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What's YOUR debt ceiling limit?

at what point do you no longer accept the premise that we have to raise the debt ceil

  • Total voters
    13
Mithros said:
Interesting. You say that none of this is true and then agree that the debt is financed through the sale of T-Bills.. Which is pretty much exactly what I said in my first statement.
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I agreed that we sell T-bills; it is untrue that doing so is unrelated to the debt.

As to the rest of it, you're just reiterating what I described as the incorrect,...
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Because it is.

Money is spent when the commitment is made to exchange funds for services, not when the actual money changes hands.
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False. Money is spent when the revenue is paid out; the promise or the commitment to spend is not an outlay and is thus not actual spending, because the commitment itself is only an greement to pay. I agree to pay my car loan, but it is not actually paid until I write the check.

If you've ever dealt with the government or a large business you've seen this first hand. You win a contract to provide goods or services for the large entity. Legal agreements are drawn up and both sides budget accordingly.
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All of this can be nullified thru the legislative process. All of it. The money is not actually spent until the revenue is disbursed

Instead, this is like saying I ordered 10 F35's, but now I'm only going to pay for 3.
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And you're only going to get 3.

It all boils down to this:
Almost every dime spent by the government is spent voluntarily - that is, by choice. As such, none of that spending is mandatory and can therefore be cut.
The spending that cannot be cut - primarily, debt service - can be covered by revenue, and so there's no way to argue that not raising the debt ceiling results in default
 
H. Lee White said:
First, you're presumuing things not in evidence, and assuming cuts that may or may not be made.
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How is that a presumption? We are running a deficit, meaning our costs exceed our revenue. If we are no longer able to borrow money to make up the difference, the only way to avoid default is to cut a trillion dollars worth of costs. Those cuts will have dramatic consequences moving forward on federal revenue.

Second - as our revenue is arbout an order of magnitude greater than our debt service, even with those salary cuts, there will be enough.
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How much greater is it? Can it absorb a 25% drop in revenue, as occurred in 2009? What about a 60% drop in revenue, as occurred during the Great Depression? How much money will we have left over to pay for the military or for anything else that needs to be done?

But, go on and keep scaring people into believe that the government MUST live totally utterly its means for the country to survive.
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People should be scared. Not raising the debt ceiling would be one of the most irresponsible fiscal decisions this country has ever made.

Assuming you intended to write "utterly beyond its means" above, I do not dispute that we cannot go on living beyond our means. I just don't think we need to send the country into a depression today to prevent a depression in the future. If we take action on the deficit and spread out cuts over a number of years, as both parties agree we need to do, we can ride out the problem, not comfortably, but perhaps without crashing our economy in the process.
 
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Krhazy said:
How is that a presumption? We are running a deficit, meaning our costs exceed our revenue. If we are no longer able to borrow money to make up the difference, the only way to avoid default is to cut a trillion dollars worth of costs. Those cuts will have dramatic consequences moving forward on federal revenue.
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But, none of those cuts are, necessarily, benefits or salaries or workforce. They MIGHT be, but not necessarily so.

How much greater is it?
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As I said: Nearly an order of magnitude - that is, nearly 10x.

People should be scared.
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Good to see that you'll admt to scaring people in order to maintain your positical agenda.
 
H. Lee White said:
But, none of those cuts are, necessarily, benefits or salaries or workforce. They MIGHT be, but not necessarily so.
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Yes, necessarily so. Taking $1 trillion dollars suddenly from the stream of commerce is going to result in less money being made . . . be it by federal employees or by federal consumers. Even if the cuts come from, say, investment in technology or military planes, as opposed to from the payroll of the Department of Defense, that means technology and military jobs or income that is being cut.

Then, when the federal government has less revenue next year, it will mean more cuts so it can keep on servicing the debt. And the private sector will cut. And the federal government will cut. Until that order of magnitude you speak of has vanished.

Good to see that you'll admt to scaring people in order to maintain your positical agenda.
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As if this entire "don't raise the debt ceiling" debate isn't being propelled by people's fears of rising debt. This is a silly retort.
 
H. Lee White said:
That is, at what point do you no longer accept the premise that we have to raise the debt ceiling?
Please be sure to explain your response.
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The limit should have been the second we got into debt.THere is no reason to go into debt unless is a major natural or man made disaster or if a country declares war on the US and we did not provoke that war.

Personally I think the clowns in office on both sides of the isle are deliberately dragging us into debt.Maybe to push into some north American union or some other thing to get us to sell our sovereignty out.
 
