Today's (1-22-23) NY Times had an opinion piece asserting the national debt limit was unconstitutional. Congress appropriates the money the government spends and leave it to the government to raise the money - taxes and borrowing. To avoid bankruptcy the government must borrow. Limiting borrowing while appropriating spending seems a bit much.
National debt limit
- Thread starter mathman
- Start date
Correct: The government can only collect, That leaves only borrowing - limiting leads to bankruptcy.
ThazzarBaal
Registered Senior Member
National debt - borrowing from foreign lenders and likewise consumer debt, which is no less concerning, is an issue worthy of concern. Limits would seem valid, as would spending, both being appropriate if done correctly. My issue rests in the terms. There are always terms and certain requirements agreed upon by both borrowers and lenders. This nation already trillions of dollars down, is likewise facing some very real economic struggle in terms of value of currency as well as repayment ability.
What are we, as a nation and as citizens, sacrificing in order to secure ourselves short term? The long term struggle, although not so well defined to date, is looming overhead as we all partake of the borrowed generosities.
Caps on both borrowing and spending should not only be required, but also expected. Fiscal responsibility and all.
What are we, as a nation and as citizens, sacrificing in order to secure ourselves short term? The long term struggle, although not so well defined to date, is looming overhead as we all partake of the borrowed generosities.
Caps on both borrowing and spending should not only be required, but also expected. Fiscal responsibility and all.
There is a cap on spending - Congrss appropriates. The executive can't spend more or spend less, leaving borrowing as the only option.
ThazzarBaal
Registered Senior Member
So in effect, there is nothing we can do aside from aquire more debt in order to honor current policies?
Janus58
Valued Senior Member
Raising the Debt Ceiling isn't about acquiring new debt, it is about honoring the debt already accrued. Not raising the debt limit would be like getting a loan to buy a car, then afterwards deciding not to make the payments. What would happen? You'd get your car repossessed. What happens if the US defaults on it's debt obligations? The economy goes into free fall.
The whole idea that the US has to periodically re-affirm that it will pay its debts is ridiculous. When this whole concept started, back after the Civil War, there was some rationale behind it, but those factors no longer exist. Until fairly recently, it hasn't been an issue as it's been just a formality. But that was before the GOP decided to start using it to hold the economy hostage as a bargaining chip.
Barry Deutsch, 29 January 2023
We are now ten days into the extraordinary fiscal measures intended to keep the United States government solvent into the first week of June. Suggestions that Republicans were sensibly↗ agreeing↗ to increase the debt ceiling just haven't worked out; as a retort to the prospect of particular political circumstance, it remains unclear just how trying to cause a specific problem should be interpreted as sensibly avoiding it. It's like a wide-eyed article of cultish faith.
Republicans (and it is only Republicans) threatening to tank the entire U.S. economy by refusing to raise the debt ceiling is a long-term issue, because the modern GOP pulls this shit again and again. We've seen this in 1995, 1996, 2011, 2013, and now 2023, and I doubt this is the last time.
So what is the debt ceiling (also known as the debt limit)? From the US Treasury's webpage:
It's important to understand that the debt ceiling is about paying debts and obligations that have already been spent by Congress, in the spending bills that have already been passed. Refusing to raise the debt ceiling means refusing to pay for the things we've already bought. It means the US goes into default.
So what happens if the US goes into default? Most likely, a worldwide recession, and the US dollar permanently becoming much less valuable. From (ugh) the US Chamber of Commerce:
(Deutsch↱)
So what is the debt ceiling (also known as the debt limit)? From the US Treasury's webpage:
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.
It's important to understand that the debt ceiling is about paying debts and obligations that have already been spent by Congress, in the spending bills that have already been passed. Refusing to raise the debt ceiling means refusing to pay for the things we've already bought. It means the US goes into default.
So what happens if the US goes into default? Most likely, a worldwide recession, and the US dollar permanently becoming much less valuable. From (ugh) the US Chamber of Commerce:
It is impossible to overstate the negative consequences that would occur if the United States were to default on its debt.
The U.S. economy and global financial system are all underpinned by the idea that the U.S. government – unlike others around the world – always pays its bills. Investments in U.S. debt are considered “risk-free”, which means the federal government pays less to borrow money. [...]
Defaulting would mean that the U.S. government no longer always pays its bills. Treasuries would no longer be risk-free. Interest rates for the government and everyone else would rise as the financial system tries to sort itself out. The role of the dollar globally would be weakened, perhaps permanently. Most analysts believe this would result in an immediate recession with long-term negative effects.
The U.S. economy and global financial system are all underpinned by the idea that the U.S. government – unlike others around the world – always pays its bills. Investments in U.S. debt are considered “risk-free”, which means the federal government pays less to borrow money. [...]
Defaulting would mean that the U.S. government no longer always pays its bills. Treasuries would no longer be risk-free. Interest rates for the government and everyone else would rise as the financial system tries to sort itself out. The role of the dollar globally would be weakened, perhaps permanently. Most analysts believe this would result in an immediate recession with long-term negative effects.
(Deutsch↱)
Questions of the worldwide impacts are particularly interesting in this moment; some would eschew consideration of international impacts, while others collapse into fallacy, but if we asked the U.S. Chamber of Commerce, as the question goes↗, "Trying to reduce debt is going to destroy the global economy?" we can expect they would scoff at the question.
If Republicans wish to sensibly address the debt limit, they can do so when presenting a budget, later this year. Flip-side: Congressional Republicans have a poor track record, in recent sessions, on the budget, and seem willing to govern by Continuing Resoulution until Democrats agree to give them everything they want, always and forever, amen.
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Notes:
Deutsch, Barry. "The Debt Ceiling Hostage Crisis". Patreon. 29 January 2023. Patreon.com. 29 January 2023. https://bit.ly/3Ri2adz