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The Debt Ceiling...Good or Bad Policy?

Good or Bad Policy?

  • Total voters
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SlevinKelevra said:
a mortgage or car loan, by definition, involves promise of repayment with money that you DO NOT HAVE. there is calculated risk by the lender (and the lendee) that you will* have the $ (your next 60-360 paychecks), but no, you do not *HAVE THE MONEY*, otherwise you would pay 100% straight down to begin with.

HAVE, as used in your comment, is present tense.
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Will you stop with your stupid posts? My finances are none of your business and are not being discussed here. Pay attention and stay on topic.
 
OrphanSlug said:
cpwill, let me see if I can help you with this.

What we are trying to say is the debt limit does not serve as a mechanism to handling our debt burden, by the time we have gotten ourselves close to the next debt limit it is because of approved spending over the course of the last time the debt limit was raised. Budgets are rarely evaluated on where we are in terms of the next debt limit, and rarely impact how spending bills end up through Congress and on the President's desk. They can when the timing is right, otherwise... spend, spend, and more spend.

Congress already knows, or should know, the conditions of our budget in terms of tax revenues and spending. Thus deficits, and additions to debt.

Your argument boils down to Congress arguing about the amount of debt we should carry *after* we approved all the spending getting us to that point of debt limit. It is nonsensical as it equates to arguing about a credit card limit after the bill shows up telling us we spent ourselves to the point of the existing credit limit.

Because we tend to spend beyond means irregardless of the condition of the economy (influence on tax revenues) or the condition of our tax code (wildly out of control and way out of balance across income quintiles) it means the debt limit ends up raised. We know this is factual because we have raised the debt ceiling some 40+ times since just 1980. Republican President, Democratic President, no matter the disposition of Congress... it gets raised all the time.

That proves, beyond doubt, that the debt ceiling does not serve as a means of "fiscal responsibility" nor does it ever equate to proper evaluation of our "debt burden." Now that our Total Debt is well above 100% of our GDP it drives home the fact that debt ceilings are meaningless in every sense.

Do away with it, and focus on something that might impact fiscal restraint. Like spending caps as a percentage of GDP, accounting for spending bills by projected revenues, something... anything... along the lines of accounting or basic finance. Debt ceilings do not apply, and clearly do not help. At all.
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Well-written post.

I believe that debt limits were intended to limit spending, at least as a thing to appease the populace, but since they vote to increase the limit all the time it has become useless. So, what's to stop them from voting to tweak whatever else is used? I mean, if they can't contain themselves now, and can just vote to thwart whatever they deem "necessary", why would anything else be any different?
 
OrphanSlug said:
cpwill, let me see if I can help you with this.

What we are trying to say is the debt limit does not serve as a mechanism to handling our debt burden, by the time we have gotten ourselves close to the next debt limit it is because of approved spending over the course of the last time the debt limit was raised. Budgets are rarely evaluated on where we are in terms of the next debt limit, and rarely impact how spending bills end up through Congress and on the President's desk. They can when the timing is right, otherwise... spend, spend, and more spend.

Congress already knows, or should know, the conditions of our budget in terms of tax revenues and spending. Thus deficits, and additions to debt.

Your argument boils down to Congress arguing about the amount of debt we should carry *after* we approved all the spending getting us to that point of debt limit. It is nonsensical as it equates to arguing about a credit card limit after the bill shows up telling us we spent ourselves to the point of the existing credit limit.

Because we tend to spend beyond means irregardless of the condition of the economy (influence on tax revenues) or the condition of our tax code (wildly out of control and way out of balance across income quintiles) it means the debt limit ends up raised. We know this is factual because we have raised the debt ceiling some 40+ times since just 1980. Republican President, Democratic President, no matter the disposition of Congress... it gets raised all the time.

That proves, beyond doubt, that the debt ceiling does not serve as a means of "fiscal responsibility" nor does it ever equate to proper evaluation of our "debt burden." Now that our Total Debt is well above 100% of our GDP it drives home the fact that debt ceilings are meaningless in every sense.

