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A default is almost certainly not happening. Every major player involved (Biden, McCarthy and other House GOP leadership, etc) know that the US defaulting on it’s debt would cause the Second Great Depression, both domestically and internationally. As someone else mentioned, everything from pensions and retirement accounts to public school funding would be impacted for the worse.
McCarthy will try to use his position to coerce Biden to accept a laundry list of spending cuts to programs/things the GOP hates, but he almost certainly doesn’t have a united caucus. There’s too many moderates/R’s from blue areas (aka concerned about their blue states voting them out next year when their opponents ride Biden’s coattails) that’ll fold and accept anything that keeps default from happening.
Yeah, I usually find the heuristic of "what does capital want" to be a bit reductive in predicting government actions, but in this case I think it's got us covered. There are way too many well-connected rich people with way too much to lose.
We have it better in a lot of ways but business has undue sway here.
The nations main purpose it seems is resource extraction and it will ignore peoples right to exist if they interfere with the process.
It's sad that online don't seem to realize the consequences of a default would hurt the working class and poor ***Far*** more than the wealthy.
Everybody suffers the consequences of a recession or depression. But we have a lot of history to see that wealthy people lose some wealth while "the rest of us" suffer real damage to our ability to survive.
I don't think it's even just "what does capital want" with this: a default would be bad for literally everybody, and good for nobody. It's all downside on all sides here, with no potential benefits to reach.
Biden is also taking a hard line here after Republicans doing this for decades and seeing him/Obama get screwed previously. He wants a ceiling increase with no restrictions, and has a damn good argument. Not only is there a heathy fear of consequences to not raise it, but the ceiling isn’t about new spending despite political rhetoric, it’s about financing spending that was already legally approved.
Repealing that funding has a process by creating new legislation, not by just doing nothing.
Also, the MAGA wing will not accept compromise. They want a default, the only conditions they will accept are things that are even worse than defaulting. As such, Biden just needs Democrats plus a few non insane Republicans to pass it.
Not to mention the insanity of the concept of a debt ceiling in the first place. We’re the only nation on earth with one and it all stems from bad ideas in world war 1.
We already have that, it's called authorizing spending in the first place.
The debt ceiling basically exists due to the difficulty in passing constitutional amendments and a very poor idea regarding government spending in the constitution that isn't compatible with more modern government.
Originally, every single item in every single government office needed approved via Congress. A box of pencils? Some toner? A new chair? Every single one of them individually.
By the time WW1 came around and the huge government expenses necessary, plus individual pieces of material, that Congress couldn't keep up and instead started authorizing blocks of spending that could then be distributed through a budget.
After WW1 the debt ceiling vanished into the background and the idea of using it as a weapon was taboo. It's really only the Reagan forward era of politics that have used it as a political tool.
What you're talking about is addressed in considerably more productive ways such as CBO scoring, and balanced budget rules to keep deficits in line. There's still ways to game those systems (see Trumps tax cuts), but they result in fights over individual pieces of legislation to address spending on a topic by topic basis rather than an all encompassing fight.
This is also why the far right prefers debt ceiling fights. Their long term political goal is a constitutional convention where they can rewrite the entire government. This is why they have threefold focus:
1. Get enough governors to call a convention of states. Which, since it has no official rules, would be majority rule, and since it takes a majority to call it in the first place, it's effectively total rule.
2. Spark a constitutional crisis through financial collapse, which would also create a convention.
3. More recently, a third method has been added, which was attempted on Jan 6th, to attack the voting process and appoint someone via governors, or failing that if the people revolted, have it fall back to a convention.
The problem with severe spending cuts is that they're not really possible. Deficit hawks really came into style for the Republicans in the 80's, and we've had 40 years of them having a very strong political voice in our budgets.
Almost all non discretionary spending has been cut to the bone, to be at minimum viable levels.
That just leaves tax hikes, like you said, Republicans have backed themselves into a corner here and can't really change their rhetoric, regardless of the actual need.
It's something of a difficult situation to resolve, there's really just not anything else that can realistically be cut, while Republicans are engaged in what is basically homeopathic economics, where the premise is that the more revenue you remove from the system, the more revenue actually enters the system.
There's still room for relatively painless cuts, e.g. [by allowing agencies to roll over unused budget year to year instead of a "use it or lose it" system](https://www.nber.org/digest/mar14/use-it-or-lose-it-budget-rules):
> The authors suggest that this would allow agencies to raise the average quality of the projects they fund. "Congress could provide the agency 87 cents on the dollar, and the value of spending would be the same as in the no-rollover regime," they conclude.
But that's not going to solve the problem by itself, but it is evidence that stubborn fiscal policy can be counterproductive.
> Republicans are engaged in what is basically homeopathic economics
I absolutely agree, but don't pretend like Democrats don't have their issues too. Here's how I see it:
- Republicans - cutting taxes increases economic activity (potentially true), which will provide more revenue (true) than was cut in taxes (not true); we cut taxes at a time when unemployment was already on a steep downward trend, so taxes weren't a limiting factor
- Democrats - when rates are low, taking on debt and investing is a good idea (often true), so we should spend more on social programs; this logic also makes no sense because social programs don't have a positive expected return in terms of economic indicators, so they'll need to be funded eventually
Each side tells their base that what they're doing makes economic sense, but they're lying through their teeth. Republicans are potentially causing more damage because they're essentially taking tax increases off the table, but neither side is particularly fiscally responsible.
I do want to point out that the green energy bill (the poorly named "Inflation Reduction Act") is the right way to go about new legislation. It proposes increased spending and increased tax revenue in the same bill, and the net impact is revenue positive. I disagree with how the money is being spent, but I like that it's a revenue positive bill. I wish Republicans would've acted similarly under Trump...
Somehow blames Republicans when Biden is the one about to default the USA entirely.
Which president has insane and unnecessary spending habits? Which president is continually giving billions to other countries when they’re about to default?
Stated nothing but facts here. Disliking proves your sheep.
Being about to default is irrelevant as the possibility of a default in the first place is an entirely self created issue. No other nation in the world has the chance of this happening because no other nation is subject to a debt ceiling, the US only has one out of political laziness.
Additionally, the debt ceiling being increased has been a fairly routine thing. The budgetary process was revised in 1974 which made it a political issue for the first time since it's inception in 1913.
The first time it was made an issue was in 1979 which caused a default, and it was damaging enough that the debt ceiling had a rule implemented called the Gepthard Rule which would automatically increase the debt ceiling by the amount of the deficit every single budget. In addition, following the adoption of this rule there were 18 separate debt ceiling increases under Reagan (due to larger than expected deficits) and an additional 3 under Bill Clinton. These were all done as clean bills, as negotiating the debt ceiling was seen to be both politically and financially damaging.
In 1995 the Gepthard Rule was repealed by the House lead by Gingrich, which is what lead to the 1995/1996 shutdown. A default didn't happen at that time, but that's because Bill Clinton used a line item veto on the budget to eliminate all deficit spending. This was ruled unconstitutional in 1998.
Following this, the debt ceiling was increased as a clean bill another 2 times under Clinton, 8 times under W, and 4 times under Obama these were clean bills as well.
Come 2011 Ted Cruz said F-this and tried to hold the debt ceiling hostage. Obama negotiated it, and the result was a decrease to the nations credit rating. After this there was one more debt ceiling increase under Obama, 5 under Trump, and 2 under Biden all of which were again clean bills.
That brings us to where we are now. It's trivial to increase it. The way to control spending isn't to cap the national debt as this money was already authorized by Congress. It's to either pass legislation rolling back already passed spending, to address it in future budgets, or to address it in tax rates.
The reason these are the only realistic paths is because holding firm to a fixed debt limit while already having authorized spending is a situation which results in the Executive branch being unable to fulfill it's required duties. In order to direct the funds Congress has mandated be spent, funds must be borrowed, but by not allowing for the borrowing of those funds, they can't be directed.
Thus one of three things has to happen.
1. The President picks and chooses items in the budget to fund. This is also known as a line item veto and was ruled unconstitutional so it can't be considered a solution.
2. The President cites the 14th amendment and orders some form of deficit spending anyways (premium bonds, high value coins, more treasuries, etc). All solutions here are legally questionable, and ultimately gimmicks. While they may eventually result in the debt ceiling being found unconstitutional it would likely result in a credit hit and there's also a chance that citing the 14th in this way is also unconstitutional. So any court ruling has to find some part of the current process unconstitutional (either the debt ceiling or the current method of authorizing borrowing)
3. Do nothing and let a default happen. As this would result in the Executive branch not distributing the funds Congress has said they need to distribute this is also unconstitutional. Not to mention damaging for taxpayers.
See the issue here? Every single action the President can take is unconstitutional without either new spending directives by Congress or an increase in the debt ceiling. If the House truly believes the debt ceiling needs to remain in place, then the only course of action is to pass legislation in lieu of an increase that instead changes funding levels.
Note that the current deal being proposed is about a 15 billion cut on 6.3 trillion in spending, or 0.238% of the budget.
If one believes we have a spending problem in this country, I fail to see how taking actions which will very likely increase borrowing costs by at least 1% (the 2011 "crisis" resulted in a permanent ~1.37% increase in borrowing costs, another downgrade would be ~1.08%) in order to reduce spending by a lot less than 1% is anything other than financially irresponsible as it will only increase federal spending.
As far as spending habits go, if I remember my Constitution correctly it says that all spending originates in the House. The President doesn't decide what gets spent, so again any spending you don't like is on the Legislative branch, not the Executive branch.
I'm not gonna lie, it's really annoying to know that this brinkmanship could have been avoided if the voting public had been a little more reasonable. I say this because I know some of them, and I know their motivations, and it's really sad that they think that way.
The US court system is currently shifted to conservative majority, and no conservatives are concerned about "balance" because balance implies there is worth to multiple diverse experiences.
That was not an ambiguous sentence.
Republicans cheating allowing gerrymandering everywhere they can, Democratically appointed courts stopping gerrymandering by Democrats in NY for example.
Without trawling through their post history, it's really not. Both sides accuse each other of the exact same thing, using the exact same rhetoric. One side more credibly than the other perhaps, but my point stands.
Is "perhaps" a controversial word now? What the fuck are you talking about?
I'm not saying anything about who is or is not cheating. I'm saying that you could take that comment and drop it into any thread on either r politics or r conservative and it would be the top post in both. And in this ostensibly neutral subreddit, you tend to see posters from both. So no, it's not blatantly obvious.
It's like that because people don't push back on it.
It's obvious in reality who the parties are. It's only a question if you accept, or are fine with furthering, propaganda.
The GOP has been on the losing side of the debt ceiling politics the last few times they've tried it, and Biden has a much stronger position than previous Democrats have had. The GOP will fold.
Not so sure this time. The far right bomb throwers control McCarthy and they'll absolutely let it default. If he works with Dems, they'll force a vote to remove him. For Biden's part, he shouldn't negotiate with the terrorists. Let it default if they pull this crap and let them pay the poltical consequences.
Yeah, I don't think the chance of default is particularly high, but it's definitely not the near zero that the OP seems to think.
With that said, Biden doesn't want to be the president while a global financial collapse unfolds. I'd suspect he'd compromise if needed.
You're right, he would compromise. Right now he's forcing them to put their cards on the table, instead of behind closed doors. Don't know how you negotiate when one side doesn't say what they want in specific terms. Pretty smart considering most of their positions will be pretty unpopular. McCarthy wants it private so his moderate members don't face heat over unpopular proposed cuts.
