, we will pay you back 60 cent on the dollar. Will it hurt the dollar? Sure, but it will be manageable. Our credit rating will be ruined but, atleast will be able to rebuild our economy to a fundamentally sound level...where we are not dependent on other nations and have more of a consume/production balance. But this will force the government to cut spending drastically..Im talking eliminating entire departments. It will be a tough road but its the best option.
Option 2: Put our middle fingers in the air and say ? it. Put the printing presses into overdrive and pay our creditors back with worthless fiat currency that will be declining in value on a daily basis. This is be the worst obviously because this will lead to hyperinflation and what costs 5 dollars today will cost 500,000 dollars then. Unemployment out the ass, looting, riots, etc. And the govt will most likely implement some sort of martial law and draconian tax laws taking everybodies money, rationing food, price controls, etc. Im talking ? will be horrible, all I can say is get the hell outta this country if this happens.
With all that said doesn't it just seem like the Government would preferably go with option 2?
I say this because when you said they would say "? it" I interpreted that as "? the people",
and as far as government is concerned that sounds about right.
SCARY -
perspective@100 wrote: »With all that said doesn't it just seem like the Government would preferably go with option 2?
I say this because when you said they would say "? it" I interpreted that as "? the people",
and as far as government is concerned that sounds about right.
SCARY
Correctamondo.
The politicians are going to do whatever can keep them in power. For them to do the right thing, they would have to say "? our cushy lifetime jobs, lets fix this economy" But there arent many politicians willing to do what's needed. Maybe if Peter Schiff gets elected to the Senate we might have a chance.
