Tag Archives: debt ceiling

A Possible Resolution To The Debt Ceiling Crisis

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On Sunday, Breitbart reported that Congress has released the details of the debt deal agreement that should avoid a government shutdown. As was to be expected, there are some good things and some bad things. There is also some griping from people who don’t want any compromise. Although I can identify with those people, I think the deal we got was the best we were going to get. The only thing that really will prevent a government shutdown by the Biden administration is the polls that are showing that the Biden administration would be blamed for that shutdown. The Democrats control two branches of government, so it makes it hard to blame the Republicans for much.

The article reports:

Congress released a bill package Sunday to increase the nation’s debt limit in exchange for a number of Republicans’ desired spending cuts and other concessions.

House lawmakers will have three days to review the 99-page bill, called the Fiscal Responsibility Act, before they are set to vote for it as soon as Wednesday. The bill can be viewed here.

House GOP leadership said in a statement that the legislation, which raises the debt ceiling through January 2025, included a “historic series of wins.”

“The Fiscal Responsibility Act does what is responsible for our children, what is possible in divided government, and what is required by our principles and promises,” the leaders said. “Only because of Republicans’ resolve did we achieve this transformative change to how Washington operates.”

The bill rescinds funds that have been allocated toward COVID, mandates student loan payments to resume in August, rescinds a portion of unused funding allocated toward the IRS, expands work requirements for certain welfare recipients, and tightens permitting processes under the National Environmental Policy Act.

The bill also caps discretionary spending for the next two years and includes a provision pushed by Rep. Thomas Massie (R-KY) to force Congress into funding the government through 12 appropriations bills rather than one omnibus bill.

The good things I see are the resumption of student loan payments, rescinding COVID funds, and funding the government through appropriations bills rather than one omnibus bill. If those three things remain in the final bill, then we have made some progress.

UPDATE: The bill passed the House last night. It’s not a great bill, but it’s not an awful bill. It is probably the best we can do right now.

 

Some Basic Facts About The Debt Ceiling

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Issues & Insights is a blog that was started by the team that for decades had produced IBD Editorials at Investor’s Business Daily. They are one of the most reliable sites on the web for financial and political information.

On Monday, Issues & Insights posted an article about the debt ceiling ‘crisis.’ The article pointed out a lot of basic facts that are being overlooked in the debate.

The article notes:

At the heart of all fearmongering over the debt ceiling “crisis” is the claim that if the federal government can’t borrow more money it won’t be able to pay interest on its existing debt, leading to a default.

But that’s poppycock. The government will collect more than a trillion dollars over the next three months. (It collected $638 billion in taxes in April alone.) That will be more than enough to pay interest on the debt. And it will be enough to pay all Social Security benefits, Medicare and Medicaid bills, welfare checks, food stamps. There will even be enough money to pay for Joe Biden’s new electric car subsidies.

There just won’t be any money left for anything else. Nothing for the military, infrastructure, education, the environment, law enforcement, or any other program the federal government currently operates.

That’s because, as it stands today, every penny collected in taxes goes to pay interest on the debt and a category described as “payments for individuals.” Everything else is paid for with borrowed money.

…This year, the federal government will collect $4.8 trillion in taxes, according to the Office of Management and Budget.

It will spend $4.2 trillion on “payments for individuals,” and $661 billion in interest on the national debt.

Everyone knows about interest payments. But what are these “payments for individuals”?

As the budget document explains, payments for individuals:

Are federal government spending programs designed to transfer income (in cash or in-kind) to individuals or families. To the extent feasible, this category does not include reimbursements for current services rendered to the Government (e.g., salaries and interest).

In 1946, “payments for individuals” accounted for less than 11% of federal spending. By 1991, they reached 50%. In 2014, they topped 70% for the first time and have been bouncing around that level ever since.

The article also notes:

The vast bulk of these “payments for individuals” involve middle-class entitlements such as Social Security and Medicare, which are paid for in volume by … the middle class. Only a fraction of the money (26%) targets the poor and needy for programs such as Medicaid, welfare payments, food stamps, earned income tax credits.

