GOP will vote for the US to default on its debt

Per McConnell:

"We will not support legislation that raises the debt limit," McConnell said after Pelosi and Schumer's announcement. "Democrats do not need our help."

Link

Update:

Senate Republicans on Monday evening blocked a measure to fund the government and suspend the debt ceiling, carrying through on their threat to not deliver votes for a Democratic measure to raise the government's borrowing limit.

The vote tally was 48-50. Sixty votes were needed to advance the measure.

No Republicans voted for the legislation.

The setback is the latest in a slow-motion brawl over how to fund the government and deal with the debt ceiling, which kicked back in on Aug. 1 with the Treasury Department using "extraordinary measures" since then to keep the government solvent.

Congress has until the end of Thursday to pass a government funding bill to avoid a shutdown the following day. The deadline for needing to deal with the country's borrowing limit is less definite. Treasury Secretary Janet Yellen warned congressional leadership they might need to take action as soon as next month.

Link

I really wish people would vote these clowns out.

@LJS9502_basic: Those clowns gatekeep for the rich.

*Unless their guy is in office* There, I updated his comment to better reflect the reality of the situation. But on to the topic...they're truly psychotic if this is their plan. I have reservations that the business community won't hang them from their necks if they allow a default to happen. It will be devastating to say the least, and money speaks the loudest.

This is do or die time for Manchin and Sinema as well. It's obvious that they are trying to fracture the democratic Senate base as they're literally saying they don't want it to happen but that democrats can do it on their own.

'We don't want to drive this car off a cliff and kill everyone, democrats have the ability to stop this unilaterally with out a GOP vote, but we're not taking our foot off of the f*cking pedal to help in anyway'.

Only an idiot would ever support a default on debt obligations and raising the limit. And an even bigger idiot would hold the US economy and it's citizens as a hostage to score political points.

@HoolaHoopMan: The issue is their base is so brainwashed they dont have to care.

Obstruction before country, I guess that's the GOP motto.

When all this is over, we need to replace Manchin and Sinema. I still can't believe they're dragging their feet.

Don't they understand the GOP will almost never cooperate? There is no bipartisan solution until the GOP steps back from the edge and comes back into the fold, and that isn't happening any time soon.

Democrats need to just unify and get shit done.

Say what you want about the GOP but at least they are a good example of solidarity. Democrats could learn from that.

Manchin is a stain but he's crucial until they pick up another seat elsewhere, which given the political outlook, won't be soon. Which is too bad since he's delusional in his stance on bipartisan ship, views on fossil fuels, and lack of knowledge on fiscal and monetary impacts.

Until then everything will have to revolve around him and his antiquated views.

@mrbojangles25: Manchin will most likely lose as he is in a ruby red state and Sinema is pissing progressives off while being in a purple state. Both are facing uphill battles to win again.

Would be amazing theatre if this happens, but it would be devastating for the US and likely to have significant repercussions for the rest of the world.

Are they considering a full or partial default?

Not if it helps the poor and middle class, but if it helps the rich pay no taxes raise that debt ceiling no questions asked. We know this, it is the same Republican Party it has been for decades. The same political party we heard on talk shows for decades "how are we supposed to pay for that... taxes... why should I be punished for being successful, why do you hate America?"

The US printed 40% of all US dollars ever printed In history in 2020 alone.

Am I the only one concerned with the amount of money we are printing?

Seriously guys, it's pretty ****** up. Put politics to the side. Is this sustainable without inflating the dollar to the point where we are in a major depression?

@sargentd: Thanks trump

@thenation: stop being petty, this isn't even a partisan thing I'm talking about. Democrats were actually trying to spend even more than Trump in 2020. Both sides Republicans and Democrats were for this. I don't think it is sustainable. We are fucked, everyone just bitches about the republicans or democrats, blames the opposition, but no one is actually doing anything to fix the problem, it actually seems like both sides would rather ignore the problem and blame the other side, I repeat, we are fucked

they'll vote no if they're assured it would pass without their yes votes.

their no vote will allow them to go home to their rube constituents and campaign that they're gettin' tough on the debt and fighting those evil democrats.

that's how the game is played. it's nothing new.

@comp_atkins: After 2011 that presumption is no longer a safe one. The internal politics changed in 2009.

Yup, Republican or Democrat, they both pretty much do the same thing when their guy isn't in office. I remember Piglosi and Schumer making the same threats when Trump was in office.

Both sides pretend to care when it's politically advantageous to, and neither side does anything when it's politically advantageous not to.