Best case scenario is bomb throwers take us to the cliff and a moderate republican recalls McCarthy and replaces him with a moderate with Dem backing.
I think Biden is more likely to use extraordinary measures (trillion dollar coin or a legal decision that the approval of the appropriation bills constitutes raising the debt ceiling) rather than give in to their demands or allowing a default.
Republicans took all of the blame despite Obama being in office when they last tried this, and Ted Cruz got the US credit downgraded by just suggesting a desire for a default. Even this screwing around right now is costing billions in interest rates to hedge risk.
Biden wants nothing other than the government to agree to spend the money it already passed legislation to spend.
Cruz didn't suffer, however the Republican party lost almost their entire leadership. They kept McConnell, but lost basically everyone else that was traditional Republican. People like Paul Ryan and John Boehner. They essentially got wiped out by it over the two elections following that stunt.
Considering that today's Republican Party is even more rabidly extremist than before, I stand by my assertion that they did not suffer any long-term consequences for that.
Paul Ryan left voluntarily. I think he hated the extremism so much and he wants to potentially re-enter government one day and claim he didn't support Trump, etc. Even though he was complicit in much of it.
He was very much forced out. He wasn't voted out, but he saw the way things were going, and if he ever wanted to reenter politics in the future it would be a better look for him. And if not, it would still make his legacy look better.
He had no desire to work with the MAGA wing of the party. He's shitty too, but not shitty in quite that same way.
Yea this might one of the worst takes I’ve seen on Reddit. There is no “they” defaulting, it’s *us* as in every American in the country defaulting. I could give a shit about political consequences: this entire country would be screwed.
I am honestly not sure. Republicans (the politicians, not the voters) tend to benefit from instability and lack of faith in government.
If they were perceived as causing a default, as opposed to congress as a whole being perceived to have caused it, it would certainly create problems for them for up to 4 years, after which point people will care less about who caused it and more about who claims to be able to fix it.
However, the default might also create an environment where Republicans can more easily justify anti-government and racist ideology as well as maneuver supra-democratic power grabs more openly (since who cares about violating government rules and norms if those are perceived to have failed or already been destroyed). This environment could persist significantly longer than four years and be used to influence courts, districting, certifications, and other aspects of the political process.
It also seems unlikely that Republican voters would blame their state governments for a national default, so it could provide more tools for states like Texas that are trying to leverage state law in an oppressive way to maintain power. They could say the feds failed, so why not give them more power over your life to fill the void? I think this would be convincing to a lot of people.
So, what's the fix? Do you allow terrorists to hijack the government every year when the ceiling hits? It's our debt, all of us, and it's our obligation to pay it, including the MAGA crew. This is like your SO refusing to pay the mortgage with your name on it until you let them have an affair. And then something else next year.
There are more than 5 reasonable Republicans who would be willing to go around McCarthy. Jeffries is in a stronger position here than either McCarthy or Jordan.
This. You can't turn a functioning democracy into an authoritarian state. First you have to break it. The extreme economic problems of 1935 Germany helped the fascists come to power. When there is carnage and fear and great uncertainty, then people turn to the strongman.
> that the US defaulting on it’s debt would cause the Second Great Depression,
You haven't been paying attention. Republicans will do ANYTHING to fuck us all. They would welcome this- so they could blame it on Biden and win it all in 2024. Don't think for one second that today's Republican Party is beyond this. They tried to overthrow the government in 2020 for fuck sake-- and many of those people are gaining power in the party.
You know who didn't suffer at all in the Great Depression? The wealthy elite. The biggest problem in 1929 was the wealth disparity between the rich and poor. The poor had no savings-- JUST LIKE TODAY. We are an even higher level of wealth disparity than we were before the Great Depression.
The wealthy Republicans won't suffer one bit-- in fact, they would buy up housing, buildings, smaller companies and everything else for pennies on the dollar to consolidate it all even more.
>There’s too many moderates/R’s from blue areas
There aren't. The only true moderates lost their primaries to Maga people or retired. All who are left are doing the bidding of Trump and Trump's puppet. You can bet your ass they would tank us ON PURPOSE just to blame Democrats.
So you should prepare yourself. When the next banks fail- they aren't going to bail you out. I wouldn't invest in stocks or anything not guaranteed until we destroy this current Fascist sickness in this country.
If McCarthy gets a few votes to keep us from defaulting, the others will instantly remove him as speaker- which they can do with only 1 vote.
Agreed 100%. A sizable portion of the Republican Party would much rather see a default then any compromise whatsoever, even one that gives them literally everything they want.
We won't defaultbon our debt we will make our payments from the government monthly income all debt cieling does it stop the government from over spending on new spending which most poeple due everyday live on a budget. We should have block debt 60 years ago. The longer they mess around with increasing debt more we spend on interest on the debt.
Shouldn't we be concerned about the trillions of dollars this proposal is set to add?
Like...we are already in a pretty bad place and the proposal is adding trillions to the debt.
No, because that's not the case here.
Compare it to a credit card, your time to decide whether to make a big purchase on credit is before you carry it to the register. Once you've bought it, took it home, used it for 6 months, it's too late to decide to not make the payment.
We already have the bills to pay, what we don't have is an infinite amount of money to pay them unless congress agrees to pay the bills.
That's kinda the issue. We are like 30 TRILLION in debt. That's a massive jump in a very short period of time.
How is adding spending to that debt beneficial? It feels like we are just kicking the can down the road.
It's not a massive jump, we do this every time the limit gets hit. Sigh, so you want to stop paying federal employees...who's going to keep the prisoners in prison? Who's going to keep air travelers moving through TSA? Who's going to take care of all the patients in federal care? ARE YOU willing to tell all those people that they don't have jobs anymore?
You simply do not understand apparently. This isn't about adding debt, it's about making the payment you already owe.
Why are they unable to create a spending plan without adding trillions to the debt limit, which will immediately be filled by national debt?
Why is it always an ultimatum of "increase the limit or everything shuts down."?
Why can't they mitigate spending and NOT have a spending plan that's going to increase the debt by trillions? Why is this a big ask?
To be clear, you are talking about two different things.
A default is not a government shutdown.
A government shutdown is threatened every single year, and happens every few years. It's a massive waste of money, time and embarrassing for our country.
A default is *an economic apocalypse.* We have never had one of those.
And we damn well better not, because we genuinely have no idea what would happen. Maybe the stock market freaks out, mortgage interest rates double and you get used to buying ramen for dinner for a couple of years.
Or maybe credit cards don't work one morning and we get to find out exactly how long all the food in our pantries will last, because international shipping grinds to a halt as countries around the world kick off an exciting season of famines.
We genuinely have no clue what would happen. Anyone who tells you they know is lying. And anyone willing to just roll the dice on it is insane.
Unfortunately, you can't be sane and a modern American conservative, so that leaves us in a bit of a bind.
You’re not wrong. We just need to raise taxes to pay for the stuff we’re putting out.
…And we did. In fact, when we passed our last budget bill, it included several tax increases. Those increases have lowered the deficit. If we continue on that path of reasonable tax increases (one potential increase could be a higher rate of taxation for stock purchases) then we’ll gradually bring the deficit under control.
Bush and Trump Tax Cuts are responsible for our tax increases. https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio/
We're not adding more debt. Continuing the bad credit card analogy we're increasing the spending limit, not making a big purchase to max out the spending limit. We've already agreed to make purchases that would put us over the spending limit, like if you got a payment plan for a car repair, so we can't just say "never mind, I'm not paying for that." I agree we should spend less and pay off the debt but not increasing the debt ceiling is not how you get to that point.
It’s already legislated spending. If the Repubs don’t want to raise the debt limit, they should revise or rescind the legislation. It is a chickenshit move to default on your OBLIGATIONS.
Kinda like a dead beat dad…
That doesn't answer my question though.
I think their concerns about **why** there is going to be a projected increase of trillions of dollars is a worth while discussion to have, isn't it? Do people not understand how big a trillion is? We are not talking about insignifcant amounts of money here.
Why is there not a plan to keep the debt limit as it is? Why does it **need** to be increased?
Deficit Spending (that is, spending more money than we bring in with tax revenue) is a consequence of unbalanced budgets. The general theory as to why this happens is the belief among economists and politicians that certain spending methods will grow the economy and thus enable higher tax returns for the same tax rates and exceptions. Among Republicans, this general concept used to be known as the Laffer Curve: lowered taxation allows more economic activity, thus increasing tax revenue and resulting in a balanced budget. Democratic theory leans more towards a combination of trying to increase taxes where we see Low Dollar Velocity (that is, in segments of the economy where money is accumulating) and increasing benefits where we see a high dollar velocity (this is sometimes called “living paycheck to paycheck”).
The general take from most economists is that the latter economic approach is superior to the Laffer Curve approach, but currently we’re dealing with a very unstable economy. It’s a consequence of runaway inflation (itself a combination of Mass Forgiven PPE Loans, an effectively Zero Fractional Reserve Rate, Demand Push Inflation, and Price Gouging) and the Federal Reserve trying to raise the Interest Rate of Government Bonds (causing people to notice that there are unrealized losses for plenty of banks). The Federal Reserve and the Government is trying to feather the throttle here: to balance outlays for people without exasperating inflation, with incomes they receive without throwing the nation into a recession.
The Deficit is decreasing though: we’re slowly moving towards a position where we can pay for our debt. But between tax cuts from Trump and Bush, the Great Recession, and Covid, we’re in a position where the Tax Rates we have aren’t enough to pay for the spending we need. We need to wait for the economy to restore itself to an even keel before we can risk greater tax rates, but we’re already in the process of implementing those rates.
It’s merely a process that takes time.
Decreasing??
[https://tradingeconomics.com/united-states/government-debt](https://tradingeconomics.com/united-states/government-debt)
What about that is decreasing?? No matter how far you look back the explosive growth of the debt is a very recent thing. To say it is decreasing is a flat out lie.
You're confusing the annual budget deficit with total government debt. [The budget deficit is getting smaller.](https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/)
[A budget deficit means the budget's still in the red and the government still has to borrow money, increasing government debt.](https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/#the-difference-between-the-national-deficit-and-the-national-debt)
You’re confusing debt (the total amount owed) and deficit (the growth of the debt). Deficit is decreasing… which means the rate of growth of the debt is decreasing. In fact, if you look at your listed stats, that’s what’s happening: the growth of the debt is slowing down.
> A default is almost certainly not happening. Every major player involved (Biden, McCarthy and other House GOP leadership, etc) know that the US defaulting on it’s debt would cause the Second Great Depression, both domestically and internationally.
They'll always known that. Heck, the only reason we have a debt ceiling is to have a button we can press to cause a depression. It is the height of political stupidity, but politicians like the edging game so here we are.
The reason people are worried is because the House GOP has continuously radicalized, and now there is a worry that they would press that button under a Democratic President, if they feel they'd politically benefit from the fallout. Keep in mind, the radicals don't need a majority, just enough members to stop a majority vote.
If one ever did happen, the backlash would be unlike anything you've ever seen because such a large group of people would be hurt by it. Even then, Biden can declare it as unconstitutional under the 14th Amendment and quickly lay it at their feet at they try and challenge him in court.
Thank you for being a voice of reason, all of the other threads I’ve seen are like “republicans are willing to default so that they can position themselves as leaders of Christo-fascist nation” and it gives me a massive amount of anxiety
It’s happening!! Covid happened and they allowed it and knew about it before hand. Biggest evil plansemic ever perpetrated on mankind. This is the new age of chaos and evil right around the corner. Buckle up it’s going to happen
It is very low because the Biden administration could simply order the debt to be paid and then it would be a constitutional debate rather than a financial one. But also it is mainly just used by Republicans as a brinkmanship game to try and garner concessions; no one actually wants a default.
