US Debt Ceiling crisis

[Guest123_x1]

In the next few days, it appears the United States federal government will hit its debt ceiling, without a deal in place to raise the ceiling and cut spending, like many in Congress are hoping for such a deal.
Many things are to blame, including both parties' constant bickering and dealing in absolutes ("it's either my way or no way"), and America's dangerous addiction to cheap credit and debt: Our addiction to overspending and debt is what's destroying what's left of our economy, and we will all be held accountable for it-and not just America, but the whole world will feel the effects.

I'm surprised Congress hasn't already repealed the debt ceiling altogether, allowing for a totally unlimited government debt load.

Part of the problem is that the tax cuts made during the Bush Administration were enacted without any meaningful spending cuts (in fact, spending exploded under the Bush Administration), and that, although they say us indivuduals should be paying more taxes, large corporations aren't paying their "fair share" (especially when they get away with not paying any taxes from selling off parts of their assets to companies much smaller than the assets they are selling, called a Reverse Morris Trust, a type of transaction most famously used by Verizon to sell off landlines to FairPoint Communications, and more recently, Frontier Communications, (the former deal of which burdened FairPoint with so much debt, it had to file for bankruptcy; the latter deal of which I was directly affected by,) but that's a whole other topic.) Also, the Federal Reserve's interest rate cuts, which, in the name of "preventing/ending the recession/saving homeowners from foreclosure/reducing unemployment", have instead stimulated inflation and the excessive borrowing by the government by leaps and bounds.

Below is an article comparing ordinary American's addiction to debt to our government's debt crisis.
From the Pittsburgh Post-Gazette and https://www.scrippsnews.com/content/us-government-consumers-are-addicted-debt :

Like the U.S. government, consumers are 'addicted to debt'
Submitted by SHNS on Wed, 07/27/2011 - 13:55

By TIM GRANT, Pittsburgh Post-Gazette

The average consumer may feel far removed from the heated debates on Capitol Hill concerning the $14.3 trillion debt ceiling, which the nation could crash into next week.
But the truth is, American households are dealing with plenty of their own red ink, and the debt issues that lawmakers must solve to get the nation back on track are similar to those facing consumers.

According to Federal Reserve data, total household debt in the nation at the end of 2010 amounted to about $13.4 trillion, which means consumers owe almost as much as the federal government.

"The conclusion to be drawn is that the government, as well as the U.S. population, is addicted to debt," said Eleanor Blayney, a consumer advocate for the Certified Financial Planner Board of Standards in Washington, D.C.

The federal debt ceiling is best compared to a consumer credit card limit. Congress has authorized the government to spend over and above the credit limit, which is the same as a consumer who spends now and worries about the bill later.

But when it comes to accumulating and paying off debt, consumers face challenges that can't be compared to the government.

Credit card companies and other lenders are not inclined to solve consumer overspending by raising the credit limit. While some card issuers may raise limits in some cases for their best customers, most will simply cancel the card or close the account and demand full payment.

According to the consumer website Creditcards.com, average credit card debt per household with credit card debt in the United States is $14,687. Meanwhile, trillions of dollars in household wealth was wiped out during the financial crisis of 2008.

The Federal Reserve earlier this year conducted a survey of U.S. households that showed the median net worth of households fell from $125,000 in 2007 to $96,000 in 2009.

"The federal government isn't in hock to MasterCard -- rather, to the millions of individuals, pension funds and foreign central banks who have loaned us money," said Terry Connelly, dean emeritus of the Ageno School of Business at Golden Gate University in San Francisco.

The enforcers of the nation's credit limit are the rating agencies that demand that we raise our debt limit.

"But they want a cut in our spending pattern along with it or they will downgrade our credit rating -- just like a consumer will get his credit score downgraded if he or she gets in trouble with MasterCard for overspending the credit limit," Connelly said.

"Both consumer and government debt are a byproduct of many years of bad financial habits and easy credit," said Greg McBride, a senior analyst for Bankrate, a leading online personal finance website based in North Palm Beach, Fla.

"It caught up with households first. Over the last several years, many households have had to make some difficult decisions.

"They've had to cut spending, take on second jobs and scale back their lifestyles. We're at a point where Uncle Sam needs to do the same, but (lawmakers) can't seem to see eye-to-eye."

Steve Smith, a portfolio manager for Covestor in southeastern Pennsylvania, said consumer debt had declined gradually over the last three years, but that the federal debt exploded by about $1.5 trillion in each of those three years.

Stimulus funding and bailouts meant to infuse money into the flailing economy and stave off an even deeper recession were a part of that, although the politicians continue to argue about the value of those.

