Debt Ceiling Stand Off? January 19, 2023

As the US Gov and Treasury is a concern, which protects financially, the poorest and most vulnerable Americans, mostly through programs like the Armed Forces, Medicare, and Social Security, it is inevitable in our current monetary system, this will require deficit spending. As they usually spend more than their revenue, their debt grows. The debt's growth tends to accelerate over long periods of multiple decades.

Congress routinely approves increases in the debt ceiling. Although there are occasionally stand offs, increasing the debt ceiling is usually a bipartisan deal.

There have been a few headlines to suggest this upcoming Thursday could result in a stand off, with the new GOP House majority.

Some quotes gathered...

"McCarthy has made little secret of the fact that Republicans intend to demand massive spending cuts to the federal budget in exchange for approving an increase in the debt ceiling.

"We don't want to put any fiscal problems to our economy and we won't," McCarthy said. "But fiscal problems would be continuing to do business as usual."

"A senior White House official told CNBC the Biden administration plans to pursue negotiations in earnest with Congress after the mid-April tax deadline."

Realistically, it is not politically acceptable for the US Gov to operate on a balanced budget, because that would open up the vulnerabilities of the nation's poorest people.

It is not financially acceptable for the US Gov to default on its debt.

So the most likely path seems to be to go into further debt. This path eventually leads to more inflation which eventually becomes politically unacceptable because it opens up vulnerabilities to the nation's poorest.

Is McCarthy being a blowhard with his calls for spending cuts to balance the budget? Will Congress continue to kick the can down the road as usual? Or will the US Gov finally default?

I don't trust McCarthy.

I hope they let the govt. shut down.

The only way to reduce inflation is to cut spending.

An easy fix would be to cut every govt agency and office by at least 50%

a reply to: watchitburn

No, they will not let the government shut down, Zelensky and his wife, needs their billions of infusions from the US taxpayer.

They do have expensive lifestyles to maintain.

if mcarthy had a spine (I know he doesnt) he would be talking about that damn omnibus that effectively mandated this fight.

I like where I live, and I make a decent wage but I am rapidly approaching a point where I cant afford to live here.

As a federal employee I can honestly say there is a lot of room to cut the fat in the federal system.

originally posted by: watchitburn
I don't trust McCarthy.

I hope they let the govt. shut down.

The only way to reduce inflation is to cut spending.

An easy fix would be to cut every govt agency and office by at least 50%

When would they shut the government down? Didn’t they just pass the spending bill?

a reply to: 38181

You're probably right,

However if the debt ceiling isn't raised, I would imagine the govt would have to cease spending, which would result in a defacto shut down.

I say let the default happen. The house of cards is going to collapse sooner or later. Might as well get on with it.

a reply to: InachMarbank
Did we not take a huge pay reduction in the trump tax cuts?

If you look at the United States as an employee, they agreed to take a huge wage cut. Yet, prices are going up??? hmmm. But, if you increase min wage , prices will go up?

So who here would agree to a reduction in there wages? Everybody here that supports trumps tax cuts for the rich should embrace a reduction in their wages yes? Reducing your pay would do the same as reducing corporations tax burden yes?

Debt ceiling... they will talk about reducing social security and medicare, is that what you want? they will not talk about their golden parachutes,

originally posted by: franklen
a reply to: InachMarbank
Did we not take a huge pay reduction in the trump tax cuts?

If you look at the United States as an employee, they agreed to take a huge wage cut. Yet, prices are going up??? hmmm. But, if you increase min wage , prices will go up?

So who here would agree to a reduction in there wages? Everybody here that supports trumps tax cuts for the rich should embrace a reduction in their wages yes? Reducing your pay would do the same as reducing corporations tax burden yes?

Debt ceiling... they will talk about reducing social security and medicare, is that what you want? they will not talk about their golden parachutes,

When you increase corporate taxes they pass the additional cost of doing business along to the consumer.

