US Politics - Super-Congress Edition

[Shryke]

Shryke, I actually agree with you that it is basically an attempt to pass the buck, although whatever it does must still be voted on and approved by both chambers. And the reality is that the so-called fast tracking could be ignored if a majority wanted to ignore it.

The problem is that Republicans are insisting on hard spending cuts as a price for tax hikes, and Democrats are unwilling to cut entitlements or provide legislative triggers to force future cuts. It's simply a disagreement as to policy that can't really be resolved before the next election. So, we get this stop-gap/gimmick instead.

Nothing malevolent or bad about it, really. Sometimes, there are honest disagreements to which no negotiated solution is possible.

It doesn't have to be. There is absolutely no reason to do this attached to the debt ceiling raise ... other then to hold the US/world economy hostage to get what you want (despite controlling only 1 house of congress).

And now that it's time to push the button, they have suddenly realised that blowing themselves and everyone else up isn't what they want to do. (Although they'd already said this before, so it should be no surprise). So now they are desperately trying to avoid the consequences of their own actions, while still reaping the political gain from them. It's disgusting.

Sure there are disagreements over policy and cuts and so on, but those aren't have to be resolved attached to this. Not at all. There is no connection between the 2 that the GOP didn't create.

The GOP has just decided to connect the 2 for naked political gain and is now trying to avoid responsibility for doing so.

[Shryke]

Obama's primary stipulation is a debt limit increase beyond Nov. 2012, that's an arbitrary political timeframe.

It's political, but it's in no way arbitrary.

[ThinkerX]

At this point, even if a deal is patched together today or tomorrow or Tuesday, is there enough time to run the legislation through even if it is fast tracked?

I also find myself wondering if it has dawned on the various congress critters yet that they stand a good chance of being actually, physically lynched should no deal be reached and the checks not go out.

[Shryke]

At this point, even if a deal is patched together today or tomorrow or Tuesday, is there enough time to run the legislation through even if it is fast tracked?

I also find myself wondering if it has dawned on the various congress critters yet that they stand a good chance of being actually, physically lynched should no deal be reached and the checks not go out.

The last date they gave was Friday. Apparently now it's Wednesday?

Anyway, it'll be interesting to see how the markets react today/tommorow. Asian markets open soon, don't they?

[awesome possum]

Nothing malevolent or bad about it, really. Sometimes, there are honest disagreements to which no negotiated solution is possible.

The GOP in the House has acted completely malevolent and dishonestly.

For someone to argue that anything they've done is in good faith shows a complete disconnect from reality.

[mcbigski]

When nobody wants to buy the debt anymore.

Same way as the credit crunch impaired the economy: if you rely on debt for operations (particularly during bad times), limiting the amount of debt means you're screwed.

Hard to see that happening. To make serious inroads into the debt, Congress would either have to raise taxes or make substantial cuts to discretionary spending and either Social Security or Medicare. Both paths cost jobs and neither is politically tenable.

Do we at least agree that continuing to increase the debt isn't a long term solution? The more debt you have, the worse credit risk you become, and the higher your interest rates and debt service costs will become. If you're relying on debt to fund operations, unless your tax base is increasing faster than your debt, you're already screwed - you just may not have reached climax yet.

Kicking the can down the road becomes more irresponsible every day.

Seems the ultimate issue boils down to spending cuts versus tax increases to support current levels of spending. Unfortunately for America, the Democrats see maintaining the size of government as more important than maintaining our solvency.

[TrackerNeil]

Seems the ultimate issue boils down to spending cuts versus tax increases to support current levels of spending. Unfortunately for America, the Democrats see maintaining the size of government as more important than maintaining our solvency.

Sorry, but this is bullshit, and one of the most common conservative misconceptions about liberals. No liberals that I've ever met, read, or heard of, advocate increasing or maintaining the size of government simply because of some philosophical conviction that big government is simply desirable. We want a government large and powerful enough to do the things we think government should do, which is really the same thing conservatives want. Conservatives have different ideas of what government should be doing, but it's interesting to note that conservatives, who often espouse the belief that small government is desirable for its own sake, never really shrink the overall size of government even when they have the power to do so. But in no case do liberals think that big government has some intrinsic philosophical value.

McBigski, I get that you're a conservative. Great. Wonderful. But you'd do yourself and your presentation a world of good if you actually tried to get a grip on the way the liberals you oppose actually behave.

[Shryke]

Do we at least agree that continuing to increase the debt isn't a long term solution? The more debt you have, the worse credit risk you become, and the higher your interest rates and debt service costs will become. If you're relying on debt to fund operations, unless your tax base is increasing faster than your debt, you're already screwed - you just may not have reached climax yet.

Kicking the can down the road becomes more irresponsible every day.

Seems the ultimate issue boils down to spending cuts versus tax increases to support current levels of spending. Unfortunately for America, the Democrats see maintaining the size of government as more important than maintaining our solvency.

Not every day. And very certainly not today.

The debt is fine as long as it isn't increasing faster then GDP and inflation, essentially. As long as the debt, over the long term, is shrinking (or at least not growing) as a percentage of GDP, there is no problem.

Secondly, you may think the more debt the US has, the worse a credit risk it becomes, but the evidence says you are wrong. The US can borrow at a ridiculously low rate right now. (Hell, I'm pretty sure borrowing for the US is free right now. Like, it literally costs you nothing. There's no reason NOT to borrow)

Long term there's definitely some things that need fixing, but the problem is the fixation on doing it right now, when right now is the absolute worst time to be doing it. Austerity measures during a downturn are almost always contractionary (at best, they are neutral) and that's the very last thing you want right now.