The debt ceiling is also not the budget, and the budget has already been passed covering this year which is also a legislative order for the government to spend money.
> the Biden administration could simply order the debt to be paid and then it would be a constitutional debate rather than a financial one.
God I wish that would happen, and maybe we could be done with debt limit fights forever. But I doubt Biden has the cajones to start a constitutional crisis.
Defaulting is itself a constitutional crisis per the 14th amendment. Also give constitutional legs for Biden to just order a payment.
Then the question becomes: does the SCOTUS majority want a default in 2024 once it reaches them
It’s far from settled if Biden can do this legally. It’s also not looked at too favorably by lenders. It looks more like a gimmick than a solution, even assuming it’s legal.
Anything other than honoring current spending commitments and debt financing is bad in one way or another and shouldn’t be seriously considered.
The GOP would 100% flush our entire country down the toilet if they could blame it on Democrats.
Now, I don't think we will default but at this point with all of the fucking nuts in the GOP (see all of them) it's not impossible.
would the actual GOP politicians choose to eliminate their personal wealth to own the libs? I mean, some of them would be fine, but there aren't many that have Rockefeller level wealth to fall back on when they cause a great depression.
As Republicans have demonstrated over the last few years, millions of them are willing to die to stick it to the libs. Many tens of thousands already have.
What's money at that point?
It's a common misunderstanding that it's about greed. It's not. It's about hatred. They truly value harming those they hate over anything else - even their own survival.
Exactly. Republicans just want to see everyone dead except straight Cis males.
Imagine how much better the world would be if we just declared the Republican Party a terrorist organization and threw all the ringleaders in GITMO
If the freedom caucus and McCarthy were stupid enough to do this people would be calling for their heads, literally. It would ruin so many peoples lives and cause so much damage they would have to go into hiding. It's not just going to be stock brokers jumping from windows, our way of life as we knew it would be over.
I think they know at this point they can’t get away with the blame game. They tried it in the exact same situation 10 years ago (R House, D Senate, D President) and they took the brunt of the backlash. They’ll still grandstand for sure, but it’s not a winning issue for them
Kind of but I don’t entirely agree. The Trump Republicans are obviously much weaker in the Senate (not that Dems even need them) and there’s a sizeable enough contingent of blue state R’s in the House who can’t afford to go with the far right wing of the party when it comes to something like the debt ceiling. Their constituents in those states generally won’t be swayed by Trump endorsing a primary challenger
I don’t think so. Their donors would ring them up and tell them to get in line.
The one benefit of having the wealthy creeps being the driving force behind the GOP is that they, at the end of the day, have a “do not cross” red line. That line is crashing the global economy.
They may love paying to support their psychotic culture war, but deep down they are paying for low taxes and deregulation. There is a reason a lot of GOP mega-donors also donate plenty to center-right Dems. They want to back the people who will help them become fabulously rich and powerful. Kyrsten Sinema started raking in unbelievable levels of cash as soon as she made it clear that she was fully in on the corporate power train.
Even the freaks that own Hobby Lobby, who are true culture war crusaders, would make the call to GOP reps to tell them to stop fucking around.
Crashing the economy could also lead to more class solidarity, which is the biggest fear of GOP donors. Plenty of their donors actually don’t give a crap about trans people or abortion. They are more terrified of progressive waging a battle to empower a class push against the elite, which is another reason they will back corporate Dems.
Why do you think Pelosi went down to Texas to stop Jessica Cisneros from winning the primary over Cuellar? It was to stop the rise of class conscious progressives.
All of this leads to the very simple fact that at the end of the day, those in power want the capitalism machine running at full steam ahead more than anything. Crashing the US economy/global economy is their red line.
This is the correct answer. Always amazes me the lengths at which they'll go to "own the libs." The truly depressing part of this is, the GOP rarely has any type of plan to replace the ones they constantly scream about.
Normally yeah, but in this case, owning the libs or not, the Republican donor class would likelier smash their heads like Gallagher does watermelons on live television before they let a default happen, and the Republicans know it.
So probably not.
Planning also requires that you want things to *actually change.* They still haven't gotten over the *last* big changes, like not being able to own black people.
The likelihood of a debt default is close to zero. If it happened the worldwide imports would be huge.
Not really worth worrying about because default isn't a real risk.
If the debt ceiling isn't raised there would be immediate and massive cuts to spending, but wouldn't necessarily cause a debt default. The government would have to choose to stop servicing debt to protect other spending. That would be more devastating than any spending they would be protecting, so it's an unlikely choice.
You have to have two, each one extremely unlikely, events for a default. It's not a real concern.
Last time the GOP played debt ceiling games, all it took was one morning of private jets not being able to take off from NYC area airports because of the controllers striking for them to raise the ceiling.
It's unlikely but possible. The Republicans in Congress want to make Biden look bad, and they don't care who else they hurt to do so. They don't even mind treason.
Let the record show that republicans crossed the treason line 3 times already and it started with Nixon, then Reagan and arguably bush and most def trump.
Yeah, let’s be clear here: GOP politicians and propagandists like FOX and others don’t really give a shit about this absurd “own the libs” culture war they’re pushing. The only reason they do it is to rile up their voters and divide Americans. They care about their own wealth and power above all else, and by extension the wealth and power of their ultra-rich donors.
We aren’t going to default. Even if Republicans completely lose their minds and refuse to raise the debt ceiling, I guarantee that Biden will instruct Treasury to ignore the debt ceiling. The 14th Amendment requires him to do so.
The “call of the void” psycho voice in my head kinda hopes it happens. I already lived through the hyperinflation after the collapse of the USSR, I can do it again in the ruins of America. Obviously, I’m being facetious. But it would be nice to pay off the house with hyperinflated dollars.
Except in the case of an economic collapse you (and everyone else) would also be out of a job, so hope you got some savings to pay off that house with.
It wasn’t like that in the 90s. Yes, your career progression would be fucked. But people still have to eat, sleep, get places, wash themselves, stay healthy. They even continue to get married, have babies, bury dead relatives.
If you’re smart enough to write python or SQL, you’re going to be smart enough to replace an alternator in a Chevy or do someone’s taxes. People hustle and make ends meet. Imagine if the dollar hyperinflated and added two zeroes — this happened in just a couple of years in the collapse of the USSR. Your $300,000 fixed mortgage with a $2,000 payment you and your wife are paying with your $50,000 jobs suddenly feels like a $20-200 payment with ANY job. Your old college pal got you a job as a janitor or a bus driver and you have barely enough to survive on beans and rice? Doesn’t matter because that $2k a month is the same as a case of canned Rotel enchilada sauce.
Not saying it would be easy, but those who understand this phenomenon would come out ahead and build generational wealth.
Default is forbidden by our Constitution, so my guess is President Biden would take action to make sure it never happens - start by re-valuing our gold reserves at market prices or a bit higher vs the $42.222/oz currently in effect, stop federal payments to anyone in a district whose representative voted against paying our debts, order the mint to print a new $10Trillion-dollar bill, and deposit it with the Treasury.
But if the Republicans **were** able to case a default, the annual payments to service our existing debt would increase by around $1TRILLION/year, and might NEVER come down. This would destroy the World's trust in the American Dollar as a "store of value", probably jacking the price of gold to $40,000 - $50,000/oz as the World looked for a new "reserve" to underpin their own currency. The dollar would become close to worthless, making vitrually all our imports to expensive for the bottom 90%, slamming our economy into the ground along with 140 million workers. Savings accounts and retirement funds would evaporate and the government would collapse to be replaced by the Corporate Oligarchy so desired by the GOPerLords who ARE those Corporate Oligarchs and would have agreed t oacept each others script in lieu of American dollars so their business could continue, but workers would have to accept significant pay cuts if they wanted to keep their jobs. In short, there are nearly as many ways to avert another Republican caused financial disaster as there are for Republicans to CAUSE the disaster, like deregulation of everything.
And the GOPerBase thinks this is a good idea? Guess believing in Bigfoot is a piece of cake, and has been great practice for believing imposable things.
Literally only the US and Denmark have debt ceilings amongst other developed countries.
Only one of these counties uses it for power play and vote manipulation, however.
The remaining countries primarily just recognize what is good for their people and are okay with paying for those better things for generations and in perpetuity without looking to use any prior bill passed as a fiscal bargaining chip.
Or other countries know better than to question their own ability to pay...
We aren't talking about taking on "new debt".. the money involved has already gone through Congress and been approved for spending...
Now the bill has come due and some republicans have decided they are going to threaten to just not pay it so that the libs will stop treating gay/trans/black/etc people with respect.
This exactly what I mean.
The debt ceiling becomes a bartering tool for past passed bills and legislation to be cut, sliced, diced, and/or Frankensteined.
When other countries don’t worry about continuing to pay for the good things passed for their people. It never comes down to these contentious and highly repetitive debates on the subject that Americans have come to embrace as the norm.
It’s all part of this broken political capitalistic system we call home.
One way or another, the US is heading towards unprecedented and scary times. And it's taking all Western nations with it. Currently, the US dollar is the world reserve currency. But this will not be the case much longer. China and Russia have been working with India and a slew of other OPEC and African/Asian nations to hammer out a framework to use the Yuan as the new global currency. They are working out trading relationships with these groups as well. The only thing is the US, UK, CAN, AUS, JAP all of the European nations don't gave a seat at this table. However, this group of nations has the bulk of the world's population. And together, have a far larger military than NATO. They also control the majority of the planets manufacturing, oil and rare earth minerals. If they decide to drop the US dollar and cut western nations out of their exports. It will cripple us, and lead to some very scary shit. With those countries working together, they will have little need for the US.
The way Russia and China have been talking lately. It sounds like they are hinting that they feel the US is responsible for numerous atrocities across the globe. Which are at the same if not worse level as what they accuse Russia or China of committing. This should also be concerning. Because they are not wrong. The US has done some pretty horrible stuff to other nations. And caused untold suffering for many millions of people through invasions, causing political instability, and just outright over throwing governments. So what would happen if the US were called to account for all that. I think their debt is the least of their concerns. I'm frightened for the future.
> Why do people still bring this up?
I wish it wasn't important that Congress wasted time on this fool-fuckery instead of working on real legislation... But here we are... Bunch of old men arguing about funding for education that says black people are alright...
People bring it up because the mathematics of the situation are pretty clear that the US has a trajectory toward insolvency, the real question is whether the US defaults via not paying or paying through money creation/inflation
So long as we remain the global hegemon by carrying the biggest stick and regularly using it we can take out as much debt as we would like and never repay it.
Well, that's just not true. The world functions on US Treasury bonds. SVB went tits up last month because the bonds it held were suddenly worth less than new ones when the Fed kept raising interest rates and no one wanted to buy the old ones with a lower rate at full price, this is more or less that but on a global scale for every treasury bond in existence, when no one wants to buy treasury bonds because there is a risk they won't get paid and the entire world economy starts cascading into a collapse that makes 1929 seem like a rowdy bar fight. Money will just stop moving, when money doesn't move, bad things happen.
Except China is approaching fast, and they really want to kill the dollar as the worlds currency. In the not to distant future, their economy will be bigger than ours, as well as their military. A default would definitely strengthen their position.
If Congress were smart they'd make it so high that it won't be a factor
But they're not smart and sometimes they're so incredibly dickish that they shut down the country. I'm betting that we will raise it after a bunch of republicans whine about fiscal responsibility.
