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Old 07-14-2011, 02:36 PM   #21
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Originally Posted by M Paquette View Post
OK. So our Congress 'grows a spine' and doesn't raise the debt limit. What next?

A study by the Bipartisan Policy Center (PDF) shows August 2nd as the 'out of cash' point, just like Treasury reports. Cash flows for August 3-31 are as follows:

Inflow: 172,400 million dollars
Outflow: 306,713 million dollars
Deficit: 134,312 million dollars

I would point out that the very same Congress that you want to immediately stop borrowing also is the one that authorized the spending (Outflow) and the taxation and fees (Inflow) that fail to match up.

Good data. It'd be interesting to see how people balance the non-borrowing budget given the real, stark, numbers. Of course, the zeitgeist is to blame the poor for all our ills so maybe it wouldn't be all that interesting.
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Old 07-14-2011, 02:43 PM   #22
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The business community -who has much to lose in case of a default or quasi-default by the US government- is putting pressure on Capitol Hill to resolve this issue ASAP. I think they will get their way. Since a bipartisan agreement seems out of reach, I think the can will be kicked in extremis down the road until after the next election cycle using either the McConnell proposal or the 14th amendment provision.
For Example Hello Eric this is Llyod, Vikram, John Mack, Brian, Jamie etc. Are you stupid and crazy, fix this or we defund republican campaigns....
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Old 07-14-2011, 04:41 PM   #23
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So if the debt ceiling doesn't get raised, who gets to decide what gets funded and what doesn't?

I'm assuming that it should be Congress, since they are the ultimate spending authority, but much of what I've heard is suggesting it would be the Executive branch.
In this case, while Congress has set the budget, expenses, and revenue, since Congress has seen fit to allocate expenses in excess of revenue and borrowing ability, it falls to the Secretary of the Treasury in the absence of any legislative guidance to try to prioritize expenses to be paid.

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I would expect that whoever has that power would be tempted to use it in pretty partisan ways.

"I think we'll fund the SS checks for everyone in districts controlled by my party"

It would be pretty easy to balance the budget that way
That would require agreement by the Trustees of the Old-age, Survivors, and Disability Insurance Trusts:

NamePosition
Timothy F. GeithnerSecretary of the Treasury, and Managing Trustee of the Trust Funds
Hilda L. Solisz Secretary of Labor, and Trustee
Kathleen Sebelius Secretary of Health and Human Services, and Trustee
Michael J. AstrueCommissioner of Social Security, and Trustee
Charles P. Blahous IIITrustee
Robert D. ReischauerTrustee
Carolyn W. ColvinDeputy Commissioner, of Social Security, and Secretary, Board of Trustees

Write to them with your suggestions. These are also the people who would have to agree to liquidate the Treasury Bonds within the Trust to cover the entire cost of the various SS checks, as suggested by some, rather than just covering any shortfall between payroll revenues and expenses. (Oh, and don't forget that liquidating the bonds requires cash to pay them off. That becomes an expense on the Treasury side of the ledger. Liquidity crises, even artificial ones, suck...)
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Old 07-14-2011, 05:15 PM   #24
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If a deal isn't reached, make sure Congress is on the "do not pay list".
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Old 07-14-2011, 06:22 PM   #25
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1) Therefore my number one prediction (70%) is that we will see some sort of McConnell approach that gives the President full authority to raise the limit but preserves the right for the GOP to vote against what they just authorized him to do.

On the other hand, there is enough Tea Party skepticism and anger that it may be impossible to work the above deal through the House and we will actually reach an impasse.
I think this is the most likely scenario. As I understand it, it will take a two-thirds vote by the Congress to override the President when he lifts the debt-limit, so the GOP won't be able to over-ride him by itself.

Actually, IMO, McConnell's proposal is quite clever in that it is a way to avoid default without actually forcing tea party members of Congress to vote to increase the debt limit.
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Old 07-14-2011, 10:48 PM   #26
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The IMF wants taxes to be raised by 35% and entitlements cut by 35%...
To Contain Future Budget, US Must Raise Taxes By 35%, Cut Entitlements 35% - Real Time Economics - WSJ

It is going to be ugly.
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Old 07-14-2011, 10:58 PM   #27
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This is all caused by illegal aliens taking American jobs. And drugs. And Caylee Anthony. If her mom was in jail with the druggies and the illegal aliens, none of this would be happening. Oh yeah, I forgot same sex marriage. That's in there too, somewhere.
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Old 07-14-2011, 11:02 PM   #28
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Are you being serious ?
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This is all caused by illegal aliens taking American jobs. And drugs. And Caylee Anthony. If her mom was in jail with the druggies and the illegal aliens, none of this would be happening. Oh yeah, I forgot same sex marriage. That's in there too, somewhere.
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Old 07-14-2011, 11:03 PM   #29
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Why start now?

(see my sig line).

