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Skylude52 · May 16, 2011, 11:43 AM

What is the worst that can happen if we do not raise the debt ceiling?

tomder55 · May 16, 2011, 03:46 PM

It cannot be permitted to happen. The US not funding the debt would be the equivalent of a family deciding to not pay the mortgage.As it is now the government pays off old debt by issuing new debt. That would be the same as someone taking out a loan to pay the mortgage . If they suddenly could not take that loan because they were maxed out ,then they would have no means to pay that mortgage . They would defaut on that house.

There would be a Treasury default.

Right now the Treasury Dept can shuffle some funds they have in reserve to temporarily stall it and can begin to make hard decisions on security issues . This includes the suspension of issuing securities to help state and local governments. But as this drags on then there would be a sovereign currency crisis . We would see in the US what we are seeing in Greece today.

This is all politics. In the dead of night there will be a bill signed to raise the debt ceiling. Perhaps the Republicans can get some concessions from the Dems and the President to save face. But in the end;they cannot be the ones that allows a sovereign collapse because they didn't raise the ceiling. They would've had an easier time holding the line on the threat of a shut down. But they folded like a cheap tent . This is not the place to make a stand .

Perhaps they can get tough on debt reduction with next year's budget. But not now. It would be suicide.
Raise the ceiling now ,and make a budget that has both debt reduction and pro- economic growth . That should be the goal . Focusing on cuts only or stimulation through spending increases like the Dems did 2009-2010 will not work .

paraclete · May 16, 2011, 05:35 PM

All of those lovely little spending programs that give you such a warm glow cannot proceed and along with it are some big ones too. You are already seeing the consequences with funding for programs like medicare not being topped up sooner or later it means the bills don't get paid because the government can't borrow any more money. When this happens credit ratings will get down graded, and that translates to higher borrowing costs for the government and everyone else because no organisation or state can have a higher credit rating than the soveriegn credit rating. You shouldn't have taken that tax cut

tomder55 · May 16, 2011, 05:59 PM

Stop with the tax cuts already . Every time there have been tax cuts revenues increase. Leave it to a socialist to think increased taxes stimulate the economy . It's a one trick pony ....tax the rich ...tax the rich... tax the rich .. It's all they know.
You cannot tax your way out of this fiscal mess.

Let's start with the consolidation and elimination of duplicate government services. You could streamline the whole thing and eliminate whole depts of the bureaucracy.

You are right about spending on entitlements . America's demographics shows that the future ratio of beneficiaries to workers supporting the system will be tipped too heavily in favor of the beneficiary over the ones who will have to pay for it.

But talk to a "progressive " about reforms that involve choice and their head spins like Regan from 'The Exorcist' .

smoothy · May 16, 2011, 07:15 PM

Exactly... if I was rich and had a big business... I'd move everything off shore where the tax structure didn't punish me for investing time, work and money... or shut down and mothball everything rather than be forced to operate at a loss.

Which not surprisingly so many actually do.

paraclete · May 16, 2011, 11:27 PM

Originally Posted by tomder55

Stop with the tax cuts already . Everytime there have been tax cuts revenues increase. Leave it to a socialist to think increased taxes stimulate the economy . It's a one trick pony ....tax the rich ...tax the rich... tax the rich .. It's all they know.
You cannot tax your way out of this fiscal mess.

Let's start with the consolidation and elimination of duplicate government services. You could streamline the whole thing and eliminate whole depts of the bureaucracy.

You are right about spending on entitlements . America's demographics shows that the future ratio of beneficiaries to workers supporting the system will be tipped too heavily in favor of the beneficiary over the ones who will have to pay for it.

But talk to a "progressive " about reforms that involve choice and their head spins like Regan from 'The Exorcist' .