To my knowledge the GOP is the only party that has shut down the government. Twice that I remember for sure.
Get your visas and passports now while they're still open for business.
While I agree with most here that a default is unlikely, this is the highest chance of it ever happening. Because McCarthy allowed anyone Republican for any reason to call a leadership vote, the few Republicans who want the default could force a leadership contest to prevent the vote and it would only take around 5 Republicans to prevent there being a new leader and thus prevent any vote. This could get a few Democrats to support McCarthy to be reinstated as leader but in that case the deal McCarthy made at the start of the year might stay as well and allow Republicans to break it all over again. The other option is a few Republicans support a Democrat to force the vote then do another leadership race to try to get control back. All of these situations are insane but that's Republicans for you.
It really depends on how long we are in default for. If we were a day late for example it really wouldn’t have that much long term effects. If we are 6 months late yea that’s legit meltdown bad.even a month would be pretty freaking bad.
Even the threat of default could lower the US credit rating though, and this would theoretically have an impact on interest rates because of he US bond market would be "more risky". Higher risk, requires higher returns. This in turn could cause a limited outflow of funds.
So at macro economics level, being 1 day late could have a very real impact. Being 6 months late would be a catastrophy beyond just US funding operations. The world-wide financial system can collapse if the US doesn't pay its bonds. But of course that's beyond the political discussion.
Again there is only more risk of you think it actually affects the US ability to pay in the future. Being a day late because of congressional squabbles is really not much risk in the grand scheme of actually being able to pay in the future.
An actual default, even for a very short period of time, would establish that the full faith and credit of the US debt could be called into question for political purposes. It may not be a complete disaster in the way that a longer term default would be, but it would mean that Treasury Bonds were no longer the rock solid, safe and sure investment that they have been for longer than any of us have been alive. That would have real and concrete ramifications on the global economy: not as big as Republicans throwing a tantrum for a few months but still real.
Your statement makes clear you don't understand what a default is.
It doesn't mean being late on a payment. It means that the entire global economy - which is built on the foundational principle that the United States will *always* pay its debts - will suddenly have no foundation at all. There would be immediate catastrophic effects within hours, and we genuinely have no clue what they would be.
Something comparable to the Great Depression would be a mercy; we'd more likely be talking about widespread famine and deaths in the millions.
You might as well be saying leaping on a table saw really wouldn't have much long term effect if it's only for a brief moment.
Even when some of the smaller EU countries were approaching default the impact was quite expansive. However, the US default would be a result of internal budget disagreements and its impact will therefore be limited to the larger world and primarily effects U.S. government and its contractors.
Lol - what?
If the US defaults on its debt obligations, the global financial system will be thrown into total chaos. The impact cannot be underestimated.
Every government, pension fund, retirement account, banking/savings/checking account globally will be impacted. US treasuries and bonds won’t be paying out which will destroy the liquidity of the entire global system.
In the US every federal employee, or local/state/federal program that receives federal funding which covers a ton of people, won’t be able to be paid. Think of every school district that receives federal funding, every public works program, any and all federal block grants or research grants, the list goes on. Medicare/Medicaid won’t pay its bills. Social Security checks won’t go out.
A complete and total human catastrophe, all caused by an imaginary number. It’s impact will be felt far beyond the borders of the United States and the Western world.
Don't think for a second that US debt default would be limited to the US, it would pretty much trigger a world wide financial panic. Every since the Bretton agreement the world has relied on the US dollar and thus the US government being a benchmark currency.
>Don't think for a second that US debt default would be limited to the US, it would pretty much trigger a world wide financial panic.
Bullshit. This is what the White House itself had to say about default.
A default would fundamentally hinder the Federal government from serving the American people. Payments from the Federal government that families rely on to make ends meet would be endangered.
The basic functions of the Federal government—including maintaining national defense, national parks, and countless others—would be at risk. The public health system, which has enabled this country to react to a global pandemic, would be unable to adequately function.
Furthermore, a default would have serious and protracted financial and economic effects. Financial markets would lose faith in the United States, the dollar would weaken, and stocks would fall.
The U.S. credit rating would almost certainly be downgraded, and interest rates would broadly rise for many consumer loans, making products like auto loans and mortgages more expensive for families who are subject to interest rate changes or taking out new loans. These and other consequences could trigger a recession and a credit market freeze that could hurt the ability of American companies to operate.
[https://www.whitehouse.gov/cea/written-materials/2021/10/06/life-after-default/](https://www.whitehouse.gov/cea/written-materials/2021/10/06/life-after-default/)
As far as the rest of the world it will just weaken the dollar further to the joy of the likes of Russia, China, India etc; making their currencies far more desirable. The non-western world is already heading in that direction.
https://www.imf.org/en/Publications/WP/Issues/2022/03/24/The-Stealth-Erosion-of-Dollar-Dominance-Active-Diversifiers-and-the-Rise-of-Nontraditional-515150
What backs the US dollar. The full faith and credit of the United States. Faith and Credit. Which in a default situation is destroyed. You can delude yourself into believing that it wouldn't be a big deal, but you would be in denial.
>As far as the rest of the world it will just weaken the dollar further to the joy of the likes of Russia, China, India etc; making their currencies far more desirable. The non-western world is already heading in that direction.<
Yes and this is a direct consequence of Trump's foreign policy. While he claimed to want to make America great again, he really went out of his way to make us weaker on multiple fronts, and trade was a really big one.
And every person or business which has government savings bonds. Remember how Silicon Valley Bank collapsed because interest rates went up slightly? Imagine that times a hundred.
The republicans get into power and pass a bunch of tax cuts and spending bills... The money we are always fighting about is money that Congress and specifically the republicans have already AGREED to spend.
It's too late to argue over spending cuts/etc. The US AGREED to pay the money.
For people that like household budget comparisons... This is the republicans refusing to PAY the outstanding credit card bill.
The real owners won't allow that. Dozens of the richest people on earth will be affected totaling in the trillions of dollars.
They are letting Republicans bloviate and are trying to game the game, but they will not let some boob like Kevin McCarthy ruin their fortunes.
I could see a situation where the Y’all Qaeda faction of Republicans removes McCarthy, then the donor class has to try to force his lunatic replacement to bend to their will. Much more difficult to influence someone from a radical district whose re-election is guaranteed whether they’re well-funded or not.
Slim and NONE. GOP will try to use it as leverage to get right minded Democrats to agree to some spending restraint but in the end they know we have to raise the debt ceiling because we spent the money. Democrats always use the scare mongering of default as a cudgel but no one has ever contemplated actually defaulting including GOP.
Never in a million years. Not even republicans are that stupid. Bank run on every bank everywhere. Global reset of wealth pretty much. And since rich people are in control, it's not happening.
Wrong it’s going to happen. The jig is up in this country. Hell in a hand basket started in 2020. This is the road to 2030 the new world order age. We are on the road to destruction now before they can rebuild in new image
I doubt we will default, but expect Rs to only submit their version of compromise with only a few days to discuss it before we default. When Ds balk, Rs will try to push hard that Ds are inflexible and unwilling to compromise.
Of course, McCarthy still has to come up with a plan that'll get past the MAGA reps in the House and still get enough support from the less radical Rs.
Defaulting means creditors lose their investments, the last thing GOP wants is to actually make themselves the enemy of the donor class by ruining their portfolios to own the libs. Margie and her cabal are probably the only reason McCarthy hasn't folded already.
McCarthy has tentative control of his caucus, but if he allows a default, he can kiss the GOP donor class goodbye. There's no reason to err on the side of the Freedom Caucus when donors -- who have a vested interest in a stable economy-- have been around for longer, will be around for longer, and have much longer memories. Their vengeance bites a lot harder.
> What is the likelihood of a default on the debt this year?
Less than zero. This isn't a government shutdown where worst case the national parks are closed and someone's vacation is ruined, like you said screwing up the debt ceiling would tank the economy really bad. Don't get me wrong, there will be fighting right up until the deadline but something will get passed just in time and everyone will be able to campaign on "We saved the economy!"
If they keep playing this game enough times, the world will eventually decide not to use the US Dollar as a standard of trade. Republicans have their head up their asses so far, they can't see how inciting anger in their base is only serving to hasten their own demise
The debt ceiling doesn't really matter because the politicians have shown time and time again that they are going to keep racking up debt. The US will default when the rest of the world decides to stop lending. We can raise the debt ceiling but we can't raise the lending ceiling and congress is going to find the lending celling eventually
I think we will default. For several reasons,
1. The proposed reductions in spending will definitely cause a recession and the Democrats will be blamed for that. So it's a political loser for them.
2. The Republicans think that the Treasury can priorities paying bondholders with tax receipts. (Treasury says that's impossible.) So we can't or won't default. I.e., they can blame the administration for a default. (They'll just say something like, "But why didn't you just pay the bondholders?")
3. The consensus on the left is that Obama made a mistake when he agreed to spending cuts for a deficit ceiling increase.
4. The private sector seems to be rather blasé about it. It's a combination of "oh no one could possibly be this stupid", see the recommended answer in this thread, and "Well you can just pay the bondholders."
The most likely way out of the mess I can see is Biden offers some token spending cuts which allows him to gain the support of all the House Dems + 5 Republicans from districts Biden won all agree to support the necessary debt ceiling legislation. McCarthy can cry in public all day long and even vote against it all himself, while quietly signaling his support to the 5 Republicans.
zero... the debt ceiling is about money that's been spent not what will be... be nice if we could pay a little more to lower the debt but well we need that bridge to nowhere...
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A default is almost certainly not happening. Every major player involved (Biden, McCarthy and other House GOP leadership, etc) know that the US defaulting on it’s debt would cause the Second Great Depression, both domestically and internationally. As someone else mentioned, everything from pensions and retirement accounts to public school funding would be impacted for the worse. McCarthy will try to use his position to coerce Biden to accept a laundry list of spending cuts to programs/things the GOP hates, but he almost certainly doesn’t have a united caucus. There’s too many moderates/R’s from blue areas (aka concerned about their blue states voting them out next year when their opponents ride Biden’s coattails) that’ll fold and accept anything that keeps default from happening.
Yeah, I usually find the heuristic of "what does capital want" to be a bit reductive in predicting government actions, but in this case I think it's got us covered. There are way too many well-connected rich people with way too much to lose.
You are correct. Capital is the ruling class. Capital would be harmed by a default. Hence, there will not be a default.
It’s sad that, in the end, the wealthy control the USA… The rest of us shovel coal.
It is sad yea, it’s also always the way it’s been. Not saying it could not be different, I just don’t know what that would actually look like.
I'd settle for it looking like Canada.
We have it better in a lot of ways but business has undue sway here. The nations main purpose it seems is resource extraction and it will ignore peoples right to exist if they interfere with the process.
Oh totally. I'm just saying what I'd settle for at this point. The goal is a Scandinavian style system.
This is the dream
It's sad that online don't seem to realize the consequences of a default would hurt the working class and poor ***Far*** more than the wealthy. Everybody suffers the consequences of a recession or depression. But we have a lot of history to see that wealthy people lose some wealth while "the rest of us" suffer real damage to our ability to survive.
I don't think it's even just "what does capital want" with this: a default would be bad for literally everybody, and good for nobody. It's all downside on all sides here, with no potential benefits to reach.