Worse, some programs, Medicare, for instance, are regressive. A paper published by the National Bureau of Economic Research concluded that “Medicare has led to net transfers from the poor to the wealthy, as a result of relatively regressive financing mechanisms and the higher expenditures and longer survival times of wealthier beneficiaries.”

This is all by design. The left desperately wants to increase dependency on government, and there’s no better way to do that than through income redistribution. Take as much money away from people as possible, then give it back to them in the form of a “benefit.”

Please follow the link to read the entire article. We don’t just need to cut spending–we need to overhaul the entire federal budget and follow the lawful budget process.

When Will Washington Politicians Decide To Honor The Constitution?

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The Biden administration has done an end run around the U.S. Constitution since coming into office. Executive orders have decimated our energy independence, and various agencies have interfered is things as minute as the appliances we cook on. We have long passed the point where our laws are made by legislators–they are now made by regulatory agencies that are unelected and unaccountable. Now the President is discussing ignoring the role of Congress as ‘keepers of the purse’ and threatening to invoke the Fourteenth Amendment to raise the debt ceiling without the consent of Congress.

On Tuesday, NewsMax reported:

President Joe Biden confirmed that he is floating the idea of utilizing the 14th Amendment to work around congressional gridlock on raising the debt ceiling, The Hill reported.

Speaking to reporters Tuesday, Biden invoked legal scholar Laurence Tribe’s recent editorial in The New York Times, where he backed the theory, which claims the president can unilaterally raise the limit under certain circumstances.

“I have been considering the 14th Amendment, and the man I have enormous respect for, Larry Tribe … thinks that it would be legitimate,” Biden said, citing the article.

The article concludes:

But House Speaker Kevin McCarthy, R-Calif., scoffed at the idea outside the Capitol on Tuesday.

“Really think about this,” McCarthy said. “If you’re the leader … and you’re going to go to the 14th amendment to look at something like that — I would think you’re kind of a failure of working with people across sides of the aisle or working with your own party to get something done.”

The Republican-controlled House has proposed its Limit, Save, Grow Act of 2023 to solve the debt crisis. Alternatively, the Democratic-led Senate released an economic report condemning the proposal.

Republicans are seeking to make significant inroads to slash government spending in their proposal — a move that Democrats said should take a backseat to pass a “clean” debt ceiling measure.

The un-Republicans in the House before the 2022 mid-terms worked with the Democrats to pass a spending bill that would effectively tie the hands of the Congress that was elected in 2022. Technically this may have been legal, but it was definitely not the right thing to do. Now the Republicans in the House are trying to undo the damage those un-Republicans did. The American people want spending cuts. If the Republicans don’t deliver them, they don’t deserve to be re-elected next year.

 

There Is A Real Plan

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On Tuesday, Breitbart posted an article about the Republican plan to deal with the debt ceiling.

The article reports:

The Congressional Budget Office (CBO) said in a report released on Tuesday that the Limit, Save, Grow Act would reduce the deficit by $4.8 trillion over the next ten years.

That is a really good idea.

The article explains:

The CBO report found that the debt limit plan would drastically cut the growth of spending between 2023 and 2033. The nonpartisan analysis agency found:

  •  The bill’s cap on discretionary funding would result in savings of $3.194.5 trillion over ten years
  • Scrapping energy tax credits would save $569.5 billion
  • Reducing funding for the IRS would save $119.7 billion
  • Implementing work requirements [for] Medicaid, Temporary Assistance for Needy Families (TANF), and the Supplemental Nutrition Assistance Program (SNAP) would save $120 billion
  • Rescinding funding for unspent coronavirus aid would save $29.5 billion
  • Requiring the Department of the Interior (DOI) to conduct oil and gas leases would save $3.4 billion

House Republican leadership hopes to pass the debt limit bill this week to pressure President Joe Biden and Senate Democrats to negotiate a debt ceiling compromise.

