[tomder55]

Every 2 years we go through this charade . There is a debt ceiling . That means the debt cannot be above the agreed to amount . And every year Federal spending exceeds that .
There are some that ask why have a ceiling ? The answer is that there has to be some pretense of discipline.

So now the Armegeddon of default is threatened if the waskly Repubs don't cave in on raising the ceiling . And the Repubs will cave at the 11th hour . The negotiations are all about giving them some face saving rhetoric to give to their base.

About that threat . The 14th Amendment sec 4 says that the government cannot repudiate the debt . To avoid that the Treasury has to be able to pay the interest on the debt as it comes due.

Here is a dirty little secret that doesn't get discussed.......
The Treasury collects more than enough revenue to accomplish that .

Some numbers according to Treasury:
Tax receipts in March were $313 billion and interest payments were $67billion. April receipts were $639 billion and interest was $62 billion.
mts.xls (treasury.gov)

Prioritizing interest payments on debt could temporarily or permanently shut down parts of the Federal government. But in reality ,that is where decisions have to be made and negotiated . It is nonsense to use the threat of default . It aint happening .


But what it means is that Sec Treasury Janet Yellen would have to prioritize paying the debt over other spending . Raising the debt ceiling would allow the progressive Dems to continue to fund all their pet projects .It would allow the war hawks to continue to send mega-bucks down the Ukraine war rabbit hole.
The threat of default is an empty one that both sides pretend would be the consequences of not increasing the debt .
Treasury is also capable of issuing bonds as old bonds mature with minimal impact on the debt .

[Curlyben]

Don't know what is the bigger joke, the continual brinkmanship or the actual dollar amount....

[tomder55]

Ben it is a national embarrassment. But when debt exceeds GDP a nation has a serious problem . One side sort of wants to address it .The Dems seem to think debt doesn't matter . I saw the absurd arguement that it doesn't matter because we owe it to ourselves . ???????????????????

This is the opinion of leading progressive economist Paul Krugman

Opinion | Learn to Stop Worrying and Love Debt - The New York Times (nytimes.com)

So lets say you loan me money and I can't pay it back . Thaty makes you poorer and it makes me poorer because next time if you loan me money at all ,it would cost me even more to pay it back.

Many American's own the debt I own bonds and trade in them all the time. But Krugman is wrong. Many foreign countries like China also own American debt . The US cannot afford to default . The good news is that it is unconstitutional for the US to default .

[tomder55]

So called "progressives " in the Dem caucus are pressuring Clueless Joe over the debt ceiling negotiations. One; Pramila Jayapal said that the left would take to the streets if he accepted spending cuts.


“I think there would be a huge backlash from our entire House Democratic Caucus, certainly the progressives, but also in the streets,” Jayapal told CNN of a potential “bad deal.”

Parties ramp up pressure to hold the line in debt talks | CNN Politics

There is a fair debate about whether the increased spending was justified during the covid pandemic. I believe that the $ trillions of monopoly bucks caused the inflation problems we face today. But the pandemic has been declared officially over . There is no need to continue spending at the levels reached. A minimum of bringing spending back to 2019 levels should be a no-brainer.

Clueless knows a recession is on the horizon caused by the necessary Fed actions to fix the inflation mess caused by his reckless spending . The Conference Board gives it a 99% chance.

The odds of a recession are high. 4 things to do with your money now - MarketWatch

His plan going into the 2024 election is to pin the blame on the Repubs. That is why you hear Armageddon language from Treasury Sec Yellen.

Why not blame the Repubs ? It always worked during the emperor's reign . Shut down a couple of National Parks and the Repubs folded like cheap tents. 1st Clueless said he would not talk about the debt ceiling until the Repubs passed a bill in the House . He did not think that was possible because the Repubs had a chaotic process selecting McCarthy as Speaker . Well he was able to get almost all the Repubs to agree to the bill he put forward and the House passed it.

The Senate is the no show body . Clueless moved the goal post . Publicly he says he will not agree to spending cuts . That may have been sound strategy if he was the emperor with large public support . But his approval is in the low 30% range. If this was a Parliamentary system there would've already been a no confidence vote.