Do away with it, and focus on something that might impact fiscal restraint. Like spending caps as a percentage of GDP, accounting for spending bills by projected revenues, something... anything... along the lines of accounting or basic finance. Debt ceilings do not apply, and clearly do not help. At all.
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You make a good argument and I agree with it, but I have to agree with cpwill. It keeps the national debt in public view and by shinning light on the debt, having to yet again raise it, shows we have a serious debt problem. And the public needs to be aware of this problem and if by having to raise it brings attention to it. So be it. That is a good thing.
 
radcen said:
Well-written post.

I believe that debt limits were intended to limit spending, at least as a thing to appease the populace, but since they vote to increase the limit all the time it has become useless. So, what's to stop them from voting to tweak whatever else is used? I mean, if they can't contain themselves now, and can just vote to thwart whatever they deem "necessary", why would anything else be any different?
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Thank you for the kind words.

I'll admit it will always be a challenge to engineer some method of fiscal restraint for Congress, as there will always be plenty of economic or foreign policy reason to spend beyond means. Let alone all the political reasons to spend, usually the result of treasury promises (less tax, or more spending, or both) to obtain a vote.

I recall the last time a balanced budget amendment came to discussion, there were all sorts of outs for various conditions where spending needs to go beyond means. So much of them that the idea itself became useless. War, economic fault, "social need," assurance of government function, etc. Illustrating well the point we are talking about.

That said, something needs to be done. Because of what has happened with the debt ceiling, we can be certain that can be crossed off the list.
 
Carjosse said:
As I explained it creates a crisis that can be blamed on someone else but can only be solved by them, it makes them look good which gives them an incentive to hit debt ceiling and cause a crisis, a crisis that does not need to happen in the first place. THen there are times where hitting the debt ceiling is unavoidable through the normal course of budgeting. You do not need the economic weapon of mass destruction when like you said they will get voted out for spending wastefully.
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NO, it puts the responsibility directly on the person who sponsored the bill that created the problem.
 
Born Free said:
You make a good argument and I agree with it, but I have to agree with cpwill. It keeps the national debt in public view and by shinning light on the debt, having to yet again raise it, shows we have a serious debt problem. And the public needs to be aware of this problem and if by having to raise it brings attention to it. So be it. That is a good thing.
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I understand what you are arguing, I just disagree with the method.

Whenever someone says "we have a spending problem" my natural response is "we have a budget problem." The idea being we need to always be aware of both sides of the math, income to spending (or tax revenues to budget needs.) But the real idea being keeping people in a mindset of looking at the core problem. What we approve as a budget.

Likewise, when someone says the "debt ceiling... keeps the national debt in public view" my natural response is to remind everyone of our Total Debt to GDP. At the moment (well, as of the likely 2015 spending conclusion) we are at roughly 103% of GDP. Sources vary on this, usually based on GDP estimates at end of year. But it is a similar principle, the economic ability of this nation to generate tax revenues to then support our budget needs. We know there will be deficits year on year into the future for as far as the eye can see, telling us that it comes down to ratios. How much more debt added per year in line with GDP growth. The trends from 2012 to current suggest continued minor increases in our Total Debt to GDP, telling me we are on the Japan track of debt spending at unsustainable levels. Our GDP does not grow quick enough to sustain the levels of added new Debt year on year. That is what needs attention, using the debt ceiling is thinking too late.

When we rely on debt ceiling numbers, we are basically waiting for the maxed out credit card bill to illustrate we spent too much beyond means. With this analogy, it ignores the previous couple of months spending so we can argue about what our credit card limit should be. The focus is on one side of the equation, and way too late.

That is my main issue, and there is only so far you can push Fiat Money Systems to handle adding debt to the point of continually stressing a nation's GDP to afford it.
 
radcen said:
Well-written post.

I believe that debt limits were intended to limit spending, at least as a thing to appease the populace, but since they vote to increase the limit all the time it has become useless. So, what's to stop them from voting to tweak whatever else is used? I mean, if they can't contain themselves now, and can just vote to thwart whatever they deem "necessary", why would anything else be any different?
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Greetings, Radcen. :2wave:

It wouldn't, that's the problem! Besides the idea of a debt limit that gets raised every year is oxymoronic to begin with - but if they insist upon acting like morons, the debt limit should not be raised one penny more than the CPI went up.
 