"The consumer is already ahead of the government in trying to end its addiction to debt by not borrowing as much as they used to," Smith said. "But while consumer debt is going down, the federal debt is continuing to march upward."

(Contact reporter Tim Grant: at tgrant(at) post-gazette.com or 412-263-1591.)

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)

Must credit Pittsburgh Post-Gazette

Feel free to discuss what should be done about our debt crisis, the article I posted, or the points I have brought up in this post.

 

[Steven]

I'm not an economist, so I really would like people to explain to me what is happening.

But as far as I know, here is what I think.

1. Having unlimited debt is stupid - it makes it so you have no major reason to fix a failing economy.
2. Both Republicans and Democrats are at fault. They won't work together.

 

[FreakyLocz14]

The House already passed the Cut, Cap, and Balance Act. It raises the debt ceiling in exchange for real spending reforms and begins the process of passing a balanced budget amendment. The Democrats are the ones holding SS and Medicaid/Medicare hostage, since they refuse to cooperate, yet haven't put a bill up in Congress.

 

[Steven]

The House already passed the Cut, Cap, and Balance Act. It raises the debt ceiling in exchange for real spending reforms and begins the process of passing a balanced budget amendment. The Democrats are the ones holding SS and Medicaid/Medicare hostage, since they refuse to cooperate, yet haven't put a bill up in Congress.

Walking out is cooperating?

Well, I need to walk out of everything then.

 

[FreakyLocz14]

Walking out is cooperating?

Well, I need to walk out of everything then.

We already passed a bill in the House. The Senate could have amended the bill and debated it, but instead the Senate Dems chose obstructionism and voted it down. Has the Senate passed a bill for the House to consider? No. They need to put up a bill of their own or shut up.

 

[Black Ice]

I feel like I missed something here. I thought Obama had several offers that the republicans turned down. I feel as if they want Obama to run this country into default just so he'll lose the 2012 election. I have heard so many people on your side talk about how removing Obama is their greatest priority. Greatest.

Even John McCain said a lot of the conservatives were being stupid and immature. John McCain. He's your voice of reason now.


Edit: Oh yeah, Boehner's proposal disappeared on us. Big surprise?

 

[Steven]

We already passed a bill in the House. The Senate could have amended the bill and debated it, but instead the Senate Dems chose obstructionism and voted it down. Has the Senate passed a bill for the House to consider? No. They need to put up a bill of their own or shut up.

Cooperation takes more than just one side. Republicans are not willing to compromise, Democrats have.

I see you don't know your facts - I've seen this throughout most your posts that have anything to do with politics. You post what you want to be true, not what really is true.

 

[FreakyLocz14]

I feel like I missed something here. I thought Obama had several offers that the republicans turned down. I feel as if they want Obama to run this country into default just so he'll lose the 2012 election. I have heard so many people on your side talk about how removing Obama is their greatest priority. Greatest.

Even John McCain said a lot of the conservatives were being stupid and immature. John McCain. He's your voice of reason now.


Edit: Oh yeah, Boehner's proposal disappeared on us. Big surprise?

If he wants tax increases, a Democratic member of Congress can introduce a bill or amend an existing bill. We need to be voting on these things in Congress, not the White House.

 

[Ivysaur]

The problem is, the Republicans won't even try to compromise because otherwise the Tea Party voters will get angry (literally, in recent polls they were the only group who said their representatives should not even think of a compromise, as opposed to moderate republicans and democrats who supported a bipartisan solution). And no, saying "do everything I ask or else I'll say no" is not a bipartisan solution- even if they end up agreeing because the other solution would be letting the country default. And you say they haven't put up a bill in the Congress- well yeah, Republicans have majority and their own bill they are unwilling to compromise! Why in the world would they vote for anything else when that would make them look like "the ones chickening out"? Since we even got to this point, that proves that the US' economy collapsing is not enough of a reason for them, so I guess nothing would be.

It's easy to pass your plan and say "well, if they don't accept it, it's their fault, not mine". Why can't we say it's their fault for not suporting the Democrat Senate proposed bill? It's the same thing. And I can believe they don't want to remove the tax cuts when they alone cause 1.2tn of the debt. Seriously?

Plus, the House bill barely gives the Government money to get to 2012, meaning that this same exact problem will happen in a few months all over again. But, at this rate, the US will default before Greece (or any of the EU countries that have had a debt crisis for years already) does- that will certainly will be something else.

