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The Debt Ceiling; No Big Deal?

Wednesday, October 09, 2013

U.S. Dept. of Treasury (Mesut Dogan/Shutterstock)

Nancy Cook, economic and fiscal policy correspondent for The National Journal, takes a closer look at some of the talking points surrounding the debt ceiling debate.

 

Guests:

Nancy Cook

Comments [14]

Martin Chuzzlewit from Manhattan

The Uncompromiser in Chief - Doyle McManus, Los Angeles Times

Oct. 09 2013 02:50 PM
Martin Chuzzlewit from Manhattan

Can we start the Obama impeachment proceedings now?

Oct. 09 2013 01:33 PM
Joe from nearby

Sorry, I stand corrected. I realize that some of my comments are biased, so to be fair it seems that Democrats and Republicans alike are hated, almost equally. I shouldn't have blamed just the GOP for what is a bipartisan mess:

http://politicalticker.blogs.cnn.com/2013/10/07/cnn-shutdown-poll-plenty-of-blame-to-go-around/

Regardless, this is a mess. The fact remains that both sides are messing up, democrats included. This isn't just a one sided mess.

Oct. 09 2013 12:59 PM
Joe Mirsky from Pompton Lakes, NJ

From my latest newsletter
Anyone Got Raid?
Animal Planet has a variety of cutesy animal cams: kittens, penguins, wild birds, butterflies....you can watch the natural behavior of over 11 species live 24/7.

But you'll go from aaaw to eeew, with the newest addition: cockroach cam, cockroaches doing the roach thing in a roach motel kitchen. Cockroach cam is sponsored by Orkin exterminators, of course.

Cockroach cam should not be confused with C-SPAN. With just a 9% favorability rating, Congress ranked low-er than cockroaches in a January, 2013 poll by Public Policy Polling.

Congress was rated for favorability against 26 different things. Head lice beat Congress 67-19, colonoscopies, 58-31, and Brussels sprouts, 69-23. Cockroaches edged out Congress 45 to 43.

On the plus side, Congress beat telemarketers 45-35, Lindsay Lohan 45-41, and trounced the ebola virus 53-25.

Oct. 09 2013 12:00 PM
Joe from nearby

GOP approval now lower than dog poop:

www.huffingtonpost.com/2013/10/08/congress-dog-poop-hipsters-popularity_n_4065586.html

Oct. 09 2013 11:53 AM
bb from nyc

"the approval rating could actually be at zero"...laughter ensues

Oct. 09 2013 11:53 AM
jgarbuz from Queens

Let's amend the Constitution to bring back debtor's prisons! Yay! Put those reckless, greedy gamblers' butts in the slammer!

Oct. 09 2013 11:52 AM
jgarbuz from Queens

For centuries, dozens of nations have gone bankrupt, and after restructuring and having their populations go through devastating downsizing, they have recovered and are doing well. Recent examples have been Russia and Argentina.
Indeed hundreds of Americans have gone bankrupt, and after a period of very tough times, rehabilitate themselves and get credit again and rejoin the national economy. Thankfully, we don't have debtor's prisons in America. Other countries do. I know Israel technically does, following British common law, and chronic debtors can go to jail, but very actually do.
But bankruptcy is not death, but it's not a good thing either. It creates long periods of suffering. People lose money and the debtors go into a long period of deprivation until they clean up their record and are reinstated.

Oct. 09 2013 11:42 AM
Scott from Soho

@Chris,

These numbers came straight from the interweb, they have to be completely accurate. I also realize that it is difficult for our country to go completely bankrupt. We can however pit ourselves in a position that will make it hard for the population to theive when we are over taxed and under served.

I was simply hoping that the little note would cause a little discussion on Brian's show. I am getting bored listening to each side negatively babble on about eachother when in fact neither has much to be proud of. Both sides of the aisle are perpetuating a huge fraud. They are far more concerned with holding office and leas concerned with doing what is right for the country.

Oct. 09 2013 11:21 AM
Joe Mirsky from Pompton Lakes, NJ

Debt for Dummies
"If Congress fails to raise the debt ceiling by $2.5 trillion that somehow the United States will go into default and we will lose the full faith and credit of the United States. That is simply not true."
— Michele Bachmann July 13, 2011

After months of posturing, Congress passed the debt ceiling increase on August 2, 2011. Three days later Standard & Poors downgraded the credit of the United States, saying that political brinksmanship had made governance and policymaking less stable, less effective, and less predictable.

