u.s. gov't shutdown? debt-ceiling showdown

[dcarrigg]

Re: u.s. gov't shutdown? debt-ceiling showdown

Don't forget who butters their bread, errr, toast. I'd put the odds of a bi-partisan plan that works against the banks about even with the odds of a Cubs/Canucks combo victory next year.

I'm with EJ on this one - no default happens. It may go past Aug. 2nd, true enough, but the 'fantastic' Treasury leadership will 'find a way' to string it out through Sept. at the zero hour. The markets may rattle a bit, but I don't think it will be all it's cracked up to be.

I think you are right about the 'capitulator-in-chief,' though. Austerity's-a-commin'.

And right on cue, I read a piece in the NYT saying that the fearless 'capitulator-in-chief' is ready to take the axe to SS and Medicare. I knew it would happen as long as he kept up that 2 point payroll tax deduction piece. Regardless of whether you think SS needs the axe - knowing that it's coming could be invaluable. I'm shorting lap-blankets, seat cushions and doilies. (sorry; needed a little humor in there)

Anyhow, here's a quote:

The two sides remain in a deadlock over the president’s insistence that the package contain tax increases as well as spending cuts. While Mr. Obama did not retreat from that demand Tuesday, he coupled it with a pledge to take on spending in “entitlement programs,” a promise likely to unsettle many Democrats.

[Jay]

Re: u.s. gov't shutdown? debt-ceiling showdown

isnt this a pay-me-now or pay-me-later situation? If the likely outcome is raise the debt ceiling by 2-3T, and offer some phony spending cuts, then default looms even larger in 5 - 10 years. Right? Is it better to let the house collapse now rather than destroy even more capital later?

Of course with our legislators only being able to see to the next election. Option A raise with phony cuts is the most likely option.

That has always been the choice. Pay-me-later is the agenda and has been for a very long time. Once you get a soft currency, you always have to inflate and pay-me-now just gets harder with every passing day.

[Jay]

Re: u.s. gov't shutdown? debt-ceiling showdown

Nations that don't take care of their poor end up with a huge advantage in this global economy. They reap the rewards without any of the costs. If some sort of level playing field is not required in this regard, any hope of a way out of this becomes impossible.

This in some ways is the point of globalization. Certainly it is one of the tools of policy implementation.

[mmr]

Re: u.s. gov't shutdown? debt-ceiling showdown

There's always the option of just ignoring the law. Who would stop them from doing so? If an opinion piece like this is appearing in a major newspaper, someone may be laying the groundwork to do so.

Invoke the 14th - and end the debt standoff

... President Obama may find that there is only one course left to avoid a global economic calamity: Invoke Section 4 of the 14th Amendment, which says that “the validity of the public debt of the United States … shall not be questioned.” This constitutional option is one that the president alone may exercise.

If the Aug. 2 deadline arrives and no deal has been made, Obama could use a plain reading of that text to conclude — statutory debt ceiling or not — that he is constitutionally required to order the Treasury to continue paying America’s bills. In that sense, this is not just a constitutional option, it is a constitutional obligation, one even the Tea Party will have trouble denying....

[jk]

Re: u.s. gov't shutdown? debt-ceiling showdown

There's always the option of just ignoring the law. Who would stop them from doing so? If an opinion piece like this is appearing in a major newspaper, someone may be laying the groundwork to do so.

there's the argument that the whole debt ceiling idea is contradictory. i.e. the congress mandates certain spending. and it simultaneously denies permission to raise the money for the spending it mandated. which law governs?

[jk]

Re: u.s. gov't shutdown? debt-ceiling showdown

There's always the option of just ignoring the law. Who would stop them from doing so? If an opinion piece like this is appearing in a major newspaper, someone may be laying the groundwork to do so.

there's the argument that the whole debt ceiling idea is contradictory. i.e. the congress mandates certain spending. and it simultaneously denies permission to raise the money for the spending it mandated. which law governs?

[thriftyandboringinohio]

Re: u.s. gov't shutdown? debt-ceiling showdown

there's the argument that the whole debt ceiling idea is contradictory. i.e. the congress mandates certain spending. and it simultaneously denies permission to raise the money for the spending it mandated. which law governs?

Quite contradictory. All spending is at the direction of congress, as is all taxation, and all authority to borrow.

[dcarrigg]

Re: u.s. gov't shutdown? debt-ceiling showdown

There's always the option of just ignoring the law. Who would stop them from doing so? If an opinion piece like this is appearing in a major newspaper, someone may be laying the groundwork to do so.

