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04-11-2011, 02:40 PM   #1
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Round 2: Debt Ceiling

So now that the FY 2011 budget deal has been struck, the new crisis du jour will of course be the debt ceiling, followed by the FY 2012 budget.

How deeply do you think we can get the cuts to go in exchange for raising the debt ceiling? Is there an alternative to raising it such as cutting spending deeply enough that we don't borrow $0.40 of every $1 the government spends?

If we do default, does that let the US go and renegotiate all of its contracts? Sorry Haliburton but we won't be paying $1000 for toilet seats anymore.

04-11-2011, 04:14 PM   #2
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Only if we want to default for some "stupid" reason can the US default on it's debt...... Your not getting it yet.
04-11-2011, 07:17 PM   #3
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QuoteQuote:
It is an obvious fact that the U.S. government’s liability is unlike those of the private sector, because only the government pays by using its own liability and there is no limit to which it can issue those. This has been an important point of departure for MMT, but it has been recognized by some of your saltwater colleagues as well. And yet, they have not been able to provide the intellectual leadership to move us forward.

Let’s take Mr. Woodford, for example — a saltwater star economist, who developed the Fiscal Theory of the Price Level (FTPL), which I must admit I have criticized considerably. Problems with FTPL and DSGE models, notwithstanding, Woodford has recognized the obvious fact that sovereign currency nations cannot default on their obligations:
Pavlina Tcherneva: 'Modern Monetary Theory and Mr. Paul Krugman: a way forward' | MyFDL
QuoteQuote:
Mr. Krugman, you have also made this claim, namely that the government will eventually run into difficulty meeting its long-term obligations. My question is, if the Fed can clear any tax cut check that we get in the mail today, it can certainly clear the social security checks we will get in the future. If the government faced no technical limits to buying toxic financial assets, it clearly can pay for grandma’s social security today and mine in the future. More than that, the government can buy the labor of the unemployed today and put them to work on useful projects. The important question is what can we buy with these checks? MMT has always argued that we have to get past the illusion of financial constraints to start asking the meaningful questions of what the real resource constraints of our economy are and how to employ the idle resources to overcome these constraints in order to provide for the young, poor, unemployed and elderly and to increase the standard of living for all.
04-11-2011, 09:38 PM   #4
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This is the extent of the tactical advantage the Tea Party has with this issue and why the democrats are going to be demolished without quarter...

There is a very near deadline for passing something so there is no chance for a protracted process with town halls and protests like we saw with the health insurance reform law.

There are 3 basic outcomes:
1. Pass a "clean bill" like the white house wants and has a zero percent chance of happening.

2. Pass a "dirty bill" which is the most likely outcome. This bill would include some combination of deep current year spending cuts, deep next year spending cuts as deep as potentially balanced budget, targeted cuts at culture war crown jewels, and putting a balanced budget amendment on the ballot in 2012.

3. Do nothing which is very unlikely because the democrats will pass even the dirtiest of bills to avoid default. This is essentially a murder-suicide pact but the teabaggers are crazy enough that they might go this route if all their demands are not met.

Lets work through the 2012 outcome for teabagger going backwards from on this list.

In the case of default money is worthless, but they have already own an oil company or they bought a bunch of gold from Glenn and Rush so they are okay. They might get voted out of office but they don't really care cuz they had only been there a couple of years and they still remember how to do real work. For simplicities sake, assume that every incumbent gets tossed out, that means a new republican president, republican senate, and a democratic house; overall a net gain for republicans. The US Government's cost of borrowing skyrockets and the federal government is forced to make the drastic cuts the teabaggers wanted in the first place.

In the case of a dirty bill the republicans will be able to tout it as a huge success in their campaigns while the democrats will be shamed for hurting their base of constituents so much, probably getting kicked off the ticket by a primary challenger. Obama might be able to survive and many of the incumbents will be able to keep their job but overall, republicans will fair better than democrats (especially with freshly gerrymandered districts). If a balanced budget amendment is included there will be 100% teabagger participation in the 2012 election tilting the playing field to benefit a republican challenger. Taking a bill with deep spending cuts to balance this year or next year's budget would be mean that the government is much smaller for decades to come. Taking a bill which cuts off the liberal crown jewels is suicidal for democrats but it could be the only way they could pass something by attracting traditional culture warrior republican votes and make an end run around the tea party.