Surprisingly the business world isn't reacting too negatively to these comments. This means they have faith it will be avoided. But I certainly wouldn't count out the GOP willing to sacrifice millions of jobs in an attempt to halt any of Biden's agenda.

Doesn't one of the amendments say US has to pay its debt?

I am not even trying to blame one side or the other, but am genuinely curious. What happens if the US cannot pay its debt? Who are we paying our debt to? And how can a party keep wanting to spend money for this and that?

If I kept doing that my credit card company would decline my card, my credit would tank, everything would go to shit and I would have no chance of ever paying anything off until I started to try.

the situation is not all that dissimilar to you not paying your cc debt.

if there is uncertainty over the US paying its debt ( there isn't ), governments, companies, institutions, people, etc. will slow or stop investing in us bonds or the US will have to pay higher interest on the bonds they sell to attract buyers.

the result being the US's borrowing costs ( interest rates) go way up since its debt is seen as riskier or ( worse ) the state isn't able to borrow the money it needs to fund its operations. this would result in drastic cuts ( likely to things deemed non-essential first ) in order to continue to operate the essential parts of the government as well as pay to service current debt.

of course the US being a big fucking powerful country makes the situation slightly different than a personal credit card :)

@comp_atkins: Thanks. That helps clear things up a little bit.

I think I just get really frustrated whenever I see an administration wanting to spend millions, billions, trillions, etc on a spending bill or helping out a country when I feel like the US should focus more on paying debts off and working on our own problems first.

I think I might try this strategy with my credit card company.

Look guys, I know I already charged $10,000 to my credit card, but I decided that wasn't fiscally responsible of me. Therefore, I will only be paying you back up to $7,000. That seems like a more responsible amount on my end.

Good plan. I see this working well for me.

@judaspete: No joke. I know of some people that were doing stuff like this. One guy I worked with at a factory a few years back said he accumulated $30,000 in medical bills but he wasn't going to pay them a cent. I was blown away. I said, "well then aren't you going to get in trouble or something?" He pretty confidently said no, his debt would be written off after x amount of years of not paying but his credit would tank.

My dad knew a guy who did this as well. People seem to think it is A-Ok to not pay their debt off and then their credit goes to shit and things go pretty bad financially for them. But they don't care.

I knew a guy in college who thought that if he didn't complete a full year of college (as opposed to just going for semesters) he wouldn't have to pay anything back. He would just switch to different schools before a full year.

I swear I'm not making this shit up. I can't even imagine having this kind of non-accountability.

Well, you will never be able to get elected to the US Senate as a republican with that kind of attitude.

Good! I want a default to happen. It's time to call the bluff, and if it were me I would have done a long time ago.

It's only going to push the dollar down into worthless territory and push up crypto currency up to the moon, something most of us want anyway hahaha.

@poe13: the thing is, $30,000 in medical bills is obviously grossly misproportionate. You could go to a 3rd world country and get the same care at a state of the art private hospital for maybe $4000, or even less.

@blaznwiipspman1: Sure you could. My point was that this dude kept going for various issues and all those visits added up to the point that he doesn't care about paying it off. Similar to the US. I don't know if we are ever going to be able to pay that shit off. We just keep adding to it. At some point, isn't it all going to blow up in our face?

What is the value of anything anymore if you just keep raising the debt without paying it back?

That's all I'm wondering. Why not focus on paying things back and being responsible. I didn't think this was a party issue. Just fucking common sense.

@PurpleMan5000: But apparently as a democrat, I'd be a shoe-in.

Paying down the debt for the sake of it is a dumb thing to do. We have the means to pull in far more revenue via taxes to offset any negative effects tied to increased money in circulation (see inflationary pressures). Many of our problems are directly tied to spending such as infrastructure, climate change mitigation, income inequality, etc. Sometimes you have to spend money to make money, or solve problems in this case.

To answer your previous question, the debt owed is largely to US citizens, companies, and the government itself. If we cannot meet our obligations we'd impact economic activity, dampen GDP, and at the very least open the gates for a recession. What would follow is certainly draconian budget cuts at the federal level which would create a negative feedback loop of lowered economic activity, thus the cycle would repeat itself. Then our credit worthiness would weaken, driving up interest rates, making it harder and more costly to borrow in future instances.

In all reality the debt ceiling shouldn't exist. It's not a useful tool by any measure and only sets us up for these repeated showdowns of stupidity by placing a gun to the nations head.