Krhazy said:
Yes, necessarily so. Taking $1 trillion dollars suddenly from the stream of commerce is going to result in less money being made
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The specific example was government salaries and/or government benifits outays. Yes, the $1T will come from somewhere and mean $1T less into the economy, but not necessarily from either of those things. At some point, the economy will rebalance from this artificial supply of availabe revenue and tax revenue will stabalize.

As if this entire "don't raise the debt ceiling" debate isn't being propelled by people's fears of rising debt.
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Fear of actual danger is a rational response. Fear of a contrivance is not. You present the latter.

Unrestrained accumulation of public debt, such as you support, will bring a governmental, economic and societal collapse.
 
H. Lee White said:
The specific example was government salaries and/or government benifits outays. Yes, the $1T will come from somewhere and mean $1T less into the economy, but not necessarily from either of those things. At some point, the economy will rebalance from this artificial supply of availabe revenue and tax revenue will stabalize.
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So you chose to make some technical point about my examples, to avoid the point, which you now concede. Just to be clear.

You're right, "at some point" I'm sure the economy would stabilize. It may take a generation lost to poverty. But hey.

Fear of actual danger is a rational response. Fear of a contrivance is not. You present the latter.
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Me and most reputable economists and business people versus you and Michelle Bachmann. Personally, I think it is far more rational to fear what might happen in the course of a few months as opposed to what may or may not happen a decade or so from now, if lawmakers are unable to take more nuanced and gradual steps to avoid it.

Unrestrained accumulation of public debt, such as you support, will bring a governmental, economic and societal collapse.
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I don't support unrestrained accumulation of public debt, as discussed in prior posts. That's the strawman you wish you were debating. As I said, I simply don't support the idea that we have to trigger an economic meltdown today to prevent one in the future. Tea Partiers should be thanked for restarting the national dialogue and pressuring the country to take the problem seriously, but this solution is radical and reckless.
 
Krhazy said:
So you chose to make some technical point about my examples...
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To keep them in context with my response, yes.
No one disagrees that reducing spending will have an impact on the economy, and so there's nothing to concede to.

You're right, "at some point" I'm sure the economy would stabilize. It may take a generation lost to poverty. But hey.
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Ah. More fearmongering.
Compared to the collapse that runaway debt - your preferred solution - will bring, any economic impact of not lifting the debt ceiling will look like a day at the beach.

I don't support unrestrained accumulation of public debt...
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Really?
What's -your- debt ceiling limit, and why?
 
We have no debt, nothing on credit other than we carry some personal line of credit loans backed up by CDs to maintain credit ratings just in case we ever needed it. House, cars, boats everything paid for. My wife briefly had a business to earn her own pocket money and with a very wealthy partner joining in it boomed in business until she shut it down to get the government off her back - putting most of what was earned into offshore accounts via the Bahamas. Otherwise most our savings is in cash, land and collectable firearms.
 
When is a debt ceiling NOT a debt ceiling?
 
H. Lee White said:
I agreed that we sell T-bills; it is untrue that doing so is unrelated to the debt.


Because it is.


False. Money is spent when the revenue is paid out; the promise or the commitment to spend is not an outlay and is thus not actual spending, because the commitment itself is only an greement to pay. I agree to pay my car loan, but it is not actually paid until I write the check.


All of this can be nullified thru the legislative process. All of it. The money is not actually spent until the revenue is disbursed


And you're only going to get 3.

It all boils down to this:
Almost every dime spent by the government is spent voluntarily - that is, by choice. As such, none of that spending is mandatory and can therefore be cut.
The spending that cannot be cut - primarily, debt service - can be covered by revenue, and so there's no way to argue that not raising the debt ceiling results in default
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Outlays are spending. One more time through:

The government enters into a contract with company A. They agree on a set of deliverables and a payment structure. Those deliverables and the payment structure go onto the books as soon as the agreement is finalized.

These are contracts. They are legally binding. There is no refuse to pay option. Either the government pays what it owes, (by selling more T-Bills if necessary) or it defaults and declares bankruptcy, and 3 Trillion dollars of our 15T economy goes poof.

Lockheed Martin is not Walmart. There is no return policy on fighters. There is no layaway option. If you order 10, then you have to pay for 10, even if you only have the money for 3.