If we are in a recession in 2024 he and the Dems are toast.

[tomder55]

I wish these a$$wipes in the swamp would settle this already . They are doing a number on my portfolio . This keeps up another few days I will have to consider going back to work .

[tomder55]

Clueless and Congress left for a long holiday weekend . Shows how serious they are about debt ceiling negotiations .
Whatever deal is struck will require both Houses of Congress and the President to agree to. McCarthy has a razor thin majority and some hard line Repubs who correctly will not budge if there is no spending cuts included in the deal .

Schmucky can derail any bill passed by the House AND on top of that ;new House rules adopted this year says that a bill has to be on the floor for 3 days before a final vote. The deadline will be exactly 3 days after they return if we believe Treasury Sec Yellen.
The latest deal being reported would raise the ceiling for 2 years and cap spending . In other words ;no spending cuts . Good luck with that .

[jlisenbe]

There will be a "deal" that is more show than anything else. I don't see much hope for this.

[tomder55]

Nope it is like the couple who maxed out on the credit card and are having a heated debate over whether they should increase their card credit limit to $52 thousand or $47 thousand instead of cutting their spending and starting the procress of paying off the card .
Well add a whole bunch of zeros to the numbers above(into the $trillions ) ,and that is the essence of the disagreement between Clueless and the Repubs.

[jlisenbe]

It is a politician's dreamworld where spending is "generous" while taxes are kept low. Their great hope is that the day of reckoning will be still several years down the road. No one will want to be around when that happens.

[tomder55]

amazingly Janet Yellen found 4 more days . Imagine that !

4 extra days: Treasury Secretary Janet Yellen issues new potential date for looming default (msn.com)

[jlisenbe]

How do you see all of this sorting out? Do you see anything really meaningful coming out of it?

[tomder55]

A deal will have to be made .

The exact deadline date is fluid because tax receipts comes in every day. This year is more complicated because Californians were given a filing extension due to the winter storms . The next big tax due date is June 15th quarterly estimated taxes deadline

We are at the brink because the Repubs dare to suggest we should hold spending to 2022 levels. A far cry from balancing the budget .

The Dems won't budge . They want increases in spending and still think wealth taxes would solve all the problems. This is not a revenue problem . It is a spending problem. They are also balking over the audacity of having abled bodied work requirements for freebees .

How will this go ? Repubs will cave after a face saving deal is struck . You know like Wimpy saying 'I'd gladly pay you Tuesday for a hamburger today' .

The compliant press is only reporting on the dangers to the economy if the waskelly Reubs irresponsibly don't pony up for money already spent . No one is asking how could that money be spent if it exceeded an agreed upon ceiling ?

The Freedom Caucus will grumble about a betrayal by McCarthy .

[Curlyben]

Can't remember where I saw this, but doesn't the US Constitution make it illegal for the US to default on this debt.
That being the case why is there all this artificial drama ever couple of years over this matter.....

[tomder55]

Ben
After the Civil War there was a fear that some Congress in the future controlled by former Confederacy States would decide to not pay the debt that was made during the war or would vote in a law that Congress would pay for the debts incurred by the Confederacy. So in the 14th Amendment they added a clause to address that possibility.

Here is the entire Clause 4 of the 14th amendment. I will highlight the part that gets misinterpreted.
Section 4.
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations, and claims shall be held illegal and void.

Clueless Joe says that this gives him the authority to take Executive Action . It does not .


Article 1 of the Constitution makes it clear that Congress controls the purse strings .

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”
Article I, section 7, clause 1

“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”Article I, section 9, clause 7

[tomder55]

This "crisis" is just a drop in the bucket . Unless REAL reforms are made to mandatory entitlement spending then the money we are talking about here is just a drop in the bucket. The CBO says that unless something changes ;in the next 30 years ,we are bound to borrow $114 trillion to service entitlement obligations. We have only borrowed $32 trillion on the entire history of the country. Medicare insolvency is about 6 years away based on new estimates. Social Security will be shortly after .