But Section 4 of the 14th was specifically about spelling out that it was right and proper for the Union to pay debts to its soldiers while not paying the soldiers of the Confederate army.

It would be hard to make the legal argument that this section, as envisioned, was meant for the debt ceiling as it is known today. Section 5 gives congress the power to enact laws to enforce it.

Furthermore, even to hold that all debts are valid, one does not have to hold that they be paid in a given timeframe. Clearly that is congress' prerogative.

To shorten an otherwise long story full of legalese - the 14th amendment argument is a weak one at best, and one that I'm pretty sure Bob Bauer isn't going to be recommending in the Whitehouse - particularly given that Aug. 2nd is an arbitrary deadline set by them to draw a line in the sand. That's right folks - the .gov can continue to pay its debts for a while after August 2nd is done, even with the current debt ceiling. That much has been obvious for a while. Even Kyl gets it.

Anyhow, here's Sect. 4 of the 14th amendment:

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.

[zoog]

Re: u.s. gov't shutdown? debt-ceiling showdown

isnt this a pay-me-now or pay-me-later situation? If the likely outcome is raise the debt ceiling by 2-3T, and offer some phony spending cuts, then default looms even larger in 5 - 10 years. Right? Is it better to let the house collapse now rather than destroy even more capital later?

Of course with our legislators only being able to see to the next election. Option A raise with phony cuts is the most likely option.

That is what I expect. The portion of the public who want to cut government spending will be appeased by spending cuts which will sound like big numbers, but are merely a tiny fraction of the problem. The portion of the public who do not want cuts to programs that affect them will be distracted by a laundry list of small cuts to a wide array of subprograms of tertiary departments of various government agencies so that it does not sound like any one thing is taking a big hit. With the public satisfied, other than little grumbling here or there, they will raise the debt ceiling and kick the can a little further.

Reposting this graphic because I think it pretty much nails it.

[dcarrigg]

Re: u.s. gov't shutdown? debt-ceiling showdown

And right on cue, I read a piece in the NYT saying that the fearless 'capitulator-in-chief' is ready to take the axe to SS and Medicare. I knew it would happen as long as he kept up that 2 point payroll tax deduction piece. Regardless of whether you think SS needs the axe - knowing that it's coming could be invaluable. I'm shorting lap-blankets, seat cushions and doilies. (sorry; needed a little humor in there)

Anyhow, here's a quote:

It looks to be more and more true - Obama will go after Social Security.

[we_are_toast]

Re: u.s. gov't shutdown? debt-ceiling showdown

It looks to be more and more true - Obama will go after Social Security.

Your link might be a bit old.

Latest reports are claiming that a new scientific breakthrough has discovered that there may be a subspecies of Democrats who are not invertebrates!

Sources: House Dems Stunned By White House Debt Proposal, Read Obama The Riot Act

Multiple senior House Democratic aides tell TPM that caucus members were caught off guard by news stories about President Obama's push for deeper deficit and spending reductions -- and particularly about the White House's willingness to cut Social Security as part of a grand bargain to raise the debt limit.

At a private caucus meeting Thursday morning, House Minority Leader Nancy Pelosi (D-CA) told her members that if Obama's serious about putting Social Security on the chopping block, he'd left her in the dark about it. And after an at-times-contentious meeting about how open Dems should be to significant entitlement cuts, leaders departed to the White House to read Obama the riot act.

http://tpmdc.talkingpointsmemo.com/2...ct.php?ref=fpa

[charliebrown]

Re: u.s. gov't shutdown? debt-ceiling showdown

Taxable Social Security Benefits
If your provisional income is below the base amounts for your filing status, then your Social Security benefits are completely non-taxable. If you provisional income is between the base amount and the additional amount, then half of your Social Security benefits over the base amount are taxable.
Provisional income is your social security benefit + all other income from employment, ira distrubutions, cap gains, interest etc.
After some other threshold SS benefits are 85% taxable.

It seems like an no brainer to say the SS benefit is fully taxable rather than half once it is over the base amount.

1) It can be marketed as no cuts to SS.
2) It would tax the rich.
3) Just a minor twink to the tax code, probably won't even make the top news stories. ... What's not to like?

I think that some states should do this too with over liberal pension payouts. In Illinois constitutionally the pensions can't be cut, but I don't think there is a provision stating how much of the benefit is taxable. Not that I want to see people starve, but there are some elite govt workers collection multiple pensions from multiple arms of the state and some have
those clauses where the benefit is 85% of the last years salary, and somehow they find an open position in their last year of service at a much higher salary than there previous years of service.