Here we are again fighting over the debt ceiling. January 20, 2023 rdquinn Government, Observations on life, Politics 6 comments Why doesn’t anyone ask the real question. Why aren’t our politicians concerned about their spending and creating new spending obligations throughout the year?Where will the money come from to pay the credit card at the end of the month? Nobody cares.🥲 Rate this:Share this:TweetEmailPrintShare on TumblrLike this:Like Loading... Related
Excerpts from another blog I regularly read:
“… Everyone keeps repeating that hitting the debt limit would necessitate a default on principal and interest. The Treasury itself says:
1. “… Failing to increase the debt limit would have catastrophic economic consequences. …”
2. “… It would cause the government to default on its legal obligations – an unprecedented event in American history. …”
3. “… That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession. …”
The first statement is correct.
The first part of the second (statement) is not. The government is still hauling in tax revenues. The Treasury could easily say “given the catastrophe that a default would produce, we will always pay interest and principal on treasury debt before any other payment.” Congress could pass a law stating that fact. There is no economic reason that a debt limit should force a default. There is a legal argument, and a claim that the Treasury cannot prioritize debt payments over other legally mandated payments. … (however) The Treasury is legally obligated to make debt payments, as it is obligated to pay Social Security checks, and also legally obligated not to borrow. Law prescribes the impossible. It has to prioritize. Indeed, unpaid bills are a form of debt, so if you want to be a stickler, the government will violate the debt limit no matter what it does.
The second part of the second statement is also false. The US has defaulted on gold clauses in the 1930s. It has defaulted on other “legal obligations.”
The third is correct. If we are to tussle over paying Wall Street fat cats vs. grandma’s social security, keep in mind just what a catastrophe default would be. Grandma will be way worse off if that happens.
Treasury secretary Janet Yellen should say out loud, right now “we pay principal and interest on treasury debt first, before anything else.” President Biden should back her up. Drastic delays in social security, medicine, government shutdown and more are plenty enough threat to get Congress to move, without risking a run. …”
Regarding BenefitJack’s comment; I had to smile; my boss told me the exact same thing years ago, “no one ever got fired for going over budget”.
Long ago, when I cautioned my boss about an expensive software acquisition and the likelihood that we would exceed our budget, he responded: “Jack, no one ever got fired here for failing to meet their budget.”
All this hype sounds awfully familiar to me. Which politician did American voters dump because their approved spending proposals triggered deficit spending?
See my earlier comment on a different blog post. We need members of Congress to approve the increase in the debt ceiling at the same time they propose spending that will add to the deficit. The idiot Republican “20” should have simply demanded that Speaker McCarthy retroactively apply that.
For the D’s and R’s in Congress in 2022 who retired or lost reelection bids – well, well, well, wouldn’t they make easy targets for scapegoating – don’t you think?
Just read an editorial from Bloomberg News where the editors say that it is nonsense to argue over the debt limit, since it always increases, anyway.
Well, what would our National Debt be today, how much more than $31.4 Trillion would it be, but for the fights over the debt ceiling?
As the Bloomberg News editorial states, in part: “… Defenders of the current rules say that debt-ceiling negotiations provide at least a semblance of fiscal discipline. One analysis found that every major deficit-reduction deal between 1985 and 2011 resulted from such fights. Yet if the debt limit was ever an effective tool, it no longer is: Debt has increased to roughly 95% of gross domestic product (not counting intragovernment obligations), up from 78% in 2019. That figure is on track to keep rising. …”
Again, just because there is a big leak is no reason to dynamite every fiscal “dam” in America, which would drown in debt all those Americans who are too young to vote today, and future generations yet unborn who live “downstream”.
According to the US Debt Clock.org, The US national debt is going up $1 million about every 40 secs. The Federal tax income for 40 seconds is only about $26,000. I really like to know how they plan on closing that number. No body seemed to care when Congress passed the last two multi-trillion spending bills.
Washington pols don’t care about the debt. They only want to spend and “buy” votes.