[jlisenbe]

Medicare insolvency is about 6 years away based on new estimates. Social Security will be shortly after .

A situation so grave that everyone should be alarmed about it, but the "elect dems at all costs" news media continues to move along as though there is no story there. Perhaps the reason is that social security/medicare/medicaid spending have come to dominate the fed budget and account for nearly half of all spending. It is hard to imagine how that can be brought under control without some really significant spending cuts for programs directly affecting a voting block that is really large and very willing to get to the polls and vote.

I imagine the dems, if they can, will enact significant increases to the FICA taxes paid by employers, something like increasing from roughly 7% to 10 or 12%. The public will, as usual, think it does not affect them.

It's a bad situation. It's like a teenager who suddenly has to fend for himself after being raised by parents who lavished him with anything he asked for. It will be shocking. The real world can be pitiless.

[tomder55]

Bush's SS reforms would've worked . There was a built in transition period of a generation . Instead we've kicked the can down the road and we will most likely need to enact very similar reforms or there will be a major hair cut to recipients .

Medicare/Medicaid is a different issue. I think it is a Cloward-Pivin type intermediate plan that eventually leads to government in complete control of the health of the people. Medicare/Medicaid was introduced along with the beginning of the open border policies in 1965 A year later,1966 we were introduced the the Cloward-Pivin strategy of creating chaos . The plan was for universal income but it works as well for universal health care .

[jlisenbe]

major hair cut to recipients .

That will be political suicide for whatever political party enacts it. We probably should freeze SS payment amounts for a few years, or at least for every other year. That would help, but with inflation now running at 8 and 9 percent, thanks to our current idiot crop of pols, that would be difficult. Wifey and I would be OK, but others would suffer a lot.

It is a really thorny patch we are going to have to pass through. Gutless, visionless pols don't help any.

[jlisenbe]

Medicare/Medicaid

That's an even worse problem. The spiraling cost of healthcare, which is never, ever, ever talked about, has put us on a path of what will be rationed med care.

In 2020, U.S. health care costs totaled $4.1 trillion. That makes health care one of the country's largest expenses. Health spending accounted for 19.7% of the nation's gross domestic product (GDP).

In comparison, national health expenditures totaled $27.2 billion in 1960, just 5% of GDP.1 That translates to an annual health care cost of $12,530 per person in 2020 versus roughly $150 per person in 1960.

https://www.thebalancemoney.com/caus...-costs-4064878

That cannot continue. It will bankrupt us. I can tell you that as a Medicare recipient, I never ask what a treatment will cost and don't really care since I basically don't have to pay for it, and therein lies your problem. The same thing would happen with oil changes if the gov agreed to pay for them. Only a healthy dose of free enterprise can solve this dilemma, but that would prove distasteful for the liberals who enjoy flattering themselves by forcing other people to be "charitable".

We once had a teacher who had cancer. The cost of her treatments were enormous, even though there was very little prospect of remission. Her costs were approaching half a million dollars, which was the insurance limit, but then the company (BlueCross) extended that limit to a million dollars. She quite likely spent very nearly that much so that her life could be extended by two or three years. That meant, of course, that everyone else's health insurance costs went up since BlueCross had to come up with the money to pay for that. Is that really a smart way to go? It's a tough question.

[Curlyben]

That cannot continue. It will bankrupt us. I can tell you that as a Medicare recipient, I never ask what a treatment will cost and don't really care since I basically don't have to pay for it, and therein lies your problem. The same thing would happen with oil changes if the gov agreed to pay for them. Only a healthy dose of free enterprise can solve this dilemma, but that would prove distasteful for the liberals who enjoy flattering themselves by forcing other people to be "charitable".

While Free Enterprise is a possible solution, it's not the only one available.
Look at the models used in Canada and UK for examples of another way.
Making treatments financially inaccessible to the majority of the population is even less sustainable than the current model.
The current levels of medical bankruptcies are an anachronism.