Úsers Guide For The Debt Reduction Debate

[privateinvestor]

What is the debt limit?
It is the statutory limit on the amount of federal debt.

In February 2010, Congress passed legislation to increase the debt limit to $14.29 trillion. Since 1993, Congress has voted to increase the debt limit 16 times.

Treasury Secretary Tim Geithner has warned Congress that if it doesn’t vote to increase the debt ceiling before the government reaches its borrowing limit on Aug. 2, it would trigger a default by the United States.

A default “would have catastrophic economic consequences that would last for decades,” Geithner said, by spurring ruinously high interest rates and threatening “the dollar’s dominant role in the international financial system

Why are congressional Republicans refusing to raise the debt ceiling?
Republicans argue that federal spending — which is now nearly 25 percent of GDP — must finally be brought under control. The only way to force Obama to agree to spending cuts is to refuse to raise the debt limit, they argue.

Obama said Monday that he agrees with Republicans that trillions of dollars of spending cuts are needed over the next decade, but he also wants to get rid of certain tax breaks that cause the government to lose revenue. At a Tuesday press briefing, he invited congressional leaders to continue negotiations at the White House.

How would financial markets react if Congress failed to pay interest or principal on Treasury bonds?
No one can be certain, but John Chambers, chairman of the sovereign rating committee for Standard & Poor’s said last week that his company would lower its AAA ranking on federal debt to D, the lowest rating on its scale if the government "doesn’t pay its debt on time."

But he said S&P believes the Congress will raise debt ceiling before Aug. 2.

Could the government avoid a debt crisis by continuing to pay interest to its creditors while reducing spending on other items and by delaying payments to contractors and vendors?
Former Senate Budget Committee staffer Stan Collender said the government does have enough revenue every month to pay its interest obligations, but not enough revenue to both pay interest and to pay for all federal programs

Can Geithner stave off the point at which debt limit is reached?
Yes, as other Treasury secretaries have done, he can use extraordinary measures such as suspending reinvestment of Treasury bonds in the federal employees’ retirement plan, as a way of buying time. But he has said Aug. 2 is the day on which all measures will be exhausted.

Could Obama simply ignore the debt ceiling law and order the Treasury to keep issuing bonds after Aug. 2?
That scenario is now being debated.

The GAO said in a report last February that “If debt is at the limit and the extraordinary actions are exhausted, Treasury may not issue debt without further action from Congress and could be forced to delay payments until sufficient funds become available.”

How large is the national debt?
At the end of 2010, gross federal debt totaled $13.5 trillion. That compares to a gross domestic product — the most common measure of national income — in 2010 of about $14.7 trillion.


www.msnbc.msn.com/id/43647632/ns/politics/t/users-guide-debt-debate/

[privateinvestor]

The Quiz on the Users Guide For Debt Reduction will be tommorrow at 11:30AM PST & Final Grades will be posted Friday evening. Those who get a 100 for this quiz will be given a two day unpaid vacation on any two days of your choice.


P.I.

[handyman2]

This whole thing is silly. We need an amendment that requires the government to have a balanced budget every year and stop this debt limit nonsense. You ain't got it don't spend it.
So we raise the debt limit this year. What about next year when the governments spending spree has used up all that borrowed money.
If Congress would cut out all those subsidies to those that don't need it then we would be getting somewhere.
Face the fact there is soon come a time that just raising the debt limit is not going to work. We won't be able to give those bonds away.
P.I. I have not had a paid vacation for 15 years so your offer falls on deaf ears here.

[privateinvestor]

handyman2 we may learn more tomorrow if not; then who knows ??

The Repubs might just cave on tax loopholes but not sure that will be a deal maker or not.... But nobody knows what the congress will do when they have to vote on any deal with Obama, Reid and McConnell....Boehner and Pelosi have their work cut out for them convincing their respective caucuses to go along to get along.. And Liberals are hung up on cutting Defense by @60 Billion more than what is on the table..

[BeenThere...DoneThat...]

...read my lips... no more debt...

[privateinvestor]

Jul 7, 2011 0:09:54 GMT -5 BeenThere...DoneThat... said:

...read my lips... no more debt...

Yes Ma'am and I hear you loud and clear..

California is still in debt and the new state budget just signed by our Governor is based on smoke and mirrors..or windfall profit taxes that Sacramento hopes to receive..they stayed away from state workers pension reform which is career ending for dems.

[fairlycrazy23]

There are billions upon billions of assets that the Federal Government has that it could sell to raise some revenue.
"closing loopholes" will likely only result in modest income in the short term and likely be counter productive in the long term; The tax code needs to be dramatically reduced.
Because of our complex tax code we end up chasing our tail, I think one 'loophole' being targeted is corporate jets, and I think this loop hole was introduced in one of the recent stimulus package.
Don't give breaks for this and that, just reduce the overall rate, actually making it zero and replace it with a Federal Sales tax would be better and much simpler.
We could get rid of accountants, lobbyists and IRS agents at the same time, probably a good thing.