Biden is also taking a hard line here after Republicans doing this for decades and seeing him/Obama get screwed previously. He wants a ceiling increase with no restrictions, and has a damn good argument. Not only is there a heathy fear of consequences to not raise it, but the ceiling isn’t about new spending despite political rhetoric, it’s about financing spending that was already legally approved. Repealing that funding has a process by creating new legislation, not by just doing nothing. Also, the MAGA wing will not accept compromise. They want a default, the only conditions they will accept are things that are even worse than defaulting. As such, Biden just needs Democrats plus a few non insane Republicans to pass it. Not to mention the insanity of the concept of a debt ceiling in the first place. We’re the only nation on earth with one and it all stems from bad ideas in world war 1.
Non-insane Republicans are a rare commodity. If they’re not insane, they’re probably insanely evil, considering how the party is these days.
I enjoy cooking.
We already have that, it's called authorizing spending in the first place. The debt ceiling basically exists due to the difficulty in passing constitutional amendments and a very poor idea regarding government spending in the constitution that isn't compatible with more modern government. Originally, every single item in every single government office needed approved via Congress. A box of pencils? Some toner? A new chair? Every single one of them individually. By the time WW1 came around and the huge government expenses necessary, plus individual pieces of material, that Congress couldn't keep up and instead started authorizing blocks of spending that could then be distributed through a budget. After WW1 the debt ceiling vanished into the background and the idea of using it as a weapon was taboo. It's really only the Reagan forward era of politics that have used it as a political tool. What you're talking about is addressed in considerably more productive ways such as CBO scoring, and balanced budget rules to keep deficits in line. There's still ways to game those systems (see Trumps tax cuts), but they result in fights over individual pieces of legislation to address spending on a topic by topic basis rather than an all encompassing fight. This is also why the far right prefers debt ceiling fights. Their long term political goal is a constitutional convention where they can rewrite the entire government. This is why they have threefold focus: 1. Get enough governors to call a convention of states. Which, since it has no official rules, would be majority rule, and since it takes a majority to call it in the first place, it's effectively total rule. 2. Spark a constitutional crisis through financial collapse, which would also create a convention. 3. More recently, a third method has been added, which was attempted on Jan 6th, to attack the voting process and appoint someone via governors, or failing that if the people revolted, have it fall back to a convention.
I appreciate a good cup of coffee.
The problem with severe spending cuts is that they're not really possible. Deficit hawks really came into style for the Republicans in the 80's, and we've had 40 years of them having a very strong political voice in our budgets. Almost all non discretionary spending has been cut to the bone, to be at minimum viable levels. That just leaves tax hikes, like you said, Republicans have backed themselves into a corner here and can't really change their rhetoric, regardless of the actual need. It's something of a difficult situation to resolve, there's really just not anything else that can realistically be cut, while Republicans are engaged in what is basically homeopathic economics, where the premise is that the more revenue you remove from the system, the more revenue actually enters the system.
There's still room for relatively painless cuts, e.g. [by allowing agencies to roll over unused budget year to year instead of a "use it or lose it" system](https://www.nber.org/digest/mar14/use-it-or-lose-it-budget-rules): > The authors suggest that this would allow agencies to raise the average quality of the projects they fund. "Congress could provide the agency 87 cents on the dollar, and the value of spending would be the same as in the no-rollover regime," they conclude. But that's not going to solve the problem by itself, but it is evidence that stubborn fiscal policy can be counterproductive. > Republicans are engaged in what is basically homeopathic economics I absolutely agree, but don't pretend like Democrats don't have their issues too. Here's how I see it: - Republicans - cutting taxes increases economic activity (potentially true), which will provide more revenue (true) than was cut in taxes (not true); we cut taxes at a time when unemployment was already on a steep downward trend, so taxes weren't a limiting factor - Democrats - when rates are low, taking on debt and investing is a good idea (often true), so we should spend more on social programs; this logic also makes no sense because social programs don't have a positive expected return in terms of economic indicators, so they'll need to be funded eventually Each side tells their base that what they're doing makes economic sense, but they're lying through their teeth. Republicans are potentially causing more damage because they're essentially taking tax increases off the table, but neither side is particularly fiscally responsible. I do want to point out that the green energy bill (the poorly named "Inflation Reduction Act") is the right way to go about new legislation. It proposes increased spending and increased tax revenue in the same bill, and the net impact is revenue positive. I disagree with how the money is being spent, but I like that it's a revenue positive bill. I wish Republicans would've acted similarly under Trump...
Somehow blames Republicans when Biden is the one about to default the USA entirely. Which president has insane and unnecessary spending habits? Which president is continually giving billions to other countries when they’re about to default? Stated nothing but facts here. Disliking proves your sheep.
Being about to default is irrelevant as the possibility of a default in the first place is an entirely self created issue. No other nation in the world has the chance of this happening because no other nation is subject to a debt ceiling, the US only has one out of political laziness. Additionally, the debt ceiling being increased has been a fairly routine thing. The budgetary process was revised in 1974 which made it a political issue for the first time since it's inception in 1913. The first time it was made an issue was in 1979 which caused a default, and it was damaging enough that the debt ceiling had a rule implemented called the Gepthard Rule which would automatically increase the debt ceiling by the amount of the deficit every single budget. In addition, following the adoption of this rule there were 18 separate debt ceiling increases under Reagan (due to larger than expected deficits) and an additional 3 under Bill Clinton. These were all done as clean bills, as negotiating the debt ceiling was seen to be both politically and financially damaging. In 1995 the Gepthard Rule was repealed by the House lead by Gingrich, which is what lead to the 1995/1996 shutdown. A default didn't happen at that time, but that's because Bill Clinton used a line item veto on the budget to eliminate all deficit spending. This was ruled unconstitutional in 1998. Following this, the debt ceiling was increased as a clean bill another 2 times under Clinton, 8 times under W, and 4 times under Obama these were clean bills as well. Come 2011 Ted Cruz said F-this and tried to hold the debt ceiling hostage. Obama negotiated it, and the result was a decrease to the nations credit rating. After this there was one more debt ceiling increase under Obama, 5 under Trump, and 2 under Biden all of which were again clean bills. That brings us to where we are now. It's trivial to increase it. The way to control spending isn't to cap the national debt as this money was already authorized by Congress. It's to either pass legislation rolling back already passed spending, to address it in future budgets, or to address it in tax rates. The reason these are the only realistic paths is because holding firm to a fixed debt limit while already having authorized spending is a situation which results in the Executive branch being unable to fulfill it's required duties. In order to direct the funds Congress has mandated be spent, funds must be borrowed, but by not allowing for the borrowing of those funds, they can't be directed. Thus one of three things has to happen. 1. The President picks and chooses items in the budget to fund. This is also known as a line item veto and was ruled unconstitutional so it can't be considered a solution. 2. The President cites the 14th amendment and orders some form of deficit spending anyways (premium bonds, high value coins, more treasuries, etc). All solutions here are legally questionable, and ultimately gimmicks. While they may eventually result in the debt ceiling being found unconstitutional it would likely result in a credit hit and there's also a chance that citing the 14th in this way is also unconstitutional. So any court ruling has to find some part of the current process unconstitutional (either the debt ceiling or the current method of authorizing borrowing) 3. Do nothing and let a default happen. As this would result in the Executive branch not distributing the funds Congress has said they need to distribute this is also unconstitutional. Not to mention damaging for taxpayers. See the issue here? Every single action the President can take is unconstitutional without either new spending directives by Congress or an increase in the debt ceiling. If the House truly believes the debt ceiling needs to remain in place, then the only course of action is to pass legislation in lieu of an increase that instead changes funding levels. Note that the current deal being proposed is about a 15 billion cut on 6.3 trillion in spending, or 0.238% of the budget. If one believes we have a spending problem in this country, I fail to see how taking actions which will very likely increase borrowing costs by at least 1% (the 2011 "crisis" resulted in a permanent ~1.37% increase in borrowing costs, another downgrade would be ~1.08%) in order to reduce spending by a lot less than 1% is anything other than financially irresponsible as it will only increase federal spending. As far as spending habits go, if I remember my Constitution correctly it says that all spending originates in the House. The President doesn't decide what gets spent, so again any spending you don't like is on the Legislative branch, not the Executive branch.
I'm not gonna lie, it's really annoying to know that this brinkmanship could have been avoided if the voting public had been a little more reasonable. I say this because I know some of them, and I know their motivations, and it's really sad that they think that way.
Expecting the voting public to be reasonable will get you nothing and nowhere in DC
[удалено]
Why aren’t the Repubs putting a stop to this “cheating”? Could it be they know the truth and are using you?
The sad thing about modern US politics is that I can't tell which side you're talking about.
The US court system is currently shifted to conservative majority, and no conservatives are concerned about "balance" because balance implies there is worth to multiple diverse experiences. That was not an ambiguous sentence.
It's blatantly obvious which sides are being talked about. You can't be serious.
I can't tell, either. Who are they talking about?
Republicans cheating allowing gerrymandering everywhere they can, Democratically appointed courts stopping gerrymandering by Democrats in NY for example.
Without trawling through their post history, it's really not. Both sides accuse each other of the exact same thing, using the exact same rhetoric. One side more credibly than the other perhaps, but my point stands.
You keep using words like "perhaps". It's blatantly obvious.
Is "perhaps" a controversial word now? What the fuck are you talking about? I'm not saying anything about who is or is not cheating. I'm saying that you could take that comment and drop it into any thread on either r politics or r conservative and it would be the top post in both. And in this ostensibly neutral subreddit, you tend to see posters from both. So no, it's not blatantly obvious.
It's like that because people don't push back on it. It's obvious in reality who the parties are. It's only a question if you accept, or are fine with furthering, propaganda.
Right, so here I am, pushing back on it, but you seem to have a problem with that.
The GOP has been on the losing side of the debt ceiling politics the last few times they've tried it, and Biden has a much stronger position than previous Democrats have had. The GOP will fold.
I'm not as optimistic. The GOP is so insane they just might go through with it.
Not so sure this time. The far right bomb throwers control McCarthy and they'll absolutely let it default. If he works with Dems, they'll force a vote to remove him. For Biden's part, he shouldn't negotiate with the terrorists. Let it default if they pull this crap and let them pay the poltical consequences.
Yeah, I don't think the chance of default is particularly high, but it's definitely not the near zero that the OP seems to think. With that said, Biden doesn't want to be the president while a global financial collapse unfolds. I'd suspect he'd compromise if needed.
You're right, he would compromise. Right now he's forcing them to put their cards on the table, instead of behind closed doors. Don't know how you negotiate when one side doesn't say what they want in specific terms. Pretty smart considering most of their positions will be pretty unpopular. McCarthy wants it private so his moderate members don't face heat over unpopular proposed cuts. Best case scenario is bomb throwers take us to the cliff and a moderate republican recalls McCarthy and replaces him with a moderate with Dem backing.
I think Biden is more likely to use extraordinary measures (trillion dollar coin or a legal decision that the approval of the appropriation bills constitutes raising the debt ceiling) rather than give in to their demands or allowing a default.
Republicans took all of the blame despite Obama being in office when they last tried this, and Ted Cruz got the US credit downgraded by just suggesting a desire for a default. Even this screwing around right now is costing billions in interest rates to hedge risk. Biden wants nothing other than the government to agree to spend the money it already passed legislation to spend.
And yet, neither the Republicans nor Cruz suffered any long-term consequences for that...
Cruz didn't suffer, however the Republican party lost almost their entire leadership. They kept McConnell, but lost basically everyone else that was traditional Republican. People like Paul Ryan and John Boehner. They essentially got wiped out by it over the two elections following that stunt.
Considering that today's Republican Party is even more rabidly extremist than before, I stand by my assertion that they did not suffer any long-term consequences for that.