Oh, and I'd like to add, as of the last edit of this post, the House still hasn't agreed on anything because the Tea Partiers consider Boehner's plan "too moderate". So no, there isn't anything already approved anywhere. And if the Senate manages to pass the Democrat proposal first, the Republicans will be the ones declining an existing plan. And I still it's incredibly sad to see how the US politics have got so radical since Obama's election that they can't even agree on a plan to save the US from defaulting. The Republican Party is in a really bad crisis if they can't even agree on a partisan solution proposed by their House leader.

 

[Esper]

Every time one of the tea partiers comes on the news they never answer any questions. They just say the same repeated lines and have these Dolores Umbridge-like smiles on their faces that say without saying "Why can't you see that I'm only doing what is right and that you have everything wrong?"

Republicans are so at fault over this. Well, the exrteme tea partiers are most at fault. They could just let the debt ceiling pass, but noooooo. They want to get something out of it. Obama has offered so much to the Republicans to get a compromise over something that they shouldn't be haggling over in the first place and they still won't agree. They won't compromise. Period. They want everything their way and they'll let the economy fall apart if they don't get it.

Their proposals are so ridiculously political that even the usually spineless Democrats in the Senate realized it.

Republicans just want to see Obama fail. That's what they've said since he was elected.

 

[OmegaRuby and AlphaSapphire]

the house pass the boehner's bill but a couple minutes later the senete shot it down...neverstood a chance...even obama said if it did pass the senate he was going to veto it...
Both are at fault here...we are looking a lot like Rome now...

 

[Black Ice]

The house vote was 218-210.

Also, Larry Reid introduced a new plan. I'm pretty sure it's just going to get rejected by the house though. It's all fun and games until Monday.

 

[FreakyLocz14]

I hear all this talk about the Republicans not wanting to compromise. Why don't the Senate Democrats offer amendments to the House bill, then? They just want to slander the House GOP for political gain.

 

[Livewire]

I hear all this talk about the Republicans not wanting to compromise. Why don't the Senate Democrats offer amendments to the House bill, then? They just want to slander the House GOP for political gain.

Are you actually serious? That's all Boehner and the mob you call the Tea Party have ever done from day one. The Republicans don't compromise. They force their own agenda and pander to the tea party and the fanatical fear mongering of people like McConnell, Bachmann, Beck, Palin and McCain.

Who raised the Debt Ceiling 7 times during the Bush Administration? They did. Which just proves that the entire issue here is entirely political semantics and the Republicans are once again going out of their way to obstruct Obama at every single turn.

 

[Black Ice]

I hear all this talk about the Republicans not wanting to compromise. Why don't the Senate Democrats offer amendments to the House bill, then? They just want to slander the House GOP for political gain.

Everything the house is "offering" is pretty obviously one-sided. There is nothing in it for the democrats. No real compromise. Then when the time comes, the republicans can just say whatever you did and act like they're the victims of some political cold shoulder. I don't understand why you people always make yourselves victims when it's very clear you're not.

There's talks about Obama using the 14th amendment though.

 

[Captain Hobo.]

I think the Democrats and Republicans are just trash talking each other and are going to raise the debt ceiling before we go over it.

 

[Mr. X]

Personally, im all for a ballanced approach.

Cut spending. Cap spending. Cut social security benefits. Cut medicare benefits. Fix tax loopholes.

Make it fair. Don't just target the elderly (by cutting medicare and SS) Lets spread the pain evenly (By cutting medicare, SS, and the removal of tax loopholes)

Until the Republicans are willing to remove tax loopholes, its not fair in anyway. Its just a attack on the elderly.

As for Democrats, come up with a bill or ammend the republican bill. Sure, the republicans are not willing to negoiate but your not helping at all.

That said, even if the democrats DID come up with a bill, the house would shoot it down just because it attempts to make the rich pay for some of it. They apparently don't agree with that, but apparently have no problems with making the elderly pay for everything.

 

[Black Ice]

This good enough for you?

I don't understand why the rich get off easy. They are the ones who can support the economy. You don't steal from the poor and give to the rich. Exaggerated but same principle.

 

[Mario The World Champion]

I wouldn't call the Tea Party a mob, even though that is what they seem to act like. I would call them fascists. It seems more fitting. Fareed Zakiaria of CNN commented on Anderson Cooper 360 that the Tea Party are anti-democratic and wants to see America fall just to get their message through.

I think the Tea Party has been drinking too much of their own Kool-aid to not see how bad this default will be. They just want Obama gone.

 

[OmegaRuby and AlphaSapphire]

I bet this will have a huge impact on the elections. worst of all on our economy and I don't think it will be a positive one either...we should vote those who weren't willing to compromise out of public office for causing this mess...
Three days left...can they do it in time?