Debt Limit 2021

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mattbbpl

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#1 mattbbpl
Member since 2006 • 23010 Posts

I was hoping I'd be able to avoid making this thread, but it has become clear that there will be a standoff over this topic.

The GOP has decided that defaulting the country is great leverage, and they see the 2011 impasse as a good blueprint to follow now.

I'll update this post as additional developments occur since it's unlikely to be resolved before September or October.

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#2  Edited By HoolaHoopMan
Member since 2009 • 14724 Posts

The debt ceiling shouldn't exist. I wish it couldn't be used as leverage by either side. Threatening murder suicide isn't an ethically or moral tactic I view favorably.

Edit: To clarify, all debt limit ceiling increases should be clean.

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mattbbpl

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#3 mattbbpl
Member since 2006 • 23010 Posts

@HoolaHoopMan: Good point, it's a relic from our past when the country was small enough for Congress to approve each individual bond issued.

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Telekill

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#4 Telekill
Member since 2003 • 12061 Posts

We're at $28.5 trillion in debt. How much owed should be the stopping point?

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mattbbpl

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#5 mattbbpl
Member since 2006 • 23010 Posts

@Telekill: It belongs in the budget process. Reminder that this wasn't an issue at all during the last administration.

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#6  Edited By HoolaHoopMan
Member since 2009 • 14724 Posts
@Telekill said:

We're at $28.5 trillion in debt. How much owed should be the stopping point?

@mattbbpl said:

@HoolaHoopMan: Good point, it's a relic from our past when the country was small enough for Congress to approve each individual bond issued.

Debt is also meaningless as a simple data point. Setting a limit on debt with no context or comparison against revenue is antiquated and foolish. ^^^ See above for why providing a 'stopping point' misses the bigger picture.

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Telekill

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#7 Telekill
Member since 2003 • 12061 Posts

@mattbbpl: It should have been an issue every administration. I don't know how America will ever be able to pay back what's owed.

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mattbbpl

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#8 mattbbpl
Member since 2006 • 23010 Posts

@Telekill: The debt limit should never be an issue. Address it in budgeting where it belongs

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#9 Telekill
Member since 2003 • 12061 Posts

@mattbbpl: Agreed that it's a budget issue. Frivolous spending needs to stop.

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#10 HoolaHoopMan
Member since 2009 • 14724 Posts

@Telekill said:

@mattbbpl: It should have been an issue every administration. I don't know how America will ever be able to pay back what's owed.

Simply put, we don't need to clean our slate and pay everything back. We just need to service our debt accordingly.

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Telekill

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#11 Telekill
Member since 2003 • 12061 Posts

@HoolaHoopMan: Fair enough. It just seems severely daunting.

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#12  Edited By judaspete
Member since 2005 • 7203 Posts

Yep. Now that there is a Democrat in the White House, Republicans can start pretending to give a crap about the debt again.

@Telekill: I always tell my conservative friends and family that if the debt truly matters to you, vote Democrat for president, Republican for congress. We only make progress on the issue with this combination.

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#13  Edited By LJS9502_basic  Online
Member since 2003 • 178808 Posts

@judaspete said:

Yep. Now that there is a Democrat in the White House, Republicans can start pretending to give a crap about the debt again.

@Telekill: I always tell my conservative friends and family that if the debt truly matters to you, vote Democrat for president, Republican for congress. We only make progress on the issue with this combination.

We make no progress under a Republican Congress.

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mattbbpl

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#14 mattbbpl
Member since 2006 • 23010 Posts

@judaspete said:

Yep. Now that there is a Democrat in the White House, Republicans can start pretending to give a crap about the debt again.

@Telekill: I always tell my conservative friends and family that if the debt truly matters to you, vote Democrat for president, Republican for congress. We only make progress on the issue with this combination.

But then we attempt self immolation.

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#15 HoolaHoopMan
Member since 2009 • 14724 Posts

Also, a point of interest is that a quarter of US debt is held by the US treasury itself, which covers things like the Social Security trust fund, Medicare trust fund, etc. This is because it sometimes receives excesses in what is owed in outgoing cash payments, thus we're increasing solvency of these programs by getting some interest on excesses.

Of the remaining ~20 trillion half is owned by the Federal Reserve. This is a result of debt monetization in the form of QE/buying it's own bonds (expansion of their balance sheet to increase liquidity). The rest then being owned by foreign governments and private entities. And of those, Japan is the largest owner, not China.

This is why it's important to remember that sovereignly held government debt is not applicable to individual debt. If you're looking to default on debt payments the primary impact will be felt by Americans as we are the main beneficiaries of bought/sold US debt. That is not to say that debt is meaningless as there are consequences to running up numbers too high. Interest payments to recipients need to be manageable in the long term.

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deactivated-61302760efd95

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#16 deactivated-61302760efd95
Member since 2020 • 75 Posts

Fiscal conservatism is dead at this point and the Republican Party doesn't fool me. Not when they passed legislation in my state to require taxes to be collected on all online purchases starting July 1st in an effort to offset the massive tax cuts given to the wealthy (it's nowhere near enough to offset it by the way). Now my state's heavily in debt with nothing to show for it and Reaganomics as an economic theory seems awfully disastrous.

I guess I can't give Republicans all the flack though because now, the rules for selling things online are changing due to the American Rescue Plan Act signed by Joe Biden. Not all people are going to get impacted by it much, but some people are. Link: It's going to get harder to avoid reporting income from online sales (cnbc.com)

IMO, Democrats spend more recklessly but try to raise taxes to offset the costs (though not enough) and Republicans spend a little less recklessly but lower taxes enough to put the government deeper into the red.