As the debt ceiling deadline, likely in June, looms ever closer, battleground Democrats continue to fret over the president’s refusal to continue negotiating with McCarthy over a long-term deal.

I honestly don’t know if Democrats have any incentive to work with Republicans on this. Most Americans won’t even notice the debt ceiling unless the government shuts down. At that point the media will make it look like the shutdown was the Republicans fault. We need to stop raising the debt ceiling, but no one is willing to take the political hit that would be the result of doing that. Until Americans are properly schooled on the impact of our ever-increasing debt, I think this is a losing battle for Republicans. They should probably fight a debt ceiling increase for moral reasons alone, but unless the public can be educated, the Republicans will not succeed here.

Common Sense Rears Its Ugly Head

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On Friday, The U.K. Daily Mail posted the following headline:

Trump warns Republicans not to cut Social Security or Medicare in their debt ceiling battle – and instead focus on ‘foreign aid, cracking down on migration and BILLIONS spent on climate extremism’

I think history has proven that giving excessive amounts of money to people that hate us has not caused them to hate us less. Migration is costing millions in health and dental care for illegal aliens, and the climate change people have gone over the edge with their war on gas stoves.

The article reports:

Former President Donald Trump waded into the debt ceiling impasse on Friday, urging Republicans to protect hardworking Americans and seniors by not cutting money from entitlement programs.

‘Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security to pay for Joe Biden‘s reckless spending spree,’ Trump said in a video message. 

It comes as House Republicans flex their muscles, warning Democrats that they will only help head off a crisis and raise the debt ceiling if it comes with sweeping cuts to spending programs.

Just for the record, Social Security is not an entitlement program–the people currently collecting it have paid into it all of their working lives. Had they been allowed to invest the money themselves (and done it prudently and faithfully), they would have a whole lot more money to spend. Also consider the fact that if someone paying into Social Security dies before collecting, the money they put into Social Security is not inherited by their family–it is simply paid out to someone else.

The article continues:

In a two-minute policy video, Trump makes clear his opposition — channeling his 2016 campaign, when he distanced himself from small-government, spending-cut conservatives.

Instead he suggests his party’s lawmakers should target foreign aid, money spent on climate change and migration. 

‘While we absolutely need to stop Biden’s out-of-control spending, the pain should be borne by Washington bureaucrats, not by hardworking American families and American seniors,’ he said in the video first obtained by Politico.

‘The seniors are being absolutely destroyed in the last two years. 

‘Cut the hundreds of billions of taxpayer dollars going to corrupt, foreign countries. 

‘Cut the mass releases of illegal aliens that are depleting our social safety net, and destroying our country. 

‘Cut the left-wing gender programs from our military. Cut the billions being spent on climate extremism.

‘Cut waste fraud and abuse everywhere we can find it.’

Love him or hate him, President Trump is an astute businessman who solves problems. I wish he were in the White House now.

Have You Seen This Anywhere On The News?

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Yesterday The Hill reported that the legal limit on how much debt the U.S. government can owe was reimposed Sunday.

The article reports:

A two-year deal to suspend the debt ceiling lapsed at midnight following inaction from Congress and President Biden to give the U.S. more borrowing authority. The Treasury Department will now begin taking what it refers to as “extraordinary measures” to prevent the U.S. from defaulting on its debt.

Those steps are likely to avert a default until October or even November before Biden will need to sign a bill to raise or suspend the limit again.

Think about this in terms of your personal finances. You have reached the top of your borrowing authority and have to cut back on expenses for the moment. However, you plan on expanding the amount of money you can borrow in the fall (or suspending any limit on your borrowing for some length of time). Meanwhile you are considering trillion dollar spending bills. In what universe does this make any sense?

The article continues:

The expiration of the debt limit has triggered numerous partisan standoffs over the past decade, most recently in 2019. Each time, Congress has raised or suspended the debt limit. But the weeks before a potential default have often been the most tense, both for financial markets and administration officials.