@HoolaHoopMan: right more nonsense...we can have infinite debt infinite growth and never have to pay it off blablabla. What kind of fantasy world do you live in? No wonder the US dollar is tanking while crypto is booming

Yeah, means a lot coming from some chump that has insisted all economists are fools and wants to crash the global economy....because it will somehow drive up crypto.

Must be lovely seeing Bitcoin lose 20% of it's value in the last month. If that's BOOMING then I can't help you with your delusion.

@HoolaHoopMan: "Inflation is going to spiral any day now! Fight inflation!"

*Increases taxes*

"No, not like that!"

The same people also advocate for crypto currency which can lose >10% of it's value in a single day. Imagine if the US dollar inflated by by 10% that fast. You'd have riots in the street.

@HoolaHoopMan: I will admit I am not as learned in the arts of economics but blazn kinda sounds correct at least to the extent of our attitude with the US debt. We definitely do seem to keep spending more more more with no end in sight. Nobody seems concerned with paying anything off. I'm not really sure how it ever will be paid off even after your well-worded explanation (which I'm thankful for btw).

So I guess just keep doing what we are doing and until this train runs off the rails.....weeeee?

Bolded: He's not, so that's something we need to clear up right away.

To keep it simple though, you don't need to pay off debt. There's no need to. Comparing household debt to a country that holds sovereignty over it's currency is where most people go off the tracks. As long as the economy grows at a faster rate, or in some comparative fashion, we will be fine.

Then again, we're ignoring that we have the ability to generate massive amounts of revenue at the moment but fail to do so. Framing this issue as a spending problem by ignoring our revenue streams is disingenuous. We need to raise taxes on the top earners, change inheritance laws, and increase tax enforcement.

@HoolaHoopMan: and do you think that your suggestions will happen or is it more likely that the US will continue to spend even more and our debt will continue to increase to astronomical levels until something happens to crash it (if something happens by that point)?

See I’m just hung up on the fact that we continue to spend money on reforms, aid for other countries, and so many things and yet nothing on actually working on our debt. I don’t like Biden (or Trump for that matter) but it was kinda nice when he was campaigning that he was talking about increasing taxes on the income earners over $400,000 a year in order to reduce the debt IIRC. Now I didn’t believe him as I believe most politicians will say anything to get into office, but it was at least nice to see him bringing a solution to the ongoing discussion of our worsening debt. I think we need more discussion and action happening on how to reduce the debt rather than proposing more bills to continuously dig ourselves deeper into debt.

@poe13: It's absolutely possible to increase taxes via reconciliation. That's how Trump was able to sneak his tax cuts into law. You have to remember that some things need to be paid for. Eventually every road, bridge, dam, etc., will need to be repaired or rebuilt as they will fail (see infrastructure). The same goes for clean energy initiatives and climate change impacts. Paying for them now is cheaper and delaying it will only worsen the impact when it worsens.

Also, a default can result in a worsening of debt problem, which is something that hasn't been touched on. So while you may think that tightening your belt and imparting extreme austerity measures can solve a debt problem, the reality is that it will likely drive down GDP, increase unemployment, and lower your tax base. If you lower your tax base, you lower your revenue, which means less money in the coffers, and less options to pay down our debt. That is the spiral of death that can occur.

The problem then becomes, 'How much pain inflicted on people is worth these budget cuts?'

And to clarify, aid to other countries is a drop in the bucket. Look at an actual budget and it doesn't even register.

I wouldn't be surprised if it started effecting us on a global scale. Would you trade engage in a trade with someone knowing full well that what they were giving you (in this case, US Dollar) would be worth significantly less in a week than what you received?

@eoten: yeah that’s what I’m thinking will happen. I feel like eventually no country will want to trade with us if all we do is continue to increase our own debt. No end in sight. It’s super similar to the guys I met that I mentioned above that accumulated mountains of debt and will just default on it, tank their credit, and they will be in financial ruin for a long time.

that stance makes sense but it is not as simple as debt = bad.

you have to remember though that not all spending is wasteful. if you build and run a school that educates people so that they can work and become productive members of society, that will generate economic bonuses as well as generate more future tax revenue.

shit, people take on loads of debt to finance college educations and for many, it is still the path to increased revenue in the future.

there's also the opportunity cost to consider. debt is extremely cheap right now. so it may make sense to carry the debt and pay interest rather than paying it down. that way the money can be invested elsewhere that will pay greater dividends in the future.

true. but right now... the cost just for infrastructure is in the trillions.

legal... speaking. is most infrastructure is condemn. have to get a special fed waiver to even be used.

going forward(big thinking here).

to modernize stuff and to compete at a world stage....

where looking into multi trillions .

we let way to much rot or under funded.

so unless we do something right now...

we will have run away debt.