Mainly I'm trying to point out that this is all political and media driven hype. There's a real problem here, but I isn't being addressed. Someone on this form (or maybe the Bogleheads, I get confused) has a sig of the Charles Dickens quote -
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"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Until we realize the truth of this and legislate accordingly, we're all doomed.
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Old 07-14-2011, 11:13 PM   #30
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The IMF wants taxes to be raised by 35% and entitlements cut by 35%...
To Contain Future Budget, US Must Raise Taxes By 35%, Cut Entitlements 35% - Real Time Economics - WSJ

It is going to be ugly.
Interesting - I was pondering these numbers while mowing the grass today. Earlier we said we spend ~ 1.6x what we take in. So, any way you slice it to balance that, seems like we'd have a reduction in our net standard of living of approximately that ratio.

While it would be relatively ugly, most of us would still be far and away better off than most people in the world. We'd get by.


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The IMF paper, written by Nicoletta Batini, Giovanni Callegari and Julia Guerreiro, shows that if the government doesn’t cut entitlements, it will have to raise taxes by 88% to pay for their costs.
With the top 10% of earners paying 70% of the FIT ( ~ 18% average tax rate), there doesn't seem to be enough rich people to tax to hit those kinds of numbers. If Feds are taking 18% now, state and property tax a sales tax are taking some more, how much is left to tax? Seems they would need to go deeper down the income scale to hit the numbers?


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Old 07-15-2011, 06:28 AM   #31
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This is all caused by illegal aliens taking American jobs. And drugs. And Caylee Anthony. If her mom was in jail with the druggies and the illegal aliens, none of this would be happening. Oh yeah, I forgot same sex marriage. That's in there too, somewhere.
I blame Lindsay Lohan.
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Old 07-15-2011, 06:39 AM   #32
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Old 07-15-2011, 08:26 AM   #33
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It's been a long time coming. The slide started with Elvis's hips.
Our country has been stuck in reverse since the invention of the horseless carriage.
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Old 07-15-2011, 08:35 AM   #34
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The problem with this is that everyone paying attention is going to consider the Republicans who use this tactic pretty weeny.

The Tea Party members are not going to be fooled, and everyone else is going to think that the Republicans feel that political games are more important than doing what is right for the country.

Of course, the very simple-minded might be taken in by this tactic. If people buy this, I'm concerned that we have become too dumb as a people to self-govern.


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I think this is the most likely scenario. As I understand it, it will take a two-thirds vote by the Congress to override the President when he lifts the debt-limit, so the GOP won't be able to over-ride him by itself.

Actually, IMO, McConnell's proposal is quite clever in that it is a way to avoid default without actually forcing tea party members of Congress to vote to increase the debt limit.
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Old 07-15-2011, 08:59 AM   #35
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Prediction on debt crisis: it will get solved.

For many tens of years there have been grossly overpaid self interested politicos creating the the crisis.

There still are grossly overpaid self interested, politicos legends in their own minds, who will solve the problem. No one may like the outcome or the method they use to solve it.

This blowhard mess reminds me of the time I left my car's headlights on in the parking lot. A kind fellow came and reminded me. I said to my co-w*rker, an ex car salesman, I have to go out and turn off the headlights, they will not go out by themselves. Thinking no auto shutoff.

He said: yes they will. Ah, right he was.

Moral of the story, all problems get solved, we just may not care for the outcome, but the problem will get solved.

Rome was a mighty powerful and feared nation. Once. So was the USA.
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Old 07-15-2011, 09:32 AM   #36
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The problem with this is that everyone paying attention is going to consider the Republicans who use this tactic pretty weeny.

The Tea Party members are not going to be fooled, and everyone else is going to think that the Republicans feel that political games are more important than doing what is right for the country.

Of course, the very simple-minded might be taken in by this tactic. If people buy this, I'm concerned that we have become too dumb as a people to self-govern.
It should be obvious that the two sides are not going to come to any meaningful agreement on spending reductions/revenue increases in the next two weeks. The default issue needs to be decoupled from the longer term debt reduction issue, as the consequences of a default (or anything that looks like a default, e.g. not sending out SS checks) could be catastrophic. Let the 2012 elections decide whether the people want spending cuts (including entitlements) or revenue increases (including tax increases on all).
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Old 07-15-2011, 09:56 AM   #37
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The Republicans have always had the option to decouple raising the debt ceiling from getting an agreement.

Using political smoke and mirrors to try to pretend that they couldn't stop Obama from raising it seems pretty weak. I just don't think anyone is going to buy it. Tea Party people are going to try to get any Republican who agrees to this primaried in the next election. Moderates will not be impressed by the complete abdication of their responsibility either.

Ultimately, if the Republicans do this deal, I think it is worse for them than if they just took whatever the President has been offering and cleanly raised the debt ceiling. They'd still lose Tea Party support, but they might pick up a few moderates who saw that they bargained hard to lower spending, got somewhat less than they would like, but were not going to gamble with default.

Ultimately, the Tea Party folks aren't going to be happy unless the Republicans actually drive us into default. At some point, the Republicans are going to have to tell the Tea Party folks that they have lost their minds.

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It should be obvious that the two sides are not going to come to any meaningful agreement on spending reductions/revenue increases in the next two weeks. The default issue needs to be decoupled from the longer term debt reduction issue, as the consequences of a default (or anything that looks like a default, e.g. not sending out SS checks) could be catastrophic. Let the 2012 elections decide whether the people want spending cuts (including entitlements) or revenue increases (including tax increases on all).
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Old 07-15-2011, 10:29 AM   #38
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