“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” Treasury Secretary Janet Yellen wrote in a letter to congressional leaders last week, warning that they risked “irreparable harm to the U.S. economy and the livelihoods of all Americans” by delaying action.

There is no clear path to a bipartisan agreement as Republicans hold out for spending cuts that Democrats refuse to consider.

While Democrats have slim majorities in both the House and Senate, they will still need the support of 10 GOP senators to avoid a filibuster on legislation to raise or suspend the debt ceiling.

Republican leaders have told Democrats that there can be no bipartisan debt ceiling agreement without a slate of debt reduction measures targeting the roughly $28 trillion national debt. Several GOP lawmakers have floated a deal similar to the 2011 Budget Control Act, which ended a debt ceiling standoff shortly before the U.S. suffered its first ever credit downgrade.

We simply cannot continue our current rate of government spending. At some point the dollar will collapse. It is interesting that none of the news shows I watched this morning mentioned the debt ceiling.

Should The Federal Government Have Limits On Its Borrowing Or Spending?

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This article has two sources–The Western Center for Journalism and CNS News. Both sources report that the Democrats want to repeal the debt ceiling that limits the amount of money that the government can borrow.

The Western Center for Journalism reports:

House Democrats are pushing legislation to repeal the federal debt ceiling, saying the borrowing limit has no practical purpose and has come to be used for political maneuvering that can have devastating economic repercussions.

New York Rep. Jerrold Nadler said the debt ceiling is arbitrary, doesn’t affect the deficit and has become a Republican means to “blackmail” the country to advance the GOP’s political agenda.

CNS News reports:

Nadler, [Rep. Jerrold Nadler (D-N.Y.)],along with fellow House Democrats Rep. Jan Schakowsky (D-Ill.), Rep. Hank Johnson (D-Ga.), Rep. Jim Moran (D-Va.), and Rep. Keith Ellison (D-Minn.), held a press conference to introduce a bill that would repeal the debt ceiling entirely.

Nadler, taking questions for the group, said the debt ceiling should be taken “off the table” in any negotiations over federal spending, and he refused to say if Democrats should offer any bill that would solve either problem.

“Basically what we’re saying is that the debt ceiling should be taken off the table. There’s plenty to fight about, unfortunately, the levels of taxation, the levels of spending – there are real disagreements on that. You need both houses and the president to agree on that.”

Has anyone bothered to put this in the context of your personal finances? If you were thousands of dollars in debt, with no prospect of paying back what you owe, how would the bank react if you went to them and asked that they raise your debt ceiling? As American citizens, we are not able to continue to spend more than we earn, why are we willing to let the government do this?

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The Facts Beneath The Noise

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It’s time for both parties to threaten the American people with doom and gloom–the debt ceiling has been reached, and Washington wants more of our money. The President is saying that Social Security, the military and the veterans won’t be paid (notice he never says that he and Congress won’t get paid), and the Republicans say they are not raising the debt ceiling until someone shows some fiscal restraint. Good luck with that.

Heritage.org posted an article this morning that does actually shed a little light on what is actually at stake underneath all the rhetoric.

The article at Heritage.org reminds us:

“Suggesting that the United States might default on its debt is factually wrong and shameful behavior on the President’s part,” Heritage’s J.D. Foster, the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, said yesterday.

The U.S. is not going to default on its interest payments, Foster said, and “this assurance rests not on congressional action to raise the debt ceiling, but on the simple fact that the Treasury has far more than enough funds to pay all interest as it comes due.”

The President stated that raising the debt ceiling was not an increase of spending but simply the paying money due from past spending. He compared the Republicans in Congress to someone who eats dinner and refuses to pay the check. Just for the record, the Republicans did not support much of the spending he is referring to. The excessive spending is due to the fact that the Senate has not passed a budget since 2009 and is using the bloated baseline of the 2009 Budget (when the Democrats controlled the House of Representatives) in continuing resolutions. Since the Senate has not passed a budget, there has been no serious Congressional debate on cutting spending since 2009. The President is essentially asking the Republicans to pay for the Democrats dinner!