Oh, and the whole trying to destroy the US's credit rating in order to do it right now. That's a problem too.

[Shryke]

Also, here's Reid:

"Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support. A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself. Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President.

"In an effort to reach a bipartisan compromise, we are putting together a $2.7 trillion deficit reduction package that meets Republicans' two major criteria: it will include enough spending cuts to meet or exceed the amount of a debt ceiling raise through the end of 2012, and it will not include revenues. We hope Speaker Boehner will abandon his 'my way or the highway' approach, and join us in forging a bipartisan compromise along these lines."

http://talkingpointsmemo.com/archives/2011/07/new_statement_from_reid.php?ref=fpblg

[Commodore]

http://blogs.wsj.com/washwire/2011/07/24/live-blog-the-u-s-debt-battle/?mod=e2tw

Bank of America-Merrill Lynch says in a note that the U.S. credit rating will likely be cut to AA by the end of the year. Even though the house believes a stopgap deal will come at the last minute, any follow-up deal is likely to be disappointing and will fail to provide a credible long-term fiscal solution or lift rating agency concerns.

"A snap credit rating cut in August could occur upon a late or very disappointing stopgap deal, but it is more likely in several months when the follow-up deal disappoints. The former could have a more negative impact on stocks than the latter, as a delayed downgrade should give investors more time to digest the implications," it writes.

[ThinkerX]

Except that there is a fair chance that BOA itself will go under before too much longer.

[Shryke]

Hey, if we are gonna start pretending these rating agency clowns know anything, why be picky Commodore?

Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders.

The United States is one of the few countries where Congress sets a ceiling on government debt, which creates "periodic uncertainty" over the government's ability to meet its obligations, Moody's said in a report.

"We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in the report.

http://www.reuters.com/article/2011/07/18/us-usa-debt-moodys-idUSTRE76H0WH20110718

The sane idea no one in the US government is putting forth.

[KazigluBey]

Do we at least agree that continuing to increase the debt isn't a long term solution?

The way it worked historically, if you look at this chart, we incurred debt during the bad times and paid it down during the good times. Of course that all changed when Reagan was elected. I'm not sure how the GOP managed to convince anyone that they're the fiscally responsible party, they've done nothing but run up deficits with the last 3 republican presidents.

[Shryke]

The way it worked historically, if you look at this chart, we incurred debt during the bad times and paid it down during the good times. Of course that all changed when Reagan was elected. I'm not sure how the GOP managed to convince anyone that they're the fiscally responsible party, they've done nothing but run up deficits with the last 3 republican presidents.

Now now, it didn't completely change. The debt was paid down during the Clinton years.

[Commodore]

Now now, it didn't completely change. The debt was paid down during the Clinton years.

more like the Kasich years

[ThinkerX]

Do we at least agree that continuing to increase the debt isn't a long term solution? The more debt you have, the worse credit risk you become, and the higher your interest rates and debt service costs will become. If you're relying on debt to fund operations, unless your tax base is increasing faster than your debt, you're already screwed - you just may not have reached climax yet

This, I fully agree with. Raising the debt limit now does absolutely nothing to solve the fundamental underlying problems that required raising the debt limit in the first place.

I would also point out that the republicans have no claim what-so-ever to being the party of fiscal responsibility. From Reagan on, they have collectively seen nothing wrong with running up massive amounts of debt, with the vast majority of that debt being incurred during the reign of Bush II - and again, Bush II actually inherited a (mostly ficticious) budget surplus. Most of the republicans now insisting on spending cuts and refusing to raise the debt limit had no problem at all with raising the debt limit under Bush II.

[Altherion]

Do we at least agree that continuing to increase the debt isn't a long term solution? The more debt you have, the worse credit risk you become, and the higher your interest rates and debt service costs will become.

If the interest rates were actually increasing, then I would agree with you -- but this is not the case. Like I said, as long as people are willing to lend to you at very low rates, there is nothing wrong with borrowing.

Kicking the can down the road becomes more irresponsible every day.

Not necessarily. The US has paid back large debts before: the key is that GDP has to grow by a non-trivial amount. If we can borrow until that happens, we'll be fine.

Seems the ultimate issue boils down to spending cuts versus tax increases to support current levels of spending. Unfortunately for America, the Democrats see maintaining the size of government as more important than maintaining our solvency.

To get out of debt without a large GDP increase you will need both large spending cuts and large tax increases. Spending has the Medicare problem and tax rates have not been this low since the Great Depression (and this is not even accounting for all of the loopholes).

[The Marquis de Leech]

The sane idea no one in the US government is putting forth.

It really is puzzling that the US continues with this debt ceiling nonsense. The consequences of actually enforcing a debt ceiling (i.e. default) are too horrible to contemplate (so horrible, in fact, that only true nutjobs would even consider not raising it), so the logical solution is to just get rid of the ceiling altogether.

[TrackerNeil]

It really is puzzling that the US continues with this debt ceiling nonsense. The consequences of actually enforcing a debt ceiling (i.e. default) are too horrible to contemplate (so horrible, in fact, that only true nutjobs would even consider not raising it), so the logical solution is to just get rid of the ceiling altogether.

IIRC, the ceiling was raised automatically from 1979 until 1995, when the Republican-controlled Congress changed things so as to have more leverage over President Clinton.

[Tormund Ukrainesbane]

Remember, what's important is whose fault it is, not what can and should be done to fix it.