[fairlycrazy23]

I wish I had thought of this, since the Fed has been buying up the majority of our new debt, why not just have the FED destroy those bonds it holds? This would reduce interest payments and reduce our debt by up to $1.6 trillion.
At the same time we should pass a law that the FED can not buy the bonds, but must actually sell to a 'real' entity.

We owe, like, $1.6 trillion because the Federal Reserve bought that debt, so we have to work hard to pay the interest to the Federal Reserve," Paul said. "We don't, I mean, they're nobody; why do we have to pay them off?
money.cnn.com/2011/06/28/news/economy/ron_paul_bankruptcy/index.htm

[privateinvestor]

Could Obama simply ignore the debt ceiling law and order the Treasury to keep issuing bonds after Aug. 2?
That scenario is now being debated


It might just come down to this..IMHO

[jkapp]

So are those spending cuts Obama is touting going to end up like the last "cuts" the government agreed to?

www.nationaljournal.com/dailyfray/how-did-38-billion-in-spending-cuts-turn-into-only-352-million--20110414
How Did $38 Billion in Spending Cuts Turn into Only $352 Million?

[floridayankee]

Treasury Secretary Tim Geithner has warned Congress that if it doesn’t vote to increase the debt ceiling before the government reaches its borrowing limit on Aug. 2, it would trigger a default by the United States.

This is the concept I cannot quite wrap my head around. If we are not allowed to borrow more money, we won't be able to pay back what we already borrowed.

[djAdvocate]

Jul 6, 2011 22:19:00 GMT -5 @privateinvestor said:

What is the debt limit?
It is the statutory limit on the amount of federal debt.

In February 2010, Congress passed legislation to increase the debt limit to $14.29 trillion. Since 1993, Congress has voted to increase the debt limit 16 times.

Treasury Secretary Tim Geithner has warned Congress that if it doesn’t vote to increase the debt ceiling before the government reaches its borrowing limit on Aug. 2, it would trigger a default by the United States.

A default “would have catastrophic economic consequences that would last for decades,” Geithner said, by spurring ruinously high interest rates and threatening “the dollar’s dominant role in the international financial system

Why are congressional Republicans refusing to raise the debt ceiling?
Republicans argue that federal spending — which is now nearly 25 percent of GDP — must finally be brought under control. The only way to force Obama to agree to spending cuts is to refuse to raise the debt limit, they argue.



www.msnbc.msn.com/id/43647632/ns/politics/t/users-guide-debt-debate/

from a false premise, an infinite number of false conclusions can be drawn.

[privateinvestor]

from a false premise, an infinite number of false conclusions can be drawn.

Yea but some true conclusions can be drawn if the so called "Debt Ceiling Talks" go nowhere..

[Driftr]

Jul 7, 2011 10:52:00 GMT -5 djAdvocate said:

Jul 6, 2011 22:19:00 GMT -5 @privateinvestor said:

Treasury Secretary Tim Geithner has warned Congress that if it doesn’t vote to increase the debt ceiling before the government reaches its borrowing limit on Aug. 2, it would trigger a default by the United States.
www.msnbc.msn.com/id/43647632/ns/politics/t/users-guide-debt-debate/

from a false premise, an infinite number of false conclusions can be drawn.

True enough. Plenty of taxes coming in each month to avoid a default.

[BeenThere...DoneThat...]

Jul 7, 2011 10:36:36 GMT -5 floridayankee said:

Treasury Secretary Tim Geithner has warned Congress that if it doesn’t vote to increase the debt ceiling before the government reaches its borrowing limit on Aug. 2, it would trigger a default by the United States.

This is the concept I cannot quite wrap my head around. If we are not allowed to borrow more money, we won't be able to pay back what we already borrowed.

...P O T D...

[privateinvestor]

Obama just left the so called "Debt Ceiling " meeting and said they will be continued in a few days

So I guess what he means is that the only thing that came out of these meeting was the attendees

[Deleted]

Jul 7, 2011 0:30:25 GMT -5 fairlycrazy23 said:

There are billions upon billions of assets that the Federal Government has that it could sell to raise some revenue.
"closing loopholes" will likely only result in modest income in the short term and likely be counter productive in the long term; The tax code needs to be dramatically reduced.
Because of our complex tax code we end up chasing our tail, I think one 'loophole' being targeted is corporate jets, and I think this loop hole was introduced in one of the recent stimulus package.
Don't give breaks for this and that, just reduce the overall rate, actually making it zero and replace it with a Federal Sales tax would be better and much simpler.
We could get rid of accountants, lobbyists and IRS agents at the same time, probably a good thing.

You may be able to reduce the number of accountants needed, but you can never be completey rid of us

We count all the nickels, and make sure everything gets paid. We collect all the dollars owed, and keep track of sales, cost of sales, and expenses. But mostly, we answer questions...because everyone knows that the government has to make things ridiculously difficult, and so every business out there, need someone like ME (job security is so cool)

[Deleted]

John Chambers, chairman of the sovereign rating committee for Standard & Poor’s said last week that his company would lower its AAA ranking on federal debt to D, the lowest rating on its scale if the government "doesn’t pay its debt on time."