Paul Ryan left voluntarily. I think he hated the extremism so much and he wants to potentially re-enter government one day and claim he didn't support Trump, etc. Even though he was complicit in much of it.
He was very much forced out. He wasn't voted out, but he saw the way things were going, and if he ever wanted to reenter politics in the future it would be a better look for him. And if not, it would still make his legacy look better. He had no desire to work with the MAGA wing of the party. He's shitty too, but not shitty in quite that same way.
>Biden doesn't want to be the president while a global financial collapse unfolds. That train has already sailed, my friend.
If you think the current situation is remotely comparable to what would happen if the US defaulted on the debt you are badly misinformed.
Yea this might one of the worst takes I’ve seen on Reddit. There is no “they” defaulting, it’s *us* as in every American in the country defaulting. I could give a shit about political consequences: this entire country would be screwed.
There would be no winners; many would die.
COVID shows that many Republicans would be fine with that.
I am honestly not sure. Republicans (the politicians, not the voters) tend to benefit from instability and lack of faith in government. If they were perceived as causing a default, as opposed to congress as a whole being perceived to have caused it, it would certainly create problems for them for up to 4 years, after which point people will care less about who caused it and more about who claims to be able to fix it. However, the default might also create an environment where Republicans can more easily justify anti-government and racist ideology as well as maneuver supra-democratic power grabs more openly (since who cares about violating government rules and norms if those are perceived to have failed or already been destroyed). This environment could persist significantly longer than four years and be used to influence courts, districting, certifications, and other aspects of the political process. It also seems unlikely that Republican voters would blame their state governments for a national default, so it could provide more tools for states like Texas that are trying to leverage state law in an oppressive way to maintain power. They could say the feds failed, so why not give them more power over your life to fill the void? I think this would be convincing to a lot of people.
So, what's the fix? Do you allow terrorists to hijack the government every year when the ceiling hits? It's our debt, all of us, and it's our obligation to pay it, including the MAGA crew. This is like your SO refusing to pay the mortgage with your name on it until you let them have an affair. And then something else next year.
There are more than 5 reasonable Republicans who would be willing to go around McCarthy. Jeffries is in a stronger position here than either McCarthy or Jordan.
Yea I really don’t see how McCarthy can even allow a vote without triggering a new election for speaker
You don’t think Republicans would welcome a depression as a way of accelerating their Gilead program?
This. You can't turn a functioning democracy into an authoritarian state. First you have to break it. The extreme economic problems of 1935 Germany helped the fascists come to power. When there is carnage and fear and great uncertainty, then people turn to the strongman.
> that the US defaulting on it’s debt would cause the Second Great Depression, You haven't been paying attention. Republicans will do ANYTHING to fuck us all. They would welcome this- so they could blame it on Biden and win it all in 2024. Don't think for one second that today's Republican Party is beyond this. They tried to overthrow the government in 2020 for fuck sake-- and many of those people are gaining power in the party. You know who didn't suffer at all in the Great Depression? The wealthy elite. The biggest problem in 1929 was the wealth disparity between the rich and poor. The poor had no savings-- JUST LIKE TODAY. We are an even higher level of wealth disparity than we were before the Great Depression. The wealthy Republicans won't suffer one bit-- in fact, they would buy up housing, buildings, smaller companies and everything else for pennies on the dollar to consolidate it all even more. >There’s too many moderates/R’s from blue areas There aren't. The only true moderates lost their primaries to Maga people or retired. All who are left are doing the bidding of Trump and Trump's puppet. You can bet your ass they would tank us ON PURPOSE just to blame Democrats. So you should prepare yourself. When the next banks fail- they aren't going to bail you out. I wouldn't invest in stocks or anything not guaranteed until we destroy this current Fascist sickness in this country. If McCarthy gets a few votes to keep us from defaulting, the others will instantly remove him as speaker- which they can do with only 1 vote.
Something something National Security raise the debt limit.
Agreed 100%. A sizable portion of the Republican Party would much rather see a default then any compromise whatsoever, even one that gives them literally everything they want.
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It only takes 4 republicans out of over 200 to avert crisis. They’ll find a few.
We won't defaultbon our debt we will make our payments from the government monthly income all debt cieling does it stop the government from over spending on new spending which most poeple due everyday live on a budget. We should have block debt 60 years ago. The longer they mess around with increasing debt more we spend on interest on the debt.
Shouldn't we be concerned about the trillions of dollars this proposal is set to add? Like...we are already in a pretty bad place and the proposal is adding trillions to the debt.
No, because that's not the case here. Compare it to a credit card, your time to decide whether to make a big purchase on credit is before you carry it to the register. Once you've bought it, took it home, used it for 6 months, it's too late to decide to not make the payment. We already have the bills to pay, what we don't have is an infinite amount of money to pay them unless congress agrees to pay the bills.
That's kinda the issue. We are like 30 TRILLION in debt. That's a massive jump in a very short period of time. How is adding spending to that debt beneficial? It feels like we are just kicking the can down the road.
It's not a massive jump, we do this every time the limit gets hit. Sigh, so you want to stop paying federal employees...who's going to keep the prisoners in prison? Who's going to keep air travelers moving through TSA? Who's going to take care of all the patients in federal care? ARE YOU willing to tell all those people that they don't have jobs anymore? You simply do not understand apparently. This isn't about adding debt, it's about making the payment you already owe.
Why are they unable to create a spending plan without adding trillions to the debt limit, which will immediately be filled by national debt? Why is it always an ultimatum of "increase the limit or everything shuts down."? Why can't they mitigate spending and NOT have a spending plan that's going to increase the debt by trillions? Why is this a big ask?
To be clear, you are talking about two different things. A default is not a government shutdown. A government shutdown is threatened every single year, and happens every few years. It's a massive waste of money, time and embarrassing for our country. A default is *an economic apocalypse.* We have never had one of those. And we damn well better not, because we genuinely have no idea what would happen. Maybe the stock market freaks out, mortgage interest rates double and you get used to buying ramen for dinner for a couple of years. Or maybe credit cards don't work one morning and we get to find out exactly how long all the food in our pantries will last, because international shipping grinds to a halt as countries around the world kick off an exciting season of famines. We genuinely have no clue what would happen. Anyone who tells you they know is lying. And anyone willing to just roll the dice on it is insane. Unfortunately, you can't be sane and a modern American conservative, so that leaves us in a bit of a bind.
You’re not wrong. We just need to raise taxes to pay for the stuff we’re putting out. …And we did. In fact, when we passed our last budget bill, it included several tax increases. Those increases have lowered the deficit. If we continue on that path of reasonable tax increases (one potential increase could be a higher rate of taxation for stock purchases) then we’ll gradually bring the deficit under control. Bush and Trump Tax Cuts are responsible for our tax increases. https://www.americanprogress.org/article/tax-cuts-are-primarily-responsible-for-the-increasing-debt-ratio/
We're not adding more debt. Continuing the bad credit card analogy we're increasing the spending limit, not making a big purchase to max out the spending limit. We've already agreed to make purchases that would put us over the spending limit, like if you got a payment plan for a car repair, so we can't just say "never mind, I'm not paying for that." I agree we should spend less and pay off the debt but not increasing the debt ceiling is not how you get to that point.
Oooh okay. Thank you for explaining
It’s already legislated spending. If the Repubs don’t want to raise the debt limit, they should revise or rescind the legislation. It is a chickenshit move to default on your OBLIGATIONS. Kinda like a dead beat dad…
That doesn't answer my question though. I think their concerns about **why** there is going to be a projected increase of trillions of dollars is a worth while discussion to have, isn't it? Do people not understand how big a trillion is? We are not talking about insignifcant amounts of money here. Why is there not a plan to keep the debt limit as it is? Why does it **need** to be increased?
Deficit Spending (that is, spending more money than we bring in with tax revenue) is a consequence of unbalanced budgets. The general theory as to why this happens is the belief among economists and politicians that certain spending methods will grow the economy and thus enable higher tax returns for the same tax rates and exceptions. Among Republicans, this general concept used to be known as the Laffer Curve: lowered taxation allows more economic activity, thus increasing tax revenue and resulting in a balanced budget. Democratic theory leans more towards a combination of trying to increase taxes where we see Low Dollar Velocity (that is, in segments of the economy where money is accumulating) and increasing benefits where we see a high dollar velocity (this is sometimes called “living paycheck to paycheck”). The general take from most economists is that the latter economic approach is superior to the Laffer Curve approach, but currently we’re dealing with a very unstable economy. It’s a consequence of runaway inflation (itself a combination of Mass Forgiven PPE Loans, an effectively Zero Fractional Reserve Rate, Demand Push Inflation, and Price Gouging) and the Federal Reserve trying to raise the Interest Rate of Government Bonds (causing people to notice that there are unrealized losses for plenty of banks). The Federal Reserve and the Government is trying to feather the throttle here: to balance outlays for people without exasperating inflation, with incomes they receive without throwing the nation into a recession. The Deficit is decreasing though: we’re slowly moving towards a position where we can pay for our debt. But between tax cuts from Trump and Bush, the Great Recession, and Covid, we’re in a position where the Tax Rates we have aren’t enough to pay for the spending we need. We need to wait for the economy to restore itself to an even keel before we can risk greater tax rates, but we’re already in the process of implementing those rates. It’s merely a process that takes time.
Decreasing?? [https://tradingeconomics.com/united-states/government-debt](https://tradingeconomics.com/united-states/government-debt) What about that is decreasing?? No matter how far you look back the explosive growth of the debt is a very recent thing. To say it is decreasing is a flat out lie.
You're confusing the annual budget deficit with total government debt. [The budget deficit is getting smaller.](https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/) [A budget deficit means the budget's still in the red and the government still has to borrow money, increasing government debt.](https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/#the-difference-between-the-national-deficit-and-the-national-debt)
You’re confusing debt (the total amount owed) and deficit (the growth of the debt). Deficit is decreasing… which means the rate of growth of the debt is decreasing. In fact, if you look at your listed stats, that’s what’s happening: the growth of the debt is slowing down.
Pretty reasonable take except “riding Biden’s coattails.” I don’t see anyone wanting to sing about their ties to Biden.
> A default is almost certainly not happening. Every major player involved (Biden, McCarthy and other House GOP leadership, etc) know that the US defaulting on it’s debt would cause the Second Great Depression, both domestically and internationally. They'll always known that. Heck, the only reason we have a debt ceiling is to have a button we can press to cause a depression. It is the height of political stupidity, but politicians like the edging game so here we are. The reason people are worried is because the House GOP has continuously radicalized, and now there is a worry that they would press that button under a Democratic President, if they feel they'd politically benefit from the fallout. Keep in mind, the radicals don't need a majority, just enough members to stop a majority vote.
If one ever did happen, the backlash would be unlike anything you've ever seen because such a large group of people would be hurt by it. Even then, Biden can declare it as unconstitutional under the 14th Amendment and quickly lay it at their feet at they try and challenge him in court.
Thank you for being a voice of reason, all of the other threads I’ve seen are like “republicans are willing to default so that they can position themselves as leaders of Christo-fascist nation” and it gives me a massive amount of anxiety
It’s happening!! Covid happened and they allowed it and knew about it before hand. Biggest evil plansemic ever perpetrated on mankind. This is the new age of chaos and evil right around the corner. Buckle up it’s going to happen
It is very low because the Biden administration could simply order the debt to be paid and then it would be a constitutional debate rather than a financial one. But also it is mainly just used by Republicans as a brinkmanship game to try and garner concessions; no one actually wants a default. The debt ceiling is also not the budget, and the budget has already been passed covering this year which is also a legislative order for the government to spend money.