At any rate, default is not an issue–it is a red herring. I suspect that if the President and Congress were not going to get paid until a deal was worked out, we would have a deal rather quickly. Stay tuned. It might not be a bad idea to get out the popcorn!Enhanced by Zemanta

Trying To Win The Media War Instead Of Governing

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The basis of the American republic is the U. S. Constitution. It serves as a guide to governing the nation.. We ask the President and Congress to swear an oath to support and defend the Constitution when they take office. It is a little disconcerting when our elected officials seem to forget or ignore this oath.

Yesterday John Hinderaker at Power Line posted an article which illustrates an apparent lack of knowledge of the Constitution by some of the leaders of the Democrat party. Senators Harry Reid, Dick Durbin, Patty Murray and Chuck Schumer have written a letter to President Obama asking him to take all “lawful steps” to increase the debt ceiling–with or without the Republicans. They are fully entitled to write that letter, and they are fully entitled to their opinion, but do they have any idea what the U. S. Constitution says?

This is the letter (from the website Scribd):

This letter is political theater. Either the Senators who wrote it have not read the U. S. Constitution or they don’t understand it.

John Hinderaker at Power Line takes a closer look at the letter. Some of his comments:

Why are they talking about default? Default is constitutionally prohibited by the 14th Amendment. The federal government’s cash flow is more than ample to pay all interest on the national debt and to retire bonds as they mature. Other spending would have to be cut, to be sure; but default will not, and cannot, happen.

The senators telegraph here what they are really afraid of: the House may pass legislation that extends the debt limit along with spending cuts–cuts that will no doubt seem reasonable, not “unreasonable” or “unbalanced,” to voters. I believed that the Republicans wouldn’t be able to get much in exchange for increasing the debt limit because the threat not to do so lacks credibility, but this letter suggests that the Democrats are more worried than I thought.

…What “lawful steps” could Obama take “without Congressional approval” that would permit racking up more debt? Article I of the Constitution gives Congress the exclusive “Power…To borrow Money on the credit of the United States.” Obama has no such authority. Are the senators urging Obama to violate the Constitution? Or perhaps to pursue the trillion-dollar platinum coin gambit? It is impossible to say.

Sure. They want it for nothing, just like Obama wanted tax increases for nothing. The Dems say they are willing to negotiate, they just don’t want the GOP to have any bargaining power.

But wait! Didn’t Obama just get higher income and investment taxes on everyone earning over $250,000, precisely the higher taxes on the “rich” he has always said he wanted? The Democrats’ greed is never satisfied.

It would be a wonderful thing if the entire budget were on the table, but that isn’t what the Democrats have in mind. Still, the Democrats’ evident concern about the debt limit, manifested not just by this letter but by the trillion-dollar coin and other half-baked ideas that are being taken seriously by Democrats, suggests that more of the budget might be on the table than we once thought possible.

Does anyone remember what President Obama said about the national debt? RedState reminds us:

On July 3, 2008, Presidential candidate Obama said that adding $4 trillion in debt was “irresponsible” and “unpatriotic.” Obama was referring to the $3.764 trillion that had been added to the national debt during the seven and one-half years Bush had been president. Obama of course got his facts wrong when he falsely claimed President Bush increased the national debt by $4 trillion “by his lonesome.” When Speaker Pelosi took over Congress on January 3, 2007, the national debt was $8.7 trillion. So the Democrats must get some of the credit for one of the four trillion dollars candidate Obama tried to blame on Bush.

I guess debt is only good when the Democrats are in the White House.

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Spiking The Football Before You Make The Touchdown Is Never A Good Idea

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I have no problem with victory celebrations in football. It is a competitive sport and in that setting they are appropriate, but I will admit that President Obama is getting on my nerves with his political victory celebrations. Being President does not mean that you have to destroy the other political party–it means that you have to lead the country and create unity. I guess President Obama never got that message.