I think you miss the point Tom more revenue means less borrowing because the government has more money. It is pointless taxing the poor because 10% of nothing is still nothing. Now I would agree with you that spending programs need to be modified to fix your problems. America, like most developed economies, is sitting on an entitlement time bomb, you have seen the results of this in Greece, better to take the pill now and it does mean that eventually the rich will have to pay or move on to those lovelly little tax havens in the Caribbean. The old remedies don't work any more, you have had tax cuts and your economy is stagrant, you have had stimulation and your economy is stagnant, you have zero interest rates and your economy is stagnant, you have had fiscal easing and your economy is stagnant. What I suggest is if the rich won't spend their money, take it away and do something with it, there is a socialist thought for you to complain about

tomder55 · May 17, 2011, 02:09 AM

Means testing for the entitlement programs would make them whole in short order. But it would expose the ponzi scheme fraud that the socialists have burdened the free world with .Then again... this whole debt burden is the result of nannystatism.

The long term solution is to decouple us from the fraud .

As far as the debt goes ;extending the ceiling may buy some time. But the fiscal mess just gets worse. Sky asks what might happen.. How about investors of US Bonds getting a haircut on principle and interest (payout less than promised ) ? That is almost definitely going to happen to the European countries in a debt crisis . That is what happened to Latin American and South American nations that have been in a debt crisis before.
The IMF will dictate the terms if they can spring their boss from jail.

American bonds are held by almost everyone directly or indirectly because they have been considered the safest place to invest. Public and private pensions are heavily invested and of course China could wallpaper every home in Beijing with the bonds they hold.

speechlesstx · May 17, 2011, 06:47 AM

Originally Posted by smoothy

Exactly....if I was rich and had a big business...I'd move everything off shore where the tax structure didn't punish me for investing time, work and money.....

With this administration you can't even expand to another state without being punished.

NeedKarma · May 17, 2011, 06:51 AM

Originally Posted by speechlesstx

With this administration you can't even expand to another state without being punished.

Can you explain how that issue is pertinent to the Obama administration?

paraclete · May 17, 2011, 06:56 AM

Originally Posted by tomder55

Means testing for the entitlement programs would make them whole in short order. But it would expose the ponzi scheme fraud that the socialists have burdened the free world with .Then again... this whole debt burden is the result of nannystatism.

Well of course you means test these programs even our socialists agree with that, in fact they are first in the queue to implement it. Can't give free money to your political rivals?

The long term solution is to decouple us from the fraud

The long term solution is to decouple you from the world.

As far as the debt goes ;extending the ceiling may buy some time. But the fiscal mess just gets worse. Sky asks what might happen.. How about investors of US Bonds getting a haircut on principle and interest (payout less than promised ) ? That is almost definitely going to happen to the European countries in a debt crisis . That is what happened to Latin American and South American nations that have been in a debt crisis before.
The IMF will dictate the terms if they can spring their boss from jail.

American bonds are held by almost everyone directly or indirectly because they have been considered the safest place to invest. Public and private pensions are heavily invested and of course China could wallpaper every home in Beijing with the bonds they hold.

Last I heard that solution was called repudiating the national debt. Most failed economies resort to it eventually, then the IMF bails them out with austerity campaigns. What a great pity there is no bigger economy than the US, oh wait, there is China who needs a market for its junk goods. So you are doing a roaring trade in wall paper these days, or is that shin plaster? But there will be no bailout for you you arrested the boss of the IMF

smoothy · May 17, 2011, 07:21 AM

Originally Posted by speechlesstx

With this administration you can't even expand to another state without being punished.

Yeah... isn't that a fact. They are refusing to let Boeing build a plant in North Carolina and Hire people from there. Apparently he didn't get enough campaign support last election from that state. And we know Chicago Politics is ALL about quid pro quo.

excon · May 17, 2011, 08:15 AM

Originally Posted by smoothy

Exactly....if I was rich and had a big business...I'd move everything off shore where the tax structure didn't punish me for investing time, work and money..... Which not surprisingly so many actually do.

