Debt ceiling drama already here (deal allegedly reached)

Then explain for the rest of us following along at home

 

Blocked him since so I don' remember exactly what I was responding to. What I recall is that is was a deflection, is generally trying to defend a default strategy by reference to spending limits, which doesn't make sense procedurally because this is just the authorization for spending already authorized and appropriations bills, act like debt amounts are excessive now, which I covered otherwise, negates the role of tax cuts in creating debt, fails to account for the impact of a default, both on US world standing, the economy, and just increasing the amount of the debt once everything shook out, assuming it did, by reference to the interest rates we would have to pay once the full faith and credit of the United States government has been undermined.

And doesn't even tie it in with the desire to cut Social Security and Medicare.

There was so much deflection, and I've learned better than to try to get into an exchange with him. I should've never responded from the outset, because there's no way to get through and create a reasoned discussion, even one where disagreement is framed. That was my bad for losing my composure; hence the block

 

I will say that what makes this episode of debt ceiling brinksmanship especially scary is the fact that these people are stupid enough to cause a true default to happen. It's always been a negotiating tactic before and they say they want to negotiate in this instance. But I don't get the feeling they would ever be reasonable. The whole recent right-wing movement is that they want to blow everything up, and I'm not so sure they wouldn't here. They don't realize what they're doing.


It's like North Korea nuclear brinksmanship, They really could

 

If we go over the default cliff because of these loons in the house, they need to be held accountable. (higher interests rates, a bad recession, the market tanks, taking people's retirement savings down with it). Great platform!

 

They will blame others, and who they need to believe that version of events will

 

Truly no offense, but who's responsible will matter very little. This could lead to horrifically bad outcomes, both nationally and globally.

If someone sets off the doomsday device, will it really matter who did it?

Optimistically, this brinkmanship could put the look at me contingent in such bad light as to push the nation towards getting rid of this scourge, but that would require sound messaging by the rest of the sane adults and for people to listen.

Who has time to listen when we're dealing with gas stoves and book bans?

 

I am not so sure with this bunch of republicans there is a deal to be made. They are dumb enough to think this is a good idea.

Rogoff and Reinhardt had some very insightful observations and were generally on the money in terms of the financial crisis, and they documented centuries of financial crisis and showed how financial/debt driven economic downturns are fundamentally different than typical recessions. Their work was spot on. They did a supplemental paper that tried to estimate what sort of debt to gdp gets government in trouble. That supplement was where they had errors. The point of it was accurate but quantifying it and comparing less financially stable countries to large first world countries is apples and oranges.

Federal debt to gdp is measured in several ways - gross, net, debt held by the public. In terms of gross debt we are probably already there.

Federal Debt: Total Public Debt as Percent of Gross Domestic Product

Recent US Debt History with Charts - a www.usgovernmentspending.com briefing

Debt held by the public, excluding debt to government agencies, and debt held by the Fed, is around 70% per the above link. Whether or not to include debt held by Fed, which is around 22% of gdp, can be debated. Debt to other agencies, mainly social security is about 25% of gdp, and should probably be excluded because the government owes itself.

Bottom line is we probably aren’t reaching crisis levels. Japan is well over 200% approaching 300%. Japan can pull it off because their citizens save a lot. The problem with increasingly high numbers is the debt service becomes higher and higher, and makes anti inflationary efforts of raising interest rates more costly. Is there a tipping point? it’s hard to say.

I think the danger of failing to raise the debt limit is far greater than the abstract danger of higher debt to gdp. It is kind of like shooting your ingrown toenail with a bullet. With the whole Covid thing and especially Ukraine we are already weakening our world currency position (which I think is overrated in importance but still significant). So if we default, then we decide to do a magical coin to payoff debt owned by fed, what does that do for confidence in the dollar? What incentives long term does that lead to into creating money out of thin air to pay for prior debt? We are getting into areas that are just hard to predict.

 

We are not a serious country, which is why the only way out of this is to mint the coin. Fake problems demand fake solutions!

 

No, we don't need a debt limit. But if we did need a debt limit the time to apply it would be when the decision to increase spending occurs, not after congress already decided to increase spending.

 

Probably overly optimistic but if it ever approaches the point of an actual default I'm hoping that enough rational Republicans join the Democrats in the House to increase the debt ceiling. Hopefully there really are members on the Republican side with the backbone to tell the crazy caucus and their sniveling Speaker to shove it.

 

Besides the obvious (mathematical errors), R&R had other major issues. They underestimated WWII debt for comparison purposes (almost everyone does), because we accounted far differently (not recalling details now). Also, we are different from other historical examples because the dollar is the reserve currency and debts are paid back in a dollar denominated world with much greater international trade, which makes us much less vulnerable to the negative types of effects they identified

 

Keep in mind that a single member even a Democrat can move to vacate the chair. Another example of the unintended consequences of McCarthy's capitulation to the Crazies. Kevin could be running for the Speakership again much sooner than he ever thought possible.

 

The maroons will cause calamity, then predictably trot out “Biden-cession” or “Great Biden-pression” or some nonsense.

 

Drive the country over a cliff to "own the libs" Good times! What a bunch of ignorant, short sighted idiots.

 

Yeah your recollection of what RR was all about is different than mine. I have been seeing ww2 debt to gdp estimates, around 120%, before RR as I recall. As far as I know they didn’t come up with those numbers.

The crux of what RR did was to demonstrate that financial crisis driven recessions were more severe, because of the inevitable deleveraging that always follows. They went back centuries and demonstrated this. It seems like common knowledge now but many idiots were saying that the recovery was worse than 1982 recovery because somehow Reagan was so much better than Obama. Not that centuries of evidence would make a difference anyways.

People like in the debt doesn’t matter crowd like Krugman really took the opportunity to unfairly beat up RR because of their error on the supplemental paper on debt to GDP history.

 

I didn’t say they invented the WWII misapplication; I said it was common.

The need to correct them publicly arose because their flawed work and conclusions were peddled to and used by bad actors. I certainly didn’t know about them from reading economics papers. Like Piketty, their work suddenly became a supposedly objective, cold hard mathematical justification for preferred policy positions, in this case the cat food caucus who wanted to cut taxes more, and defenestrate social security and Medicare to further subjugate the working class

 

They don’t care. They want to crash the country and blame the Democratic Party. They are using this as their chance to cut social security and Medicare big time— the GOP wet dream. And then they will blame the Democrats and all the idiot beneficiaries who voted for them can vote for them again.

 

McConnell being an adult

 

Kudos to Mitch but if I recall he supported going to the brink when the Republicans threatened default in 2011 although in the end he reached a deal with Obama. As much as I dislike McConnell occasionally he's the adult in the room. Unfortunately that may not be the case with Kevin McCarthy.