A clean bill would be an absolute victory for democrats but there is no way it could ever pass the house. Democrats will have to make a huge sacrifice to pass any bill.

04-11-2011, 11:27 PM   #5
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QuoteOriginally posted by mikemike Quote
liberal crown jewels
Who came up with that term?
Whats it really supposed to mean?
Just another in a long line of conservative buzz words?
You dropped the ball a while ago in the GE thread.
You should also be asking yourself this.
What is the real cost of 2 protracted military occupations?
Both were entered with no clear objectives.
Both are going on now for 10 years.
Do you think this is cheap?
This is where tax value has gone in this country.
Couple that with wallstreet unleashed and we are where we are now.
The price of gas has gone up, not because of supply and demand, but because various speculators are making it so out fear that something "might" happen to supply.
This is silly and fool hardy, in this economic climate.
Without comprehensive reform, across the board, continuing to cut domestic spending will not in itself bring the recovery you seek.
If you want ethics?------------And this is what we need, if we can ever expect it to get more honest.
You have to apply them all.
04-12-2011, 01:20 AM   #6
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Running the government with debt in a recession is a sensible thing to do: severe cuts to government spending or raising taxes in the middle of a recession are likely to make it worse. However, the deficit is there because of extensive tax cuts, which, I seem to recall, were supposed to pay for themselves with their positive effects on the economy, but have apparently failed to do so (or at least the money has failed to end in the government coffers). Historically the US has done quite well when taxes were higher, and, in particular, the marginal tax rate was much higher (that is, tax progression was much steeper), so the obvious thing is to roll back the tax cuts.

Of course, an alternative for raising taxes is cutting expenses, but it is hard to see that happening in a way that would make a substantial difference, rather, an aging population is likely to push expenses up. Making more efficient use of government funds is always a good idea; one reason of why government spending is likely to be "inefficient" on the whole is that there has to be a generous ROI for all the money that goes in as campaign contributions and such, otherwise the corporate donors would not make the investment. For the same reason, the ROI must come at the expense of someone else than the donor, of course. One way this can happen is through government contracts.

Last edited by jolepp; 04-12-2011 at 09:43 AM.
04-12-2011, 07:03 AM   #7
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SOME get it.........

QuoteQuote:
The unemployment rate, which peaked at 7.7 percent after the last recession, could have reached 9 percent if a balanced budget had been required, Government and private economists estimate. And a laid-off worker who collected $12,000 in unemployment pay might have received only $7,000 or so.

Such estimates of the potential economic impact are not emphasized very much, however, in the debate over the balanced budget amendment. So far, the battle has focused on its value as a tool to shrink government or to discipline spending. But if the amendment is enacted, the side effect would be huge: a system that has softened recessions since the 1930's would be dismantled.

"There are risks associated with a balanced budget, and I don't think anyone should deny them," said William Hoagland, the Republican staff director for the Senate Budget Committee. "Nevertheless, the debate on the floor has been dominated by what we must do to get the budget in balance, not what the risks of a balanced budget amendment might be."
The Pitfalls of a Balanced Budget - An Analysis; Economic Analysis - NYTimes.com

04-12-2011, 09:01 AM   #8
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The saddest part about all of this is the repub/baggers willingness to throw most of the country under the bus.
04-12-2011, 09:05 AM   #9
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QuoteOriginally posted by jolepp Quote
Running the government with debt in a recession is a sensible thing to do: severe cuts to govenment speding or raising taxes in the middle of a recession are likely to make it worse. However, the deficit is there because of extensive tax cuts, which, I seem to recall, were supposed to pay for themselves with their positive effects on the economy, but have apparently failed to do so (or at least the money has failed to end in the government coffers). Historically the US has done quite well when taxes were higher, and, in particular, the marginal tax rate was much higher (that is, tax progression was much steeper), so the obvious thing is to roll back the tax cuts.
The classic government action post-Keynes had been: use good economic times to trim spending and defecits, to give yourself a cushion for the inevitable bad economic times. The Republicans, God bless them, turned this one around: use good times to trim revenues and increase spending, and then use the extra defecit spending in bad times to attack government spending and to trim revenues some more. The explicit intent has been to ratchet down government services at any opportunity.
04-12-2011, 09:16 AM   #10
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They only ratchet down services to the commons.
Services to the corporates are fortified.
04-12-2011, 09:31 AM   #11
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Just for fun, needss updating.