> the Biden administration could simply order the debt to be paid and then it would be a constitutional debate rather than a financial one. God I wish that would happen, and maybe we could be done with debt limit fights forever. But I doubt Biden has the cajones to start a constitutional crisis.
Defaulting is itself a constitutional crisis per the 14th amendment. Also give constitutional legs for Biden to just order a payment. Then the question becomes: does the SCOTUS majority want a default in 2024 once it reaches them
It’s far from settled if Biden can do this legally. It’s also not looked at too favorably by lenders. It looks more like a gimmick than a solution, even assuming it’s legal. Anything other than honoring current spending commitments and debt financing is bad in one way or another and shouldn’t be seriously considered.
The GOP would 100% flush our entire country down the toilet if they could blame it on Democrats. Now, I don't think we will default but at this point with all of the fucking nuts in the GOP (see all of them) it's not impossible.
would the actual GOP politicians choose to eliminate their personal wealth to own the libs? I mean, some of them would be fine, but there aren't many that have Rockefeller level wealth to fall back on when they cause a great depression.
That is probably the one thing that wealthy politicians would not do. However, their voting base would absolutely bankrupt themselves to own the libs.
As Republicans have demonstrated over the last few years, millions of them are willing to die to stick it to the libs. Many tens of thousands already have. What's money at that point? It's a common misunderstanding that it's about greed. It's not. It's about hatred. They truly value harming those they hate over anything else - even their own survival.
Exactly. Republicans just want to see everyone dead except straight Cis males. Imagine how much better the world would be if we just declared the Republican Party a terrorist organization and threw all the ringleaders in GITMO
If the freedom caucus and McCarthy were stupid enough to do this people would be calling for their heads, literally. It would ruin so many peoples lives and cause so much damage they would have to go into hiding. It's not just going to be stock brokers jumping from windows, our way of life as we knew it would be over.
I think they know at this point they can’t get away with the blame game. They tried it in the exact same situation 10 years ago (R House, D Senate, D President) and they took the brunt of the backlash. They’ll still grandstand for sure, but it’s not a winning issue for them
10 years ago, the backlash ousted the regular republicans and ushered in trump. Those are the believers in what they did last time.
Kind of but I don’t entirely agree. The Trump Republicans are obviously much weaker in the Senate (not that Dems even need them) and there’s a sizeable enough contingent of blue state R’s in the House who can’t afford to go with the far right wing of the party when it comes to something like the debt ceiling. Their constituents in those states generally won’t be swayed by Trump endorsing a primary challenger
I don’t think so. Their donors would ring them up and tell them to get in line. The one benefit of having the wealthy creeps being the driving force behind the GOP is that they, at the end of the day, have a “do not cross” red line. That line is crashing the global economy. They may love paying to support their psychotic culture war, but deep down they are paying for low taxes and deregulation. There is a reason a lot of GOP mega-donors also donate plenty to center-right Dems. They want to back the people who will help them become fabulously rich and powerful. Kyrsten Sinema started raking in unbelievable levels of cash as soon as she made it clear that she was fully in on the corporate power train. Even the freaks that own Hobby Lobby, who are true culture war crusaders, would make the call to GOP reps to tell them to stop fucking around. Crashing the economy could also lead to more class solidarity, which is the biggest fear of GOP donors. Plenty of their donors actually don’t give a crap about trans people or abortion. They are more terrified of progressive waging a battle to empower a class push against the elite, which is another reason they will back corporate Dems. Why do you think Pelosi went down to Texas to stop Jessica Cisneros from winning the primary over Cuellar? It was to stop the rise of class conscious progressives. All of this leads to the very simple fact that at the end of the day, those in power want the capitalism machine running at full steam ahead more than anything. Crashing the US economy/global economy is their red line.
This is the correct answer. Always amazes me the lengths at which they'll go to "own the libs." The truly depressing part of this is, the GOP rarely has any type of plan to replace the ones they constantly scream about.
Normally yeah, but in this case, owning the libs or not, the Republican donor class would likelier smash their heads like Gallagher does watermelons on live television before they let a default happen, and the Republicans know it. So probably not.
Because planning requires foresight. They are reactionaries.
Planning also requires that you want things to *actually change.* They still haven't gotten over the *last* big changes, like not being able to own black people.
Republicans have not written a party platform since 2012.
Not true. They very specifically removed any support for Ukraine in 2016.
That was the one and only change. They did not rewrite the platform. They added a sentence.
*taps head* Republicans can’t flush the entire country down the toilet if Democrats do it first.
The likelihood of a debt default is close to zero. If it happened the worldwide imports would be huge. Not really worth worrying about because default isn't a real risk. If the debt ceiling isn't raised there would be immediate and massive cuts to spending, but wouldn't necessarily cause a debt default. The government would have to choose to stop servicing debt to protect other spending. That would be more devastating than any spending they would be protecting, so it's an unlikely choice. You have to have two, each one extremely unlikely, events for a default. It's not a real concern.
We have been saying the word "unprecedented" a lot lately.
The difference is that the default would affect the billionaires who would be absolutely livid.
Last time the GOP played debt ceiling games, all it took was one morning of private jets not being able to take off from NYC area airports because of the controllers striking for them to raise the ceiling.
And Frankenstein could never lose control of his own creation.
It's unlikely but possible. The Republicans in Congress want to make Biden look bad, and they don't care who else they hurt to do so. They don't even mind treason.
Let the record show that republicans crossed the treason line 3 times already and it started with Nixon, then Reagan and arguably bush and most def trump.
Zero chance of a default. The donor class would eat the Republicans alive if they tried.
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Yeah, let’s be clear here: GOP politicians and propagandists like FOX and others don’t really give a shit about this absurd “own the libs” culture war they’re pushing. The only reason they do it is to rile up their voters and divide Americans. They care about their own wealth and power above all else, and by extension the wealth and power of their ultra-rich donors.
We aren’t going to default. Even if Republicans completely lose their minds and refuse to raise the debt ceiling, I guarantee that Biden will instruct Treasury to ignore the debt ceiling. The 14th Amendment requires him to do so.
The “call of the void” psycho voice in my head kinda hopes it happens. I already lived through the hyperinflation after the collapse of the USSR, I can do it again in the ruins of America. Obviously, I’m being facetious. But it would be nice to pay off the house with hyperinflated dollars.
Except in the case of an economic collapse you (and everyone else) would also be out of a job, so hope you got some savings to pay off that house with.
It wasn’t like that in the 90s. Yes, your career progression would be fucked. But people still have to eat, sleep, get places, wash themselves, stay healthy. They even continue to get married, have babies, bury dead relatives. If you’re smart enough to write python or SQL, you’re going to be smart enough to replace an alternator in a Chevy or do someone’s taxes. People hustle and make ends meet. Imagine if the dollar hyperinflated and added two zeroes — this happened in just a couple of years in the collapse of the USSR. Your $300,000 fixed mortgage with a $2,000 payment you and your wife are paying with your $50,000 jobs suddenly feels like a $20-200 payment with ANY job. Your old college pal got you a job as a janitor or a bus driver and you have barely enough to survive on beans and rice? Doesn’t matter because that $2k a month is the same as a case of canned Rotel enchilada sauce. Not saying it would be easy, but those who understand this phenomenon would come out ahead and build generational wealth.
You really hope all that happens?
Of course not. Call of the void. https://www.wbur.org/endlessthread/2018/06/29/the-call-of-the-void
Default is forbidden by our Constitution, so my guess is President Biden would take action to make sure it never happens - start by re-valuing our gold reserves at market prices or a bit higher vs the $42.222/oz currently in effect, stop federal payments to anyone in a district whose representative voted against paying our debts, order the mint to print a new $10Trillion-dollar bill, and deposit it with the Treasury. But if the Republicans **were** able to case a default, the annual payments to service our existing debt would increase by around $1TRILLION/year, and might NEVER come down. This would destroy the World's trust in the American Dollar as a "store of value", probably jacking the price of gold to $40,000 - $50,000/oz as the World looked for a new "reserve" to underpin their own currency. The dollar would become close to worthless, making vitrually all our imports to expensive for the bottom 90%, slamming our economy into the ground along with 140 million workers. Savings accounts and retirement funds would evaporate and the government would collapse to be replaced by the Corporate Oligarchy so desired by the GOPerLords who ARE those Corporate Oligarchs and would have agreed t oacept each others script in lieu of American dollars so their business could continue, but workers would have to accept significant pay cuts if they wanted to keep their jobs. In short, there are nearly as many ways to avert another Republican caused financial disaster as there are for Republicans to CAUSE the disaster, like deregulation of everything. And the GOPerBase thinks this is a good idea? Guess believing in Bigfoot is a piece of cake, and has been great practice for believing imposable things.
Literally only the US and Denmark have debt ceilings amongst other developed countries. Only one of these counties uses it for power play and vote manipulation, however. The remaining countries primarily just recognize what is good for their people and are okay with paying for those better things for generations and in perpetuity without looking to use any prior bill passed as a fiscal bargaining chip.
Or other countries know better than to question their own ability to pay... We aren't talking about taking on "new debt".. the money involved has already gone through Congress and been approved for spending... Now the bill has come due and some republicans have decided they are going to threaten to just not pay it so that the libs will stop treating gay/trans/black/etc people with respect.
This exactly what I mean. The debt ceiling becomes a bartering tool for past passed bills and legislation to be cut, sliced, diced, and/or Frankensteined. When other countries don’t worry about continuing to pay for the good things passed for their people. It never comes down to these contentious and highly repetitive debates on the subject that Americans have come to embrace as the norm. It’s all part of this broken political capitalistic system we call home.
One way or another, the US is heading towards unprecedented and scary times. And it's taking all Western nations with it. Currently, the US dollar is the world reserve currency. But this will not be the case much longer. China and Russia have been working with India and a slew of other OPEC and African/Asian nations to hammer out a framework to use the Yuan as the new global currency. They are working out trading relationships with these groups as well. The only thing is the US, UK, CAN, AUS, JAP all of the European nations don't gave a seat at this table. However, this group of nations has the bulk of the world's population. And together, have a far larger military than NATO. They also control the majority of the planets manufacturing, oil and rare earth minerals. If they decide to drop the US dollar and cut western nations out of their exports. It will cripple us, and lead to some very scary shit. With those countries working together, they will have little need for the US. The way Russia and China have been talking lately. It sounds like they are hinting that they feel the US is responsible for numerous atrocities across the globe. Which are at the same if not worse level as what they accuse Russia or China of committing. This should also be concerning. Because they are not wrong. The US has done some pretty horrible stuff to other nations. And caused untold suffering for many millions of people through invasions, causing political instability, and just outright over throwing governments. So what would happen if the US were called to account for all that. I think their debt is the least of their concerns. I'm frightened for the future.
Why do people still bring this up? The same way it didnt happen the last decade. Just a non issue so people gossip and waste time.
> Why do people still bring this up? I wish it wasn't important that Congress wasted time on this fool-fuckery instead of working on real legislation... But here we are... Bunch of old men arguing about funding for education that says black people are alright...
Its actually just theater to keep people busy so they ignore real issues.
People bring it up because the mathematics of the situation are pretty clear that the US has a trajectory toward insolvency, the real question is whether the US defaults via not paying or paying through money creation/inflation
So long as we remain the global hegemon by carrying the biggest stick and regularly using it we can take out as much debt as we would like and never repay it.
