Debt Ceiling

Discussion in 'Politics' started by Paul3144, Jan 12, 2013.

  1. Paul3144

    Paul3144
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    We hit the debt ceiling at the turn of the year and the only way the Treasury is paying obligations now is through accounting gimmicks. The Republicans are screaming about spending and are only willing to raise the limit if accompanied by spending cuts. Meanwhile, President Barack Obama and the Democrats want spending cuts and the debt ceiling increase to be done separately.

    There are elements of truth in both approaches. At the core, these are two separate issues. The debt ceiling concerns whether the government will honor obligations it has already made, not future spending. At the same time, we must get serious about deficit reduction and one of the ways to do that is through spending cuts. The specter of default may serve as a motivational force to make the cuts we need as well as provide an opportunity to further reform our tax code to increase revenue.

    On principle, I agree with Mr. Obama and many Democratic leaders who would deal with these issues separately. However, while I appreciate the tougher stance they have taken as opposed to capitulating to the Republicans at every turn like they did during Mr. Obama's first term, they must take care to avoid turning into the obstructionist Republicans they oppose. I hope leaders from both sides of the aisle will realize the decimating consequences default would have on the American economy and negotiate a solution in good faith.

    If we default, the American economy would be severely damaged. We would lose our creditworthiness and would, when the crisis was eventually resolved, face higher interest rates. We would immediately lose two-fifths of Federal spending. That would set the economy on a downward spiral. The multiplier effect of that spending would be removed and would cause fiscal chaos in private business. The stock market would tank and we'd have massive job losses which would make the recent recession look like a walk in the park. The economy would shrink, and tax revenues would fall, further worsening the problem.

    We need to have good faith bi-partisan compromise on this. It may well need to be a limited deal, such as reducing cost-of-living increases in Social Security and cutting certain redundant defense programs in exchange for one year's worth limit increase. Ideally, revenue enhancement would be on the table as well. Perhaps we could cap certain deductions. I have more confidence a deal could be worked in the Senate and then pass the House later, as we did with the fiscal cliff, than House Speaker John Boehner being flexible enough to develop a deal.

    All things considered, the most important thing we do is make certain all outstanding liabilities are covered. If mid-Feburary rolls around and there still isn't a resolution, the President and the Treasury Department should take all lawful measures to avert default. I'm skeptical of the Fourteenth Amendment option, but I see no reason why the platinum coin option would be unlawful. There's an inflationary risk with it but the Federal Reserve can act to mitigate that. Would minting a trillion dollar platinum coin be crazy? Sure; but not nearly as crazy as the government failing to pay its bills and causing a financial collapse.
     
  2. OldRegular

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    Are you serious? Minting a coin and declaring its value as $1,000,000,000,000. Only a democrat could come up with an idea like that.
     
  3. saturneptune

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    The debt ceiling is just another byproduct of Congress not doing their job. They take their paycheck and do not do their job, ie govern. Some would call that theft.
     
  4. carpro

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    Untrue.

    Democrats want no spending cuts at all (except possibly for defense). Obama has said we don't have a spending problem.

    Therein lies the real problem. He is ideologically blind and in total denial.

    His sheep just fall in line.
     
  5. carpro

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    It's been done before.

    Check out our last liberal dictator, FDR, and the gold standard.
     
  6. Magnetic Poles

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    The administration has already rejected the trillion dollar coin idea, so that one is a moot point.
    .
    There are two sides to the balanced budget equation; revenue and spending. IMO, both are in dire need of being addressed. Increase revenue and cut wasteful spending. Sadly, Congress is incapable of figuring this basic concept out, nor in implementing any significant change.
     
  7. Paul3144

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    My point is this: If it comes down to a default or a trillion dollar coin, we should go with the trillion dollar coin. We can not afford to risk another Great Depression.
     
  8. OldRegular

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    Just shows the limits of Obama's knowledge and intelligence. And all we here from the leftist media is how smart he is, too smart even for Mensa.
     
  9. OldRegular

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    I thought we were in another depression.
     
  10. OldRegular

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    It is just the Senate half of Congress led by clueless Harry Reid!
     
  11. OldRegular

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    FDR? FDR? is that the one who stole all the gold and locked it up in Fort Knox somewhere close to S/N!
     
  12. InTheLight

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    The trillion dollar coin idea was an idea floated out there as a lark most recently by NYT columnist Paul Krugman. Republicans seized on the idea and started lambasting the Obama administration as if they had proposed it. They even went so far as to start a petition and emailing supporters to get them to sign it opposing the idea of a trillion dollar coin.

    Once again the Republicans were played for fools.

    Their most recent example of brinksmanship is opposing releasing additional funds for disaster relief for Hurricane Sandy unless there are corresponding spending cuts elsewhere. What a fine humanitarian gesture that is!

    Humiliated at every negotiating turn by Obama they don't have much leverage remaining and so now plan on holding the country's credit rating hostage in order to try to get their spending cuts achieved. Never mind that Republicans voted without a whisper about spending cuts in order to raise the debt ceiling 19 times when George W. Bush was president with a resultant doubling of our national debt.

    Get ready for the DJIA to lose 1,000 to 1,200 points when the debt ceiling deadline comes and there is no agreement. Way to go Republicans, that'll show 'em! Set back people's retirement funds 3-4 years, that'll teach 'em!

    If you would have simply done your job to begin with we wouldn't be facing this 'crisis'. A crisis of their own making. It's pathetic. And I say this as a person that has consistently voted Republican for decades.
     
  13. OldRegular

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    Sounds like you are old beyond your years!
     
  14. mont974x4

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    There is a real depression in our future.
     
  15. saturneptune

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    That is very likely. It is very possible that this event coincides with when interest rates start to rise and inflation takes off with a vengence.
     
  16. saturneptune

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    That is the crux of the problem trumping political differences, Congress not doing their job, ie governing our nation. Everyone of them should be in prison for theft. Cashing a paycheck provided by the American taxpayer without working is theft.
     
  17. righteousdude2

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    There's One Thing For Sure....

    ....we will surpass the current ceiling, for whatever reason, and we will continue to exceed any ceilings set by Congress, because we have a nation gone "Mad!"

    Your children and their children, and their childrens children will pay for the sins of our leaders. It is so unfortunate, but just a fact. This country has long ago gone over the fiscal cliff. We are merely treading water, and waiting for the inevitable: The end of this nation as we knew it! :tear::tear:

    You can take this to the bank, and don't forget; you heard it here a long time before it happened! Of course, I am not a prophet, because that gift ended a long time before the term fiscal cliff became a "Water cooloer" topic! :) Let's chalk this word of doom up to an old man's dream!
     
    #17 righteousdude2, Jan 14, 2013
    Last edited by a moderator: Jan 14, 2013
  18. Oldtimer

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    Clueless? No.

    Smart as a fox. He's the fox in the hen house.

    As of late, how many bills has he blocked to keep them from receiving a vote in the Senate? He, in effect, is holding the purse strings of this nation, and he well knows it.
     
  19. mont974x4

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    Did anyone else catch Obama's news conference this morning? Did anyone buy his explanation of the debt ceiling?
     
  20. ccrobinson

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    Neither is the President (there is no spending problem) capable of implementing significant change.


    Sorry, I did not, but I only quoted this to bring up something else anyway. Gas prices dropped recently. I can't possibly be the only one who noticed this and wondered if the economy was about to go in the tank again, right? Does anybody else remember O'bama saying, before the election, that gas prices were low in 2008 because the economy was about to tank?
     

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