Not necessarily a shoe-in, but this particular issue wouldn't be disqualifying for you.

Just a few posts up, you are openly advocating for not paying off our debt. So apparently you believe we don't ever have to pay it off.

Also, our debt is in the form of government bonds. It's amazing to me that people are willing to invest in something that draws such low interest, but apparently we are able to sell trillions of dollars worth of them every year. You can't just "pay those off" as they have a set number of years that they are paid out over. Nor would you want to pay them off, really. As I said, they really aren't a great investment. The only reason someone would buy one is that they are considered to be incredibly safe. Of course, we could default and start missing payments on those bonds, and then never be able to sell one again. That sounds awful, so of course Mitch McConnell and the resident republicans here are advocating for it.

Well, run away debt and default will certainly be a future your children are going to have to look forward to when they become old enough to start entering the workforce, because a call for more funding is the same as calling for more debt. You have to find a better solution than tax and spend and hold all politicians accountable for signing spending bills we cannot afford. And enough of this "we have to spend money to make money" bullcrap they've been feeding us every time they do it.

Since we are going with a household or individual debt/credit card analogy (which isnt good to begin with) I will try to make it simple.

The US effectively has an unlimited credit card. There is no ceiling, period. Unlike you or your household, major sovereign govt's are both the credit card holder and the credit card company.

Pause and think about that for a moment.

As the credit card company, the US govt has the ability to alter the rate of growth and importance of the total debt through monetary policy.

You or your household has a credit card that charges you something like 15-18%. That is where individuals get into trouble. You miss a few payments, things snowball, unless you get a new job that pays more it will become increasingly harder.

But if you are also the credit card company, what happens if you choose to lower your own interest rate? Make it easier, not harder, to pay yourself back. Indeed, what if in theory you could charge yourself negative interest rates?

This is the importance of understanding inflation and interest rates. The understanding of this in the early 80s was and is pivotal to the world economic situation.

Unless you understand these monetary policy concepts, you cannot really grasp the issues. This is because your frame of reference is fiscal policy. E.g. I have a budget , therefore I have to live within it. This isn't case for govts because they can effectively reestablish what the underlying value of $1 is in the first place through inflation and interest rates.

This is especially true for the US because of the size and importance of the economy relative to the world. And this is amplified through collective action...if the major economies work together.

The economic world was going to end in 2008-09. It would be worse than the great depression and would take a generation or two to correct. So said many who don't understand monetary policy.

Nope. We just printed huge sums of money and injected large doses of liquidity into the financial markets and 2 years later we were at the start of a decade run of milk and honey.

This time around, govts around the world are going to accept higher inflation rates as we come out of covid and we are going to reduce the importance of all those payments aka debt that govts around the world did for their own businesses and citizens to keep them afloat. And we will yet again do this through monetary policies by managing inflation and interest rates.

@SUD123456: this is what I was trying to get at with my comments and questions and you are able to say it much better.

Yes, it truly feels like the US is the Credit card holder and the company because look at all these past years. The country keeps spending more and more and then extends the deadlines for payment due further and further. To me, this essentially means that it's all so meaningless....until it isn't and something happens (which was my whole question and why I'm so fascinated with this issue). At what point does the US acknowledge that hey, we really REALLY cannot afford to keep doing this anymore. Let's start paying back the money.

But if the US is the borrower and the lender, well then we can just do whatever we want apparently.

Bolded: His post is explaining why your comments in bold do not necessarily apply and why it's a common mistake people make. We are both the debtor and creditor in many ways. The debt is also held in bonds which requires a maturity date. You can't just 'pay it off' like it's a credit card balance.

The term 'we cannot afford' is an assumption ignoring the main crux that we really can afford anything, we can literally print money. We have the ability to never default which makes this ceiling fight even dumber. However, there are consequences for continuously printing money. That's where the argument should be. Does the consequences of printing this money outweigh not printing and defaulting.

We aren't extending any deadlines for payment due. We are paying off bonds when they come up. To default, as many in the senate and on this board are advocating, would be to stop paying off the bonds.

Do you think so? I know there's been talk about targeting 3 to 4 % in the US Fed which I think would be a good idea. A mass movement to such a target in the Western World would be a sea change, both in terms of actual policy implications and in terms of ideological mindset.