QuoteQuote:
"21 Rules For Being A Good Republican"

1) You have to believe that the nation's 8-year unprecedented prosperity was
due to the work of Ronald Reagan and George Bush, but that today's gas prices
are all Clinton's fault.

2) You have to believe that those privileged from birth achieve success all
on their own.

3) You have to be against government programs, but expect your Social
Security checks on time.

4) You have to believe that government should stay out of people's lives, yet
you want government to regulate only opposite-gender marriages, what a woman
does with her uterus, and what your official language should be.

5) You have to believe that pollution is OK so long as it makes a profit.

6) You have to believe in prayer in schools, as long as you don't pray to
Allah or Buddha or the Goddess.

7) You have to believe that only your own teenagers are still virgins.

8) You have to believe that a woman cannot be trusted with decisions about
her own body, but that large multi-national corporations should have no
regulation or interference whatsoever.

9) You love Jesus and Jesus loves you and, by the way, Jesus shares your
hatred of AIDS victims, homosexuals, and Bill and Hillary Clinton.

10) You have to believe that society is color-blind and growing up black in
America doesn't diminish your opportunities, but you wouldn't vote for a
black candidate for president.

11) You have to believe that it was great to allow Ken Starr to spend $90
million dollars to attack Clinton because no other U.S. presidents have been
unfaithful to their wives.

12) You have to believe that a waiting period for purchasing a handgun is bad
because quick access to a new firearm is an important concern for all
Americans.

13) You have to believe it is wise to keep condoms out of schools, because we
all know if teenagers don't have condoms they won't have sex.

14) You have to believe that the ACLU is bad because they defend the
Constitution, while the NRA is good because they defend the Constitution.

15) You have to believe that socialism hasn't worked anywhere, and that
Europe doesn't exist.

16) You have to believe the AIDS virus is not important enough to deserve
federal funding proportionate to the resulting death rate and that the public
doesn't need to be educated about it, because if we ignore it, it will go away.

17) You have to believe that biology teachers are corrupting the morals of
6th graders if they teach them the basics of human sexuality, but the Bible,
which is full of sex and violence, is good reading.

18) You have to believe that Chinese communist missiles have killed more
Americans than handguns, alcohol, and tobacco.

19) You have to believe that even though governments have supported the arts
for 5000 years and that most of the great works of Renaissance art were paid
for by governments, our government should shun any such support. After all,
the rich can afford to buy their own and the poor don't need any.

20) You have to believe that the lumber from the last one percent of old
growth U.S. forests is well worth the destruction of those forests and the
extinction of the several species of plants and animals in them because it
allows logging companies to add to their profit margin.

21) You have to believe that we should forgive and pray for Newt Gingrich,
Henry Hyde, and Bob Livingston for their marital infidelities, but that
bastard Clinton should have been impeached.
The Reich-Wing Republican Joke Page
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04-12-2011, 10:42 PM   #12
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They left out an important one!
When all else fails, blame Carter.
04-14-2011, 09:50 AM   #13
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How many times did the GOP vote to raise the debt limits under Mr. Bush?
Answer honestly please.
04-14-2011, 10:24 AM   #14
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QuoteOriginally posted by shooz Quote
How many times did the GOP vote to raise the debt limits under Mr. Bush?
Answer honestly please.
Doesn't matter really. In general the minority party votes against.

Better to talk of how often Biden falls asleep during an Obamarama campaign speech. Or why to search a 9 year old girl in the airport.
04-14-2011, 10:25 AM   #15
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That wasn't honest John.
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