If you raise consumer wages, corporate increases their prices to cover the wage increases.

Both approaches are trying to put band-aides on the symptoms while ignoring the heart of the problem.

Spending cuts are an absolute MUST; there is far to much unnecessary waste in the budget that doesn't do a damn thing to benefit America, but the GOP will cave (they always do) and allow stupid waste spending to remain.

I'm with Trump. Spend more money on Americans, and send less to zielinsky and to Pakistan, teaching women how to breastfeed babies.

a reply to: watchitburn

If no increase in debt, the gov could apparently keep paying bills until about June 2023. These are what Yellen referred to as extraordinary measures.

a reply to: watchitburn

In regards to "let the default happen" it reminds me of the Doors lyrics. " The future is uncertain and the end is always near"

a reply to: franklen

Big spenders make prices go up.

Poor people go into debt to prop up big spending.

originally posted by: franklen
a reply to: InachMarbank
Did we not take a huge pay reduction in the trump tax cuts?

If you look at the United States as an employee, they agreed to take a huge wage cut. Yet, prices are going up??? hmmm. But, if you increase min wage , prices will go up?

So who here would agree to a reduction in there wages? Everybody here that supports trumps tax cuts for the rich should embrace a reduction in their wages yes? Reducing your pay would do the same as reducing corporations tax burden yes?

Debt ceiling... they will talk about reducing social security and medicare, is that what you want? they will not talk about their golden parachutes,

Define “for the rich”.

I’m sorry but this post sounds like a Biden admin talking point, and suggests a lack of understanding of how free market economics functions.

For instance, those “tax cuts for the rich” are intended to boost investment. Sure enough, what happened to CapEx? It went up.

When capex goes up, people get jobs. Companies make things. Your tax base is expanded. All sorts of positive things.

I knew a business owner who would go on a spending spree each December. Had to offset profits as either they could spend it on stuff for the business, or, they could give it to the government.

They made the logical choice and spent the money on their business. Doing anything less would be foolish. That means all of the businesses associated with those purchases benefitted.

That’s why this whole “pay their fair share” argument is utter BS. People honestly think that businesses and corporations just get away with not paying tax and are thusly wildly enriched. The reality is, that money gets spent to avoid giving it to the government.

So, the current admin’s commentary around “pay their fair share” is basically a moronic argument that’s designed to get financially illiterate people all riled up.

Seems to work.

a reply to: franklen

Unclear whose wages are most at risk at this point. Probably not much of anybody, because debt ceiling is always raised. What makes this time any different?

If the government can't do their job without further destroying the economy, maybe the government should be out of a job.

If we stopped letting them # everything up maybe things would go well for a while.

Clean slate, fire every last one of them and start over.
We could remove the temporary income tax while we're at it.

a reply to: franklen

They will talk about reducing Medicare and Social Security spending? Politicians talking means what?

Golden parachutes? Those with large salaries have an easier time setting aside a golden nest egg.

Stocks, bond, futures, and other speculative markets are instruments to absorb inflation by tying up the cash of big spenders.

a reply to: carewemust

Foreign aid accounts for less than 1% of the budget. Irrelevant to the talk about national debt.

a reply to: lordcomac

What if I make point that the government is operating to help protect the interests of poor people?

Basically your position might equate to firing all the poorest people.

Is there anything else that could help the situation?

a reply to: lordcomac

The income tax is basically a levy on inequality. Kind of like a pay to play scheme.

Here's an article with a bit more specifics about proposed House spending cuts:

www.politico.com...

"slashing federal spending by at least $130 billion from the $1.7 trillion government funding package without cutting defense, which passed in December (about 7.6%).

Capping spending at 2022 levels.

Those House GOP demands could set the stage for a government shutdown, unless conservatives relent or enough moderate Democrats come to other Republicans’ rescue.

Republicans say they won’t back a debt limit increase unless they get their way on spending cuts or measures to reign in the ever-increasing $31 trillion debt."

Let's see...