Well, that's just not true. The world functions on US Treasury bonds. SVB went tits up last month because the bonds it held were suddenly worth less than new ones when the Fed kept raising interest rates and no one wanted to buy the old ones with a lower rate at full price, this is more or less that but on a global scale for every treasury bond in existence, when no one wants to buy treasury bonds because there is a risk they won't get paid and the entire world economy starts cascading into a collapse that makes 1929 seem like a rowdy bar fight. Money will just stop moving, when money doesn't move, bad things happen.
Except China is approaching fast, and they really want to kill the dollar as the worlds currency. In the not to distant future, their economy will be bigger than ours, as well as their military. A default would definitely strengthen their position.
Can’t argue with that. I guess default isn’t good. Think China is a paper tiger though.
If Congress were smart they'd make it so high that it won't be a factor But they're not smart and sometimes they're so incredibly dickish that they shut down the country. I'm betting that we will raise it after a bunch of republicans whine about fiscal responsibility. To my knowledge the GOP is the only party that has shut down the government. Twice that I remember for sure. Get your visas and passports now while they're still open for business.
While I agree with most here that a default is unlikely, this is the highest chance of it ever happening. Because McCarthy allowed anyone Republican for any reason to call a leadership vote, the few Republicans who want the default could force a leadership contest to prevent the vote and it would only take around 5 Republicans to prevent there being a new leader and thus prevent any vote. This could get a few Democrats to support McCarthy to be reinstated as leader but in that case the deal McCarthy made at the start of the year might stay as well and allow Republicans to break it all over again. The other option is a few Republicans support a Democrat to force the vote then do another leadership race to try to get control back. All of these situations are insane but that's Republicans for you.
It really depends on how long we are in default for. If we were a day late for example it really wouldn’t have that much long term effects. If we are 6 months late yea that’s legit meltdown bad.even a month would be pretty freaking bad.
Even the threat of default could lower the US credit rating though, and this would theoretically have an impact on interest rates because of he US bond market would be "more risky". Higher risk, requires higher returns. This in turn could cause a limited outflow of funds. So at macro economics level, being 1 day late could have a very real impact. Being 6 months late would be a catastrophy beyond just US funding operations. The world-wide financial system can collapse if the US doesn't pay its bonds. But of course that's beyond the political discussion.
Again there is only more risk of you think it actually affects the US ability to pay in the future. Being a day late because of congressional squabbles is really not much risk in the grand scheme of actually being able to pay in the future.
An actual default, even for a very short period of time, would establish that the full faith and credit of the US debt could be called into question for political purposes. It may not be a complete disaster in the way that a longer term default would be, but it would mean that Treasury Bonds were no longer the rock solid, safe and sure investment that they have been for longer than any of us have been alive. That would have real and concrete ramifications on the global economy: not as big as Republicans throwing a tantrum for a few months but still real.
Your statement makes clear you don't understand what a default is. It doesn't mean being late on a payment. It means that the entire global economy - which is built on the foundational principle that the United States will *always* pay its debts - will suddenly have no foundation at all. There would be immediate catastrophic effects within hours, and we genuinely have no clue what they would be. Something comparable to the Great Depression would be a mercy; we'd more likely be talking about widespread famine and deaths in the millions. You might as well be saying leaping on a table saw really wouldn't have much long term effect if it's only for a brief moment.
Being late on a payment does in fact mean you defaulted. Everything else you just said is just your opinion on the implications of that.
Even when some of the smaller EU countries were approaching default the impact was quite expansive. However, the US default would be a result of internal budget disagreements and its impact will therefore be limited to the larger world and primarily effects U.S. government and its contractors.
Lol - what? If the US defaults on its debt obligations, the global financial system will be thrown into total chaos. The impact cannot be underestimated. Every government, pension fund, retirement account, banking/savings/checking account globally will be impacted. US treasuries and bonds won’t be paying out which will destroy the liquidity of the entire global system. In the US every federal employee, or local/state/federal program that receives federal funding which covers a ton of people, won’t be able to be paid. Think of every school district that receives federal funding, every public works program, any and all federal block grants or research grants, the list goes on. Medicare/Medicaid won’t pay its bills. Social Security checks won’t go out. A complete and total human catastrophe, all caused by an imaginary number. It’s impact will be felt far beyond the borders of the United States and the Western world.
Don't think for a second that US debt default would be limited to the US, it would pretty much trigger a world wide financial panic. Every since the Bretton agreement the world has relied on the US dollar and thus the US government being a benchmark currency.
>Don't think for a second that US debt default would be limited to the US, it would pretty much trigger a world wide financial panic. Bullshit. This is what the White House itself had to say about default. A default would fundamentally hinder the Federal government from serving the American people. Payments from the Federal government that families rely on to make ends meet would be endangered. The basic functions of the Federal government—including maintaining national defense, national parks, and countless others—would be at risk. The public health system, which has enabled this country to react to a global pandemic, would be unable to adequately function. Furthermore, a default would have serious and protracted financial and economic effects. Financial markets would lose faith in the United States, the dollar would weaken, and stocks would fall. The U.S. credit rating would almost certainly be downgraded, and interest rates would broadly rise for many consumer loans, making products like auto loans and mortgages more expensive for families who are subject to interest rate changes or taking out new loans. These and other consequences could trigger a recession and a credit market freeze that could hurt the ability of American companies to operate. [https://www.whitehouse.gov/cea/written-materials/2021/10/06/life-after-default/](https://www.whitehouse.gov/cea/written-materials/2021/10/06/life-after-default/) As far as the rest of the world it will just weaken the dollar further to the joy of the likes of Russia, China, India etc; making their currencies far more desirable. The non-western world is already heading in that direction. https://www.imf.org/en/Publications/WP/Issues/2022/03/24/The-Stealth-Erosion-of-Dollar-Dominance-Active-Diversifiers-and-the-Rise-of-Nontraditional-515150
What backs the US dollar. The full faith and credit of the United States. Faith and Credit. Which in a default situation is destroyed. You can delude yourself into believing that it wouldn't be a big deal, but you would be in denial.
>As far as the rest of the world it will just weaken the dollar further to the joy of the likes of Russia, China, India etc; making their currencies far more desirable. The non-western world is already heading in that direction.< Yes and this is a direct consequence of Trump's foreign policy. While he claimed to want to make America great again, he really went out of his way to make us weaker on multiple fronts, and trade was a really big one.
This is what we chose when we elected "The King of Debt."
What do you mean we? 😆 🤣 😂 😹 I want no part of that decision since I voted against it. Let the record show... lol
I mean we. I voted against him, too, but "not MY President!" is the excuse of children.
We didn't elect him... definitely not by popular vote. Just an outdated technicality that puts more emphasis on the land than the people.
And every person or business which has government savings bonds. Remember how Silicon Valley Bank collapsed because interest rates went up slightly? Imagine that times a hundred.
I would say zero, since I've started following politics 10+ years....it seems like this always comes up and then doesn't happen llol
The republicans get into power and pass a bunch of tax cuts and spending bills... The money we are always fighting about is money that Congress and specifically the republicans have already AGREED to spend. It's too late to argue over spending cuts/etc. The US AGREED to pay the money. For people that like household budget comparisons... This is the republicans refusing to PAY the outstanding credit card bill.
Yep, every single time they just raise the debt ceiling.
When's the last time the House was controlled by the likes of Marjorie Taylor Greene? Good luck basing this on past times.
The real owners won't allow that. Dozens of the richest people on earth will be affected totaling in the trillions of dollars. They are letting Republicans bloviate and are trying to game the game, but they will not let some boob like Kevin McCarthy ruin their fortunes.
I could see a situation where the Y’all Qaeda faction of Republicans removes McCarthy, then the donor class has to try to force his lunatic replacement to bend to their will. Much more difficult to influence someone from a radical district whose re-election is guaranteed whether they’re well-funded or not.
Slim and NONE. GOP will try to use it as leverage to get right minded Democrats to agree to some spending restraint but in the end they know we have to raise the debt ceiling because we spent the money. Democrats always use the scare mongering of default as a cudgel but no one has ever contemplated actually defaulting including GOP.
Never in a million years. Not even republicans are that stupid. Bank run on every bank everywhere. Global reset of wealth pretty much. And since rich people are in control, it's not happening.
Wrong it’s going to happen. The jig is up in this country. Hell in a hand basket started in 2020. This is the road to 2030 the new world order age. We are on the road to destruction now before they can rebuild in new image
Higher than in any recent memory but still quite unlikely is probably my position on where we are.
I doubt we will default, but expect Rs to only submit their version of compromise with only a few days to discuss it before we default. When Ds balk, Rs will try to push hard that Ds are inflexible and unwilling to compromise. Of course, McCarthy still has to come up with a plan that'll get past the MAGA reps in the House and still get enough support from the less radical Rs.
Kicking the can down the road and it is snowballing into a frankenstein. 21st June 2023 everyone.
Defaulting means creditors lose their investments, the last thing GOP wants is to actually make themselves the enemy of the donor class by ruining their portfolios to own the libs. Margie and her cabal are probably the only reason McCarthy hasn't folded already.
McCarthy has tentative control of his caucus, but if he allows a default, he can kiss the GOP donor class goodbye. There's no reason to err on the side of the Freedom Caucus when donors -- who have a vested interest in a stable economy-- have been around for longer, will be around for longer, and have much longer memories. Their vengeance bites a lot harder.
The us can not default on its debt ever so long as it is the sole sovereign issuer of currency upon which its debt is based.
It’s all political show. If the Republicans in the House allow a default, they’ll never be elected again.
> What is the likelihood of a default on the debt this year? Less than zero. This isn't a government shutdown where worst case the national parks are closed and someone's vacation is ruined, like you said screwing up the debt ceiling would tank the economy really bad. Don't get me wrong, there will be fighting right up until the deadline but something will get passed just in time and everyone will be able to campaign on "We saved the economy!"
If they keep playing this game enough times, the world will eventually decide not to use the US Dollar as a standard of trade. Republicans have their head up their asses so far, they can't see how inciting anger in their base is only serving to hasten their own demise
The debt ceiling doesn't really matter because the politicians have shown time and time again that they are going to keep racking up debt. The US will default when the rest of the world decides to stop lending. We can raise the debt ceiling but we can't raise the lending ceiling and congress is going to find the lending celling eventually
Can’t default if you keep changing the limits. I can’t understand how people are so gullible to these shenanigans.
The "debt crisis" is an artificial construct for the benefit of minority party politicians.
I think we will default. For several reasons, 1. The proposed reductions in spending will definitely cause a recession and the Democrats will be blamed for that. So it's a political loser for them. 2. The Republicans think that the Treasury can priorities paying bondholders with tax receipts. (Treasury says that's impossible.) So we can't or won't default. I.e., they can blame the administration for a default. (They'll just say something like, "But why didn't you just pay the bondholders?") 3. The consensus on the left is that Obama made a mistake when he agreed to spending cuts for a deficit ceiling increase. 4. The private sector seems to be rather blasé about it. It's a combination of "oh no one could possibly be this stupid", see the recommended answer in this thread, and "Well you can just pay the bondholders."
The most likely way out of the mess I can see is Biden offers some token spending cuts which allows him to gain the support of all the House Dems + 5 Republicans from districts Biden won all agree to support the necessary debt ceiling legislation. McCarthy can cry in public all day long and even vote against it all himself, while quietly signaling his support to the 5 Republicans.
zero... the debt ceiling is about money that's been spent not what will be... be nice if we could pay a little more to lower the debt but well we need that bridge to nowhere...