Hello again, smoothy:

It's not the tax structure that sends companies off shore... It's the wage structure. Indeed, our corporate tax rate is high, but the deductions are generous - so much so, as to result in MANY corporations paying NO taxes at all. The talk about high corporate taxes is just so much hot air..

I could take my company off shore, but I like hiring American workers. Yes, I'm willing to spend MORE to do it, too. Plus, it's PATRIOTIC to keep my company here.. I LOVE my country. I'm here to HELP it.

excon

smoothy · May 17, 2011, 08:53 AM

Originally Posted by excon

Hello again, smoothy:

It's not the tax structure that sends companies off shore... It's the wage structure. Indeed, our corporate tax rate is high, but the deductions are generous - so much so, as to result in MANY corporations paying NO taxes at all. The talk about high corporate taxes is just so much hot air..

I could take my company off shore, but I like hiring American workers. Yes, I'm willing to spend MORE to do it, too. Plus, it's PATRIOTIC to keep my company here.. I LOVE my country. I'm here to HELP it.

excon

Tax structure plays a big part... and I agree, not the ONLY part. But like wages... Taxes also push up costs and thus prices. The USA has among the highest corporate taxes in the world. Add the fact even the prospect of our minimum wage would have the Chinese popping off in their pants like a 13 year old with a Sports Illustrated swimsuit edition. Its no wonder business owners got tired and just moved things to were they were more appreciated.

Yeah a lot of people would LIKE to buy American... but can't afford to thanks to the Screw the businesses and screw the rich policies they left has been pushing driving up costs for EVERYTHING, and driving all the good jobs that were once here overseas.

When it comes to paying rent, and putting food on the table thanks to the current Obama induced Economy.. its no wonder Buy American takes a back seat, few people can actually afford to.

tomder55 · May 17, 2011, 08:57 AM

Our corporate tax rates are now the highest in the world ;and yes there are some loopholes to compensate... and yes some companies take advantage of them and pay no taxes. But the vast majority are overtaxed .

That wouldn't be corporations like the oil companies .They pay a fortune to the US Treasury . They are not friends of Obama. GE is a friend of Obama... they paid no taxes. No one is talking about their subsidies being revoked.

The tax system needs an overhaul.That too is part of the problem . There are too many loopholes indeed . Most of them are the result of political payback.
Iowa is the 1st State that decides in the primaries... no problem give the corn growers generous subsidies to destroy the agriculture industry ,the energy industry ,and the environment... causing massive food market distortions here and around the world .

NeedKarma · May 17, 2011, 09:05 AM

Originally Posted by tomder55

GE is a friend of Obama ...they paid no taxes.

That's been proven to be a lie: GE and Taxes | GE Reports

tomder55 · May 17, 2011, 09:18 AM

What ? The NY Slimes lie ? Never . The Grey Lady is the paper of record ;the gatekeepers of truth . Bwaaaahaaahaaahaaaaaa!!

NeedKarma · May 17, 2011, 09:20 AM

Well the thing that isn't a surprise here was you reposting right-wing disinformation talking points without fact checking anything... again.

tomder55 · May 17, 2011, 09:22 AM

If the Slimes is the source why do any source checking ? You on the other hand use a GE response and call it the truth . Did you fact check their reply ? NOPE

NeedKarma · May 17, 2011, 09:24 AM

I didn't try to smear anyone, you did.

tomder55 · May 17, 2011, 09:43 AM

Smear ? Au contraire .I admire their ability to scheme a flawed system . It's not their fault the system is so screwed up . They were just better than most because they managed to get their "hopenchange" .

I'm just saying that if our tax system wasn't so punitive to business there would be no need to game the system.

Canada's Effective corporate tax rate is 16.5%. That's double the US. You say I should admire the Canadian system. That's one part of it I do. Smoothy is right . The tax rate and regulatory culture forces companies to do things like move off shore and game the system for every advantage despite Excon's use of the Biden ploy of a call to patriotism.