If you want to get the deficit under control you have to attack the root cause, not the symptoms. The problem is that spending exceeds revenue. This causes a deficit which necessitates a debt ceiling increase. The real solution is that future spending needs to go down, while future revenue needs to increase. This needs to be done in a smart predictable way because decreasing the deficit DECREASES GDP.

It's a tough problem that requires tough choices and intelligent solutions. Spending effort trying to prevent a debt ceiling increase is like a patient thinking that a bullet is the best medicine for a headache.
 
Mithros said:
Outlays are spending. One more time through:
The government enters into a contract with company A. They agree on a set of deliverables and a payment structure. Those deliverables and the payment structure go onto the books as soon as the agreement is finalized.
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The money is not spent until the revenue leaves the treasury.
:shrug:

These are contracts. They are legally binding. There is no refuse to pay option.
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The governemt has a long history of ordering military equipment and then cancelling the contracts - and so, there are, apparemntly, optons other than those you present.

If you want to get the deficit under control you have to attack the root cause, not the symptoms....It's a tough problem that requires tough choices and intelligent solutions
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What indication do you have that this will ever happen?

This needs to be done in a smart predictable way because decreasing the deficit DECREASES GDP.
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Incorrect. You MIGHT argue that decressing spending decreased the GDP, but not the deficit.
I would argue that any economy that depends, as you suggest, on government spendning for its continued health is, in and of itself, unhealty and doomed to fail.
 
H. Lee White said:
The money is not spent until the revenue leaves the treasury.
:shrug:


The governemt has a long history of ordering military equipment and then cancelling the contracts - and so, there are, apparemntly, optons other than those you present.


What indication do you have that this will ever happen?


Incorrect. You MIGHT argue that decressing spending decreased the GDP, but not the deficit.
I would argue that any economy that depends, as you suggest, on government spendning for its continued health is, in and of itself, unhealty and doomed to fail.
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I'm not going to convince you, and I'm not looking to try.

Having been on contracts that were cancelled, they are seldom if ever cancelled in the middle of a contract period. (And that's because the provider hasn't met the agreed upon metrics). The government might exercise its right to not-renew a contract that is planned to be renewed x times. It doesn't affect work that has already been done, only work that will be done in the future.

As for GDP, it's calculated as Government Spending + Private Spending - Trade Deficit. You'll notice that there's no mention of budget deficit in the calculation. So if you reduce government spending to reduce the deficit, then you decrease GDP. If you increase revenues then you'll decrease Private Spending and thus will reduce the GDP.

(This is why everyone is scared of the fiscal cliff.. Going off the cliff means balancing the budget right now).

Here's a graph to illustrate what I mean. It compares GDP growth with GDP Growth minus the deficit (ie REAL economic growth)
saupload_gdp_excluding_debt_thumb1.png
 
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Mithros said:
Having been on contracts that were cancelled, they are are seldom actually cancelled.
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But, they can be, especially for things like aircraft. It was supposed that cancellation was not an option, when it is.

As for GDP, it's calculated as Government Spending + Private Spending - Trade Deficit. You'll notice that there's no mention of deficit in the calculation.
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-I- know that. The claim was made that "decreasing the deficit DECREASES GDP".

So if you reduce government spending to reduce the deficit, then you decrease GDP.
If you increase revenues then you'll decrease Private Spending and thus will reduce the GDP.
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So, to reduce the decfcit, by whatever means, you have to reduce GDP?
I think we both know here are example in recent hiostory where the deficits went down and the GDP went up. Please explain this.
 
H. Lee White said:
Ah. More fearmongering.
Compared to the collapse that runaway debt - your preferred solution - will bring, any economic impact of not lifting the debt ceiling will look like a day at the beach.
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No, the impact would be about the same -- complete economic collapse. We are in so deep at this point that a few extra years and a few trillion more dollars is not going to add in degree to the eventual collapse. Especially since, if there were to be a complete depression, that money is not going to be repaid anyway, so it doesn't matter how much there is. Which is why I don't see the need to trigger a meltdown today if we can take action today to avoid one in the future.


Really?
What's -your- debt ceiling limit, and why?
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If it wasn't clear enough the first time, I don't believe there should be any arbitrary and inflexible limit on how much can be borrowed. If borrowing is cut off late, when the debt is already massive, it only accelerates the very problems it aims to avoid. If borrowing is cut off early, it can prevent the government from taking necessary action during an emergency and thus cause similar problems to the ones it aims to prevent.

The debt ceiling is only useful as a red flag to legislators, the markets and to the people. It should never actually be invoked.

