Debt Ceiling / Limit for dummies

I found this video today about the debt ceiling.

Its basically a quick, "debt limit for dummies" explanation. Thought there would be a couple of people on here that would appreciate this.



I thought I should add. Im not american, so if any of you out there see any errors in this explanation, or have further insight. Please let us know.

I'd say it's 100% correct ...right up to 2009. That was the last year the United States Government passed a budget. Nancy Pelosi played "Deem and Psss" games and then they just threw their hands up entirely on even playing that much and started with the stop-gap spending measures and temporary bills with open ends to substitute for an actual budget.

The budget I reference in all my threads is the 2013 Proposed budget submitted by the White House to Congress last year. It's valid only in so far as what it shows for spending in 2011 and before. They're good enough about knowing what WAS spent ...but again, without a formal budget of any kind ... there are but projections, estimates and hopes going forward. This is where the debt limit truly IS an American Express Black Card (spend all ya want! They'll give more!)

Now, if they can FORCE a budget to be carried through the Senate and signed by the White House...actual limits will again exist as they haven't now for 4 years. Lines to draw INSIDE of...as well as the outer edges of what to spend TO. However, without it? The result has been budget deficits that never went much above 500 Million under Bush (and actual budgets out of Congress) to WILD deficits of no less than 1 trillion and as high as 1.5 trillion since.

Other than that and if we HAVE real and formal budgets again? Yup. That describes how the system is supposed to work and kinda disfunction at the same time..perfectly!

Debt Ceiling for dummies is there is no budget and no ceiling. They just write checks and print more to cover it. Any talk of debt ceilings is just to put the people off.

Oh yah, its a bummer but they are going to take care of it... in three months. And then they don't... and don't... and-

reply to post by Wrabbit2000


So basically... this is how the system is supposed to work, in a perfect world.
But the system is broken (thank you everybody involved in that one)

Thanks for the in depth explanation. Its a little clearer for me now where the problem is.

the real deficit is around 7 trillion for 2012
5 trillion for 2010
the government does not use GAAP "generally accepted accounting principals", when releasing numbers to the public.
which means they leave out unfunded liabilities like s.s. medicare aca, and so on.

here is an article from 2010 showing the real numbers.

2010 GAAP Accounting Shows Ongoing Unsustainable and Uncontainable Annual Federal Deficits. Against an official quasi-cash-basis reporting of a $1.294 trillion 2010 federal budget deficit, which narrowed from a $1.417 trillion shortfall in 2009, the 2010 Financial Report of the United States Government showed a GAAP-based 2010 deficit of $2.080 trillion, which widened from $1.254 trillion in 2009. The latter set of numbers reflects GAAP accounting (generally accepted accounting principles), which, at present, excludes the level of and annual changes in the net present value of unfunded liabilities for Social Security and Medicare in balance sheet and income-statement accounting. Those numbers, however, are footnoted and discussed in the financial statements. Broader GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion, remaining both uncontainable and unsustainable. The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so. On the spending side, all government spending, except Social Security and Medicare could be cut, but the broad GAAP results still would be in deficit. As demonstrated by recent Administration and Congressional reaction to the deficit cutting measures put forth by the deficit commission, there is no political will to slash Social Security and Medicare severely. The implications from this are discussed in the Hyperinflation Report. Although that report will be updated in the next month, the underlying fundamentals there have not unchanged.

here is the link. shadowstats.com
unfortunately the site is a pay site, but you can read older articles.

reply to post by osirys

Yeah, that's about the size of it I guess. How's that for something to wrap your mind around? As bad and as really ugly as the truth of your video is...that's the system when it WORKS..and it's broken at the moment.

'It's beginning to feel a lot like Zimbabwe' (imagine to the tune of a famous X-mas carol )

reply to post by osirys


I have a problem with this video, it implies that no debt limit is better than having one.

That is completely ludicrous. The reason the debt limit exists is to force congress to actually look at our debt and notice if it gets out of control. It also serves the purpose of making the citizens aware of what the nations debt picture is. Removing the limit will just allow congress and citizens to be oblivious, or worse let congress claim ignorance when the economy collapses.

Arguing for the removal of the debt limit is like arguing banks should not be regulated we should just trust that they will keep some depositor funds around and not siphon it off for themselves.

If you don't realize this is a bad idea you are dumb as a post.

Don't get me wrong the debt limit has not yet gotten congress to act, but every time they have to vote the chances of them doing something gets better.

reply to post by proximo



That is a good point. Im not sure that the point of the video was the get rid of the limit. But it could definitely be interpreted that way. Which, thinking about it, cant be good at all.

reply to post by osirys


There are MANY ATS'ers that need to watch this video. I'm weary of trying to explain it repeatedly. Great find!