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faithful_servant said:
NO, it puts the responsibility directly on the person who sponsored the bill that created the problem.
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Then you do not know how politics works then, playing the blame game is an integral part of politics.

This video explains it:

It is especially true now that Republicans control Congress.
 
pbrauer said:
Here is what Steve Moore said yesterday:
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I think the debt ceiling is a good idea with bad results. During gold and other precious metal backed standards, limiting borrowing was essential since the money was finite. After switching to fiat the debt ceiling still acted as some restraint which would aid in the dollar retaining value, but it's effects are limited.

The govt can promise the money out before they even raise the debt ceiling to ensure the money is there, and with a gold standard overspending meant instant economic and fiscal collapse unless they had a way to raise revenue to match spending increases, while with fiat the results of such would not be instant, so for politicians playing the spend and raise the debt ceiling game is nothing more than kick the can down the road.

Seeing as how we have been on fiat currency since nixon, i think debt limits need to be updated to something more practical, like requiring approval to increase spending and debt instead of keeping the two seperate.
 
beerftw said:
I think the debt ceiling is a good idea with bad results. During gold and other precious metal backed standards, limiting borrowing was essential since the money was finite. After switching to fiat the debt ceiling still acted as some restraint which would aid in the dollar retaining value, but it's effects are limited.

The govt can promise the money out before they even raise the debt ceiling to ensure the money is there, and with a gold standard overspending meant instant economic and fiscal collapse unless they had a way to raise revenue to match spending increases, while with fiat the results of such would not be instant, so for politicians playing the spend and raise the debt ceiling game is nothing more than kick the can down the road.

Seeing as how we have been on fiat currency since nixon, i think debt limits need to be updated to something more practical, like requiring approval to increase spending and debt instead of keeping the two seperate.
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Greetings, beerftw. :2wave:

:agree: Raising the credit card limit for spendaholics is never a good idea, especially if they work in government! Too tempting, since they aren't made personally responsible for repayment. IOW, we have an $18 trillion dollar debt made by people who just add to it then kick it down the road for the next guy to worry about it. Must be nice! :thumbdown:
 
beerftw said:
Seeing as how we have been on fiat currency since nixon, i think debt limits need to be updated to something more practical, like requiring approval to increase spending and debt instead of keeping the two seperate.
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That is what passing a budget is, they approve the spending and in other countries that also means they approve any implicit borrowing.
 
polgara said:
Greetings, beerftw. :2wave:

:agree: Raising the credit card limit for spendaholics is never a good idea, especially if they work in government! Too tempting, since they aren't made personally responsible for repayment. IOW, we have an $18 trillion dollar debt made by people who just add to it then kick it down the road for someone else to worry about. Must be nice! :thumbdown:
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Greeting polgara, and i agree.

To make it worse though under the gold standard consequences existed for raising the debt ceiling unjustly, but since fiat money the consequences, at least for politicians disappeared. They need to change the system to make consequences for spending too much under a fiat system.
 
polgara said:
Greetings, beerftw. :2wave:

:agree: Raising the credit card limit for spendaholics is never a good idea, especially if they work in government! Too tempting, since they aren't made personally responsible for repayment. IOW, we have an $18 trillion dollar debt made by people who just add to it then kick it down the road for the next guy to worry about it. Must be nice! :thumbdown:
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The debt ceiling is not like a credit card limit, what it is a hard limit for debt. It would be like saying if you accumulate say 200,000$ in debt that your asshole neighbor spent you will refuse to pay back any more more than 160,000$.
 