A country that can't stop spending more than it takes in. A country that fund stupid pork barrel projects daily. A country that continues to fund social programs that it can't afford.

If I were John Chambers, I would have already lowered that ranking to D & I would keep it there until we turn this around.

[floridayankee]

Jul 7, 2011 13:04:18 GMT -5 @oldtex said:

...his company would lower its AAA ranking on federal debt to D, the lowest rating on its scale if the government "doesn’t pay its debt on time."

A country that can't stop spending more than it takes in. A country that fund stupid pork barrel projects daily. A country that continues to fund social programs that it can't afford.

If I were John Chambers, I would have already lowered that ranking to D & I would keep it there until we turn this around.

The most important part of that quote is a single two letter word....IF. In the event the debt ceiling is not raised, I would strongly advise the federal government to quit wasting money studying amoeba farts and put that money towards paying down the debt in order to keep their AAA Credit Rating.

The gravy train has spoken...the party is over boys and girls!

[EVT1]

For the record: Recent debt ceiling increases

1997 Republicans voted for- no Tea Party 5.95 Trillion

Bush:

2002 " " 6.4
2003 " " 7.384
2004 " " 8.184
2006 " " 8.965
2007 " " 9.815
2008 " " 10.615
2008 " " 11.315

Obama:
2009 Now it's suddenly a problem- Tea Party 12.394
2009 " " 14.294

It is quite obvious looking at history that the republicans are the least fiscally responsible of the two parties, and the tea party is a sham.

[floridayankee]

Jul 7, 2011 14:01:42 GMT -5 EVT1 said:

It is quite obvious looking at history that the republicans are the least fiscally responsible of the two parties, and the tea party is a sham.

How can something that didn't exist be a sham? Speaking of shams, explain this one please....

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.

Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

The fact that some of you all can't see past party line propoganda is laughable. Keep crying about Bush....it's working well so far.

[fairlycrazy23]

Republicans have been part of the problem,ok, so that is out of the way, we still need to dramatically reduce spending, even if they end up increasing taxes, it will not amount to much, so cutting spending by about a trillion a year would be a good start.

[privateinvestor]

Hate to break the bad news guys but there was NO deal tody with the debt reduction talks....the parties may get to try again this weeekend on Saturday and/or Sunday..

[jkapp]

Jul 7, 2011 14:01:42 GMT -5 EVT1 said:

For the record: Recent debt ceiling increases

1997 Republicans voted for- no Tea Party 5.95 Trillion

Bush:

2002 " " 6.4
2003 " " 7.384
2004 " " 8.184
2006 " " 8.965
2007 " " 9.815
2008 " " 10.615
2008 " " 11.315

Obama:
2009 Now it's suddenly a problem- Tea Party 12.394
2009 " " 14.294

It is quite obvious looking at history that the republicans are the least fiscally responsible of the two parties, and the tea party is a sham.

You see, I remember plenty of conservatives complaining about those debt increases...

However, whatever happened to all of those fiscally conservative democrats that complained about Bush's spending for 6+ years? Once Obama came into office they have been silent or calling for more spending...

So what happened??? Oh, that's right, their savior come into power, so it became ok to deficit spend again

[EVT1]

I just find it funny that the Republicans have been voting for increasing the debt limit consistently year after year, and now they are all acting so serious about the debt. It's a load of crap-they saw an opportunity to go after SS and Medicare and they took it- if it was because of a genuine concern for the fiscal shape of the US then tax increases would not be 'off the table'. If they ever get into power again it is going to be he same old story- the debt is going to go up and they are going to take care of their buddies. I imagine the tea party will vanish into thin air at that point.

[Phoenix84]

What I don't get is that the debt cealing has been raised many times in the past, so it's a fairly common piece of business. But why is this time getting so much attention and such a bitter partisan issue? The last 17 times no one heard or cared about it.

[privateinvestor]

Parties are still far apart and to be continued I guess??

[Deleted]

We do have money coming in... the question is whether we can prioritize.... we would have to stop mandatory spending programs in order to pay the debt instead... which actually might not be a bad idea... it would get a reaction anyway...

[reasonfreedom]

Jul 7, 2011 18:20:02 GMT -5 oped said:

We do have money coming in... the question is whether we can prioritize.... we would have to stop mandatory spending programs in order to pay the debt instead... which actually might not be a bad idea... it would get a reaction anyway...

I will give you some Karma when my time from the last one is up.

2.2 trilling federal revenue - 3.6 Trillion federal spending= -1.4 trillion (federal budget deficit). Thats i nice chunk of programs

[reasonfreedom]

Oh, we are at 14.289 trillion right now, won't we hit it before Aug. 2nd?