If you think that position is incompatible with the idea that we need to balance our budgets and pay down the debt in a responsible way, I don't think you are able to appreciate nuance enough to be suggesting any solutions to our mountainous fiscal issues. The debt is the problem. The debt ceiling is, at best, an ineffective and potentially dangerous tool. You can agree that a problem is serious while disagreeing that a tool is the appropriate mechanism with which to fix it.
 
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Krhazy said:
No, the impact would be about the same -- complete economic collapse. We are in so deep at this point that a few extra years and a few trillion more dollars is not going to add in degree to the eventual collapse. Especially since, if there were to be a complete depression, that money is not going to be repaid anyway, so it doesn't matter how much there is. Which is why I don't see the need to trigger a meltdown today if we can take action today to avoid one in the future.
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What indication do you have that this will ever happen?
Absent any clear and sound indication, why do you then commit yourself to the endless accumulation of dent, regardless of the effect?
 
H. Lee White said:
But, they can be, especially for things like aircraft. It was supposed that cancellation was not an option, when it is.


-I- know that. The claim was made that "decreasing the deficit DECREASES GDP".


So, to reduce the decfcit, by whatever means, you have to reduce GDP?
I think we both know here are example in recent hiostory where the deficits went down and the GDP went up. Please explain this.
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We're not going to agree on the first part.

For the second, you hit on the key to the entire discussion with the phrase "by whatever means".

First, lets look and see what happens in a vacuum. Say we have a government with zero debt, zero deficit, and zero GDP growth. Now, using the most simplistic assumptions possible, lets assume that the government decides to increase spending by 2% of GDP for one year. This means that GDP increases by 2%, the deficit is 2% gdp and the debt is 2% gdp.

On the other hand, if we visit this country the next year, and cut spending or increase taxes to reduce the deficit by 2% gdp, then we're also going to reduce the gdp from 2% from the year before.

Now, we're just using very simplistic psuedo-static assumptions about the way the economy works. But we really can't divorce spending from it's effects, especially since deficits are essentially increased gdp growth now for reduced gdp growth later. Much like business and personal debt, some is good, and some is bad. If you take a loan to buy a house or build infrastructure to reduce your costs, most likely it will pay off in the long run and you'll gain more in revenue than it will cost you in interest. Other investments aren't so good. If you take a loan to buy a fancy new car that depreciates 50% when you drive it off the lot, then you'll most likely be worse off.

And this is where we get back to "by any means necessary". There is such a thing as good debt. Spending money on infrastructure, research, and public works; things that pay for themselves in the long run are almost by definition good things. Cutting them to close the deficit is almost certainly harmful. Likewise, government spending on things like medicare and other entitlement programs result in a net savings for our economy as a whole, then if we were to stop doing them.

So... we get back to intelligent decisions. We need to make tough choices, and we need to cut programs that either don't work, or don't work well enough to justify the additional debt. We also need to make tough choices regarding future entitlement spending as well as increasing taxes.

The conservative approach is to go through this carefully, weighing all of the pro's and con's and making intelligent decisions. The radical approach is to damn the torpedos, full speed ahead, we'll clean up what's left of the economy when the dust settles.
 
Mithros said:
For the second, you hit on the key to the entire discussion with the phrase "by whatever means"....
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None of this explains the fact that we have has periods of GDP growth -and- deficit reduction.
If reducing the deficit necessarily resuts in reduced GDP, as you claim, how can that be?
 
Mithros said:
This isn't really a choice. Raising the Debt Ceiling means allowing the government to sell more US Treasury bonds. The debt ceiling has nothing to do with the national debt.

I think some people view the debt ceiling as a sort of ceiling that we are allowed to spend up to. They think that by not raising the debt ceiling, we're forcing the government to spend within it's means. And that's an understandable mistake, especially since the vote on the debt ceiling is a wholly unnecessary one that exists only for political posturing.

By raising the debt ceiling we aren't agreeing to future spending, raising the debt ceiling is about agreeing to pay for things we've already spent. Not raising the debt ceiling isn't like cancelling a credit card, it's like declaring bankruptcy.
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This post alone should be stickied on the top of DP. Tired of the politics threatening the safety and reputation of our economy.
 
OnWisconsin said:
care to elaborate? or should i just write off this reply as b.s.?
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Look back a couple pages - I address each point.
It -is- true that raising the debt ceiling allows us to sell more T-bills, but doing so has -everything- to do with the national debt,
 
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