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#17 Kadin_Kai
Member since 2015 • 2247 Posts

The simple fact is the US (and loads of other countries) spends beyond its means from the top of the government down to the individual.

Annual debt servicing in the US is nearing 10% of the government’s annual budget, so it is sort of getting out of hand slightly.

However, the recent spate of inflation in the US is truly a God send to America, it slashes the value of debt. But a shame for countries such as Japan, China, UK and Germany who are currently the largest foreign holders of US debt.

The US will not default, if it does it will be truly catastrophic for the US in the future. I can’t even imagine such a scenario especially under Biden.

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#18 Serraph105
Member since 2007 • 36038 Posts

@Telekill: "We're at $28.5 trillion in debt. How much owed should be the stopping point?"

Raising the debt ceiling means paying for what was already spent. You can't just stop doing that.

For the record, when Republicans are in power they never actually pass a budget that reduces spending. Instead they all got behind taking in less taxes (from the rich) and spending more money simultaneously.

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mattbbpl

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#19 mattbbpl
Member since 2006 • 23010 Posts

We'll see if we decide to let this limit knock us back down from this trend line.

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#20 Kadin_Kai
Member since 2015 • 2247 Posts

@Serraph105: You really have to measure it against the size of the economy. It’s currently around 108% debt-to-GDP.

The record high is 118.90% and that was just after WWII.

How much is too much? Before the 2008/2009 financial crisis, the World Bank and IMF warned against approaching 100%, but that’s not the measure anymore.

It also depends on the country, it’s credibility and strength, that’s where the US really excels. Plus no country wants the US to crash or default.

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#21  Edited By SUD123456
Member since 2007 • 6939 Posts

US sovereign debt is effectively limitless. The portion of sovereign debt of the major economies that is directed at collective action problems like the housing induced collapse or the covid economy is effectively normalized the moment it is announced. And of course inflation will be a major lever. That isn't a surprise. It isn't luck. It is totally expected and planned, which is why every major economy has had its spokespeople telling people that it is fine, within acceptable range, blah, blah, blah. If the international community had its shit together this is exactly how we would handle another collective action problem: green transition.

On the specific topic of debt ceiling, it's a stupid notion to begin with, is nothing more than an intellectually bankrupt and politically motivated ploy to con gullible members of the voting public. And it fits in perfectly with the lowest common denominator shallow political postures like that of the previous idiot in charge who cut taxes in the midst of a raging economy. American political stupidity is endless entertainment.

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#22 HoolaHoopMan
Member since 2009 • 14724 Posts

@SUD123456 said:

US sovereign debt is effectively limitless. The portion of sovereign debt of the major economies that is directed at collective action problems like the housing induced collapse or the covid economy is effectively normalized the moment it is announced. And of course inflation will be a major lever. That isn't a surprise. It isn't luck. It is totally expected and planned, which is why every major economy has had its spokespeople telling people that it is fine, within acceptable range, blah, blah, blah. If the international community had its shit together this is exactly how we would handle another collective action problem: green transition.

On the specific topic of debt ceiling, it's a stupid notion to begin with, is nothing more than an intellectually bankrupt and politically motivated ploy to con gullible members of the voting public. And it fits in perfectly with the lowest common denominator shallow political postures like that of the previous idiot in charge who cut taxes in the midst of a raging economy. American political stupidity is endless entertainment.

Bolded: This is a very interesting idea that I've heard thrown around a lot, one of which I agree with. The problem is that the people pushing for financing immediate crises probably won't be around when climate change f*cks everything up bad enough to disrupt global economies. Their horizon for concern doesn't stretch past the next business quarter. I'd argue it's easier to justify deficit spending to get our infrastructure up to speed on energy consumption for the future than anything else.

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#23 mattbbpl
Member since 2006 • 23010 Posts

Enacted policy has been good for growth relative to past baselines.

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#24 Stevo_the_gamer  Moderator
Member since 2004 • 49565 Posts

We'll raise the debt ceiling, continue the shoddy continuing resolution process, and the cycle will continue over and over again. No party actually cares about this.

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mattbbpl

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#25 mattbbpl
Member since 2006 • 23010 Posts

@Stevo_the_gamer said:

We'll raise the debt ceiling, continue the shoddy continuing resolution process, and the cycle will continue over and over again. No party actually cares about this.

It seems that nearly everyone, including those here, agrees that we shouldn't care.

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#26 HoolaHoopMan
Member since 2009 • 14724 Posts

@mattbbpl: Just wait for numbers on poverty rates. With the passage of two relief bills and monthly child tax credits I expect there to be a rapid decline in national poverty rates.

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#27 mattbbpl
Member since 2006 • 23010 Posts

@HoolaHoopMan said:

@mattbbpl: Just wait for numbers on poverty rates. With the passage of two relief bills and monthly child tax credits I expect there to be a rapid decline in national poverty rates.

A precursor to whet your appetite:

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#28  Edited By HoolaHoopMan
Member since 2009 • 14724 Posts

@mattbbpl: I fear that these economic data points will be be glossed over. We've been accustomed to obsessing over a select few while ignoring a myriad of others.

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#29 mattbbpl
Member since 2006 • 23010 Posts

@HoolaHoopMan: They will be in the short term, for sure.