“The country now possesses the strongest credit in the world. The full consequences of a default — or even the serious prospect of a default — by the United States are impossible to predict and awesome to contemplate.”
— Ronald Reagan, in a letter to Republican Senator Howard Baker, Senate majority leader, Nov. 16, 1983.

“The Treasury has had to take extraordinary measures to allow the United States Government to continue to function normally as a result of the failure of the Congress to act. ....we must not imperil the full faith and credit of the United States Government and the soundness and strength of the American economy.”
— George W. Bush June 25, 2002 in letters to Congressional leaders.

The debt ceiling was raised 18 times under President Reagan and 7 times under President Bush. There have been 107 increases since 1940.

“As a very important source of strength and security, cherish public credit. One method of preserving it is, to use it as sparingly as possible; avoiding occasions of expense by cultivating peace, but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it; avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts, which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burthen, which we ourselves ought to bear.”
— George Washington, Farewell Address, September 17,1796.

Oct. 09 2013 10:58 AM
Chris from New York

@ Scott

Those figures are stale, probably from 2009. The current "new debt" or annual federal deficit has fallen to about $900 billion from $1,600 billion. That's still a huge number and should continue to drop as the economy recovers and the military spending declines. The federal government is not a business nor a family and cannot go bankrupt. All it needs to do is print money and devalue the existing debt and obligations in the entitlement programs. Which is current Federal Reserve policy.

Does anyone realize that the Federal Reserve is printing $85 billion a month in money, which when added up, $1,020 billion, IS LARGER THAN THE FEDERAL DEFICIT! Essentially, the Federal Reserve is creating money and then lending it to the Treasury to pay the government's bills. No one in Washington in either party will admit this because it's the classic behavior of banana republics.

It's a macro form of wealth redistribution as it weakens the purchasing power of the owners of American debt (retirement funds, China, Japan) as inflation eventually grinds away the value of the dollar. We just haven't seen much "inflation" in how the government measures it because they exclude things like energy and food, because, you know, why would voters need those things?

Governments and banana republics always distort inflation figures (see Reinhart and Rogoff's seminal work on financial crises called "This time is different").

This is all Kabuki theater.

Oct. 09 2013 10:34 AM

On the minus side, we are all more likely to be attacked when government vigilance is cut back....

IMO, this is a redux of the situation that led to the deaths of our diplomats in Benghazi. The House cuts funding, a threat that would otherwise have been parried is carried out, the cowardly House claims that it is the person in charge's fault for not prioritizing (Hilary in the case of Benghazi, Obama if an attack succeeds against the U.S.) - and holds hearings to demonstrate how poor the person in charge is at their job. Let's call them on their bullsh*t and write our Congressman to let them know we know what time it is.

It's hubris. The shutdown threatens us all and certainly is not the method of governance that the Constitution designed. They are thugs and cowards and deserve jail time. I have lost my patience. The power to extort concessions is no form of government we really WANT to live under.

Oct. 09 2013 10:11 AM
Scott

Brian,

It would be nice for you to focus on the real issue which is that our government is spending far more money than it takes in. I'm sure you will use this segment to continue bashing the elected representatives who ran for office praising the "taxed enough already" ideals.

As many business owners and private citizens know, reckless spending leads to bankruptcy. Unfortunately, it appears that very few if any elected officials realize this. We cannot continue to be a beacon of hope for the world when we can't afford to keep the lights on.

Fiscal Cliff Put in Perspective

Lesson # 1
U.S. Tax Revenue: $2,170,000,000,000
Federal Budget: $3,820,000,000,000
New Debt: $1,650,000,000,000
National Debt: $14,271,000,000,000
Recent Budget cuts: 38,500,000,000
Let’s now remove 8 zeros and pretend it’s a household budge:

Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on the credit card: $142,710
Total budget cuts so far: $38.50
Got it?…. OK now…

Lesson # 2

Here’s another way of looking at the Debt Ceiling:

Let’s say you come home from work and find there has been a sewer backup in your neighborhood… and your home has sewage all the way up to your ceilings. What do you think you should do?

Raise the ceiling or remove the crap?

**Note: This has been circling around the web the past few days. TheIowaRepublican.com does not claim authorship of it. We do not know who the original source is.

Oct. 09 2013 09:20 AM
Mark

On the plus side it's going to be really hard to start a new war with this kind of budget crisis...

Oct. 09 2013 08:31 AM

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