Last night Breitbart.com reported on the current state of the fiscal cliff negotiations. It appears as if a deal may have been reached (the question is whether or not the deal will pass in the House of Representatives). With passage in the House not a given, it was rather unwise of the President to spike the football–unless he wants the deal to fail so that he can blame Republicans. I hope that is not the case, because that would be putting politics over the welfare of the country, and I don’t like to think any President would do that.

The article reports:

However, there are several reasons a deal could fail. One is the President’s bizarre press conference earlier today, at which he appeared to mock Republicans and hinted at further tax hikes in the future. The event, timed at a sensitive stage in the negotiating process, irked Republicans and damaged whatever trust might have begun. Obama seems to have been torn between the desire to strike a victorious posture, and the real fear–driven, perhaps, by sharply falling approval ratings–that he would be blamed if the “fiscal cliff” caused a new recession.

The article also reminds us that we have already hit the debt ceiling:

Negotiations will also take place about the debt ceiling. The Treasury reports that the U.S. has officially hit the $16.4 trillion limit on what it can borrow, and that the government must resort to “extraordinary measures” to cover additional borrowing, which it can only do for a few more weeks. Congress will revisit the debt ceiling negotiations of the summer of 2011, even as it struggles with the aftermath of the “fiscal cliff.”

The problem is excessive spending–not lack of revenue!Enhanced by Zemanta

Does The President Really Want To Negotiate ?

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Today’s Daily Caller is reporting that President Obama has turned down Speaker of the House John Boehner‘s offer to raise tax rates for Americans earning more than $1 million per year. The offer also included raising the government’s debt limit by roughly $1 trillion over its current level of $16.3 trillion.

The article reports:

Obama’s rapid spending — he has raised the national debt by $5.7 trillion since 2008 — means that he must persuade Congress to raise the debt ceiling again in the next few months.

Boehner’s Friday proposal would have transferred another $460 billion from roughly 400,000 investors and entrepreneurs to the federal government by raising their top marginal income tax rate from 35 percent to 39.6 percent.

Other federal, state and local taxes lift the effective tax rate on top earners to well over 50 percent.

The article concludes:

Meanwhile, the White House has demanded that the GOP “acknowledge” that higher tax rates are needed.

This demand for the GOP to abandon its ideological principle against higher tax rates is itself a ideological demand from Obama, and spotlights his gamble that November’s election results can help him win a long-lasting ideological victory over his Republican adversaries.

I am not a big fan of John Boehner, but it does seem that he has done everything he can to try to reach an agreement with President Obama. It appears that it is the President who is not willing to negotiate.

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What Happens When Americans Are Not Paying Attention

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This is a graph of U.S. gross federal governme...

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The Wall Street Journal reported on Thursday:

The U.S. Senate, in an unusual procedure, cleared the way Thursday for the U.S. to lift its borrowing authority by $500 billion to $15.19 trillion, enough to keep the support federal government borrowing through late January or early February.

The action came under an unusual legislative procedure spelled out under the August agreement to raise the U.S. debt ceiling and avoid a U.S. credit default. In a 52-45 vote, the Senate blocked an attempt by Republicans to slow down the process that will result in the $500 billion debt-ceiling increase.

Only one Democrat broke party ranks to vote with the Republicans in trying to slow down the measure–Senator Ben Nelson, a Nebraska Democrat. The article reminds us:

The next increase in the borrowing limit, likely in the first quarter of next year, will be dependent on the ability of a panel of 12 lawmakers to reach a deal that cuts at least $1.2 trillion from federal budget deficits over the next decade.

The procedure used to vote on the increase was part of the debt ceiling worked out with President Obama in August. The bottom line here is that the spending continues unchecked as Congress goes on its merry way. It’s time to replace those in Congress who are continuing the spending with people who understand the fact that they are spending the taxpayers’ money–not their own.

 

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