Carjosse said:
That is what passing a budget is, they approve the spending and in other countries that also means they approve any implicit borrowing.
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But requiring passing a budget and requiring debt limits at the same time might be effective at limiting debt. The big issue is though that without the gold standard, the debt ceiling has little meaning. This is because the money is no longer finite, and spending more than can be payed back holds no real consequence to politicians, since the effects of inflation, deflation, and credit standing worldwide take time to effect people, and those politicians will either be gone or blaming someone else come electiong time. Under the gold standard, raising the debt ceiling willy nilly would leave the country bankrupt fast since it could not print more, hence why it used to be effective, but is not anymore.
 
beerftw said:
But requiring passing a budget and requiring debt limits at the same time might be effective at limiting debt. The big issue is though that without the gold standard, the debt ceiling has little meaning. This is because the money is no longer finite, and spending more than can be payed back holds no real consequence to politicians, since the effects of inflation, deflation, and credit standing worldwide take time to effect people, and those politicians will either be gone or blaming someone else come electiong time. Under the gold standard, raising the debt ceiling willy nilly would leave the country bankrupt fast since it could not print more, hence why it used to be effective, but is not anymore.
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Printing money is not necessarily bad, and using a gold standard heavily restricts what a central bank can do to help the economy. The US has also ran up large deficits using the gold standard as well.
 
Carjosse said:
Printing money is not necessarily bad, and using a gold standard heavily restricts what a central bank can do to help the economy. The US has also ran up large deficits using the gold standard as well.
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Printing money is not bad as long as fiscal restraint exists. Like mentioned in earlier posts with fiat combined with the debt ceiling no consequences exist for politicians abusing the system. I think they need to eliminate the debt ceiling and restructure the system to add consequence to spending without just cause, in order to ti keep fiscal restraint, and to ensure america does not join the vast majority of fiat currencies that failed horribly.
 
beerftw said:
Printing money is not bad as long as fiscal restraint exists. Like mentioned in earlier posts with fiat combined with the debt ceiling no consequences exist for politicians abusing the system. I think they need to eliminate the debt ceiling and restructure the system to add consequence to spending without just cause, in order to ti keep fiscal restraint, and to ensure america does not join the vast majority of fiat currencies that failed horribly.
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Printing more money reduces the value of money we currently have in our wallets, though, which is why things are costing more these days. I saw a chart recently that showed that our dollar is only worth five cents today in purchasing power. :shock: If I can remember where I saw it, I'll post it. I do know that I'm paying as much per pound for ground beef today - $4.99 per pound in today's flyer in our newspaper - that I used to pay for sirloin steaks per pound a few years ago, though. Even ground turkey is running around $1.79 per pound around here, and a dinner of fried chicken was always considered a good choice for an economical meal. :sigh:
 
polgara said:
Printing more money reduces the value of money we currently have in our wallets, though, which is why things are costing more these days. I saw a chart recently that showed that our dollar is only worth five cents today in purchasing power. :shock: If I can remember where I saw it, I'll post it. I do know that I'm paying as much per pound for ground beef today - $4.99 per pound in today's flyer in our newspaper - that I used to pay for sirloin steaks per pound a few years ago, though. Even ground turkey is running around $1.79 per pound around here, and a dinner of fried chicken was always considered a good choice for an economical meal. :sigh:
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You also have to remember there is normal inflation, a good economy has inflation.
 
I think in theory it was a good idea. But it's turned into a political circus. Supporting congressmen in this effort is itself a waste of tax dollars.
 
betuadollar said:
I think in theory it was a good idea. But it's turned into a political circus. Supporting congressmen in this effort is itself a waste of tax dollars.
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In theory it is meant to be a political circus.
 
Carjosse said:
Then you do not know how politics works then, playing the blame game is an integral part of politics.

This video explains it:

It is especially true now that Republicans control Congress.
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A debt ceiling puts the brakes on that crap. But you've made up your mind that you oppose a debt ceiling and nothing I or anyone else can tell you will ever change that. Facts, truth, reality all get to take a back seat to the ideology you've chosen. It's sad that people will ignore the truth in order to push an agenda....
 
faithful_servant said:
A debt ceiling puts the brakes on that crap. But you've made up your mind that you oppose a debt ceiling and nothing I or anyone else can tell you will ever change that. Facts, truth, reality all get to take a back seat to the ideology you've chosen. It's sad that people will ignore the truth in order to push an agenda....
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You are one ignoring the truth and facts, you can see the consequences of it right now, the debt ceiling has never stopped anyone and it never will. It's only purpose is as a political tool.
 
GOP playing MORE politics with our credit rating. Great

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