Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Fair enough, I meant spuend and income decisions. Point was that the current game of passing budgets and then wrangling separately over whether to actually pay is stupid and needs to end.
I guess I am not following the "stupidity" statement. The debt was a product of a long history of budget decisions, with many false calculations, and failure to anticipate economic conditions necessary to pay for them. Those decisions were both "income" and "spending" decisions. If we are serious about reducing the debt and deficit, then it is going to take a major effort on a more comprehensive strategy to do that, not just undoing one recent inflation bill that was passed. We are not going to complete that massive effort in a few weeks, and threatening default is "stupid". They need to pass a bill to pay for the debt, and then develop a more comprehensive bill to restore lost revenue (such as the Trump/republican loss of revenue by reducing taxes to the wealthy and corporations). We are just playing petty politics right now, and there is no serious interest in a comprehensive debt reduction bill.
Everytime the taxes for the "wealthy" have went up three things have happened. 1) Economy slows down 2) Both the wealthy and the poor are hurt with the poor being hurt more 3) tax receipts go down.
What the Bolsheviks want is exactly what you see now...defund the police = crime, breakdown in society and chaos. High inflation = tax on everyone. Bat shit crazy monetary and fiscal policy and spending, who cares about the debt limit. the MATH DOES NOT WORK. You can't keep spending into oblivion .
So we get what you see...chaos...so the Bolsheviks can install their Totalarian govt...just like when the Grifter in the White House says he won't debate...
Do agree with the fella in Germany...what he said the other day...we need maturity in the USA to resolve this issue...
Everytime the taxes for the "wealthy" have went up three things have happened. 1) Economy slows down 2) Both the wealthy and the poor are hurt with the poor being hurt more 3) tax receipts go down.
Show your data as I've seen the exact opposite. The late 1920s income tax rates had a peak below 30% and we hit the Great Depression, during which the government started to raise taxes for New Deal social programs and the War Effort and we had strong economic growth after they did this. Then in the late 1940s and throughout the 1950s we had a peak tax rate of close to 90% and our economy was booming with many government projects, the GI bill, etc. Tax breaks on the wealthy have not proven to be an effective form of economic stimulus. Trickle down economics is hogwash. Reaganomics is widely known among serious economic circles to be an utter failure and Reagan himself quietly raised taxes to pay the bills.
No other country has a concept of debt ceiling as far as I know. The stupidity of our system is to handle budgets and debt ceiling as separate issues when they're not. Decisions and projections(or their failure thereof) embedded in the budget is what leads to (mostly) increases in the debt. I don't see anything wrong in Republicans asking for cuts in spending but all of the decisions around income, spend and deficits/debts needs to happen in the context of a budget like every other sane country does.
The current system leads to the stupidity of Republicans casting Democrats as the party of unlimited spend when in fact prior bipartisan decisions have led to a situation of the debt ceiling needing an increase.
If an individual maxes out their credit card limits with an explicit upfront intent of stiffing the cc company, most people would label this as ethically corrupt(minus a former Prez of course who was actually quite proud of this exact same behavior). Ideally we don't want the USG to do the same.
Let’s just fund the IRS! Joe Doe, working for an hourly wage, ain’t the problem. His pay is public record and taxes are withheld automatically by his employer. Let’s be sure those with harder to track income sources (who are in a better position to cheat) are paying their fair share as well. This would go a long way towards closing the gap between spending and income.
Why Oh why would House Republicans repeal a bill intended to better fund the IRS? ”The Law and Order Party” - Right?
“The Congressional Budget Office (CBO) estimated Monday that the (repeal) would eliminate about $71 billion of the total $80 billion that was allocated for the IRS but would reduce tax revenue by about $186 billion, translating to a $114 billion increase in deficits over the next decade.”
@Hank. “Why oh why,,,,?” I am not telling you anything you don’t already know but that is the ultimate reason that the modern repugnant party exists. To cut taxes on the wealthy to zero and at the same time rid corporations of all government regulations. The culture war is just an easy way to get the suckers to vote against their own economic interests. I am certain that when the elite get together they aren’t thinking about erasing trans people or banning books. They are plotting to control all the wealth of this country instead of merely 95%.
So, if I can't separate you by color, sex, religion or class and keep you feeding on each other, I will just reduce you to one species - serf/slave/sharecropper/protégé, all the same. Ultimately, tzars/owners/rentiers/patrons are we. As it was in the beginning, is now, and ever shall be, world without end. Amen.
No other country has a concept of debt ceiling as far as I know.
Live and learn. The EU's concept of a debt ceiling (that's 27 countries) is "enshrined in the Treaty on the Functioning of the European Union (TFEU) and the 'Fiscal Compact' [Treaty on Stability, Coordination and Governance]". In March, the EU agreed to continue the agreed upon debt and deficit ceilings.
Kenya also currently has an absolute debt ceiling. It increased its ceiling by 11% (from Sh 9 trillion to Sh 10 trillion) in mid 2022 as a stop-gap. Still,
By December, Kenya’s total debt stood at Sh9.6 trillion, which was only Sh400 million shy of the borrowing ceiling set by legislators. This effectively meant that the Ruto administration, which came to power after the August election, has had little headroom to borrow for either development or recurrent expenditure.
It's no wonder that Moody's just today (May 12) downgraded Kenya from B2 to B3.
Then there's New Zealand. It sets a debt ceiling on a percentage basis, but its rules are complex, taking into consideration the type of spending (operational or capital) and other factors.
Here's a page discussing how specific countries implement and deal with debt limits. Of note is its observation:
Other countries have avoided deadlocks through one of these four routes:
The ceiling is intentionally set sufficiently high such that it will not plausibly be crossed.
The law is either amended or suspended during periods of heightened stress necessitating indebtedness.
No punishments are tied to the legislation, meaning states often cross the limit with impunity.
The law was scrapped altogether when it was severely curtailing the government’s policy space.
Another commie Bolshevik spouting facts! Man, they're just coming out of the woodwork today. Whatever happened to the good old MAGA standard of just spouting whatever you want, with absolutely no connection to any of those Bolshie facts. Facts, Schmacts!Trump WON !!!
Good post, I stand corrected. As listed towards the end of your post, no country has debt ceiling circus like the USA where the minority party can hold hostage the majority party or the party controlling the WH.
I see that most spending complainers here don’t really know what it is we actually spend on and how much and what we should be spending on and how we should be funding it, that is, the grunt details
FWIW saying I reloaded the liquor cabinet and went long on popcorn futures the other day. So I'm ready for whatever may come from these lunatics across the river from me.
@davidrmoran Interesting game, although I suspect it leaves much stuff out. I played it and was able to cut the deficit significantly, shaving $9 trillion off it, without cutting any programs like Medicare or Social Security, while reducing military spending and raising taxes on people who should have had their taxes raised a long time ago. Even dramatically increasing existing programs or adding new ones like student debt relief still shaved almost $3 trillion in this scenario.
Yet I don’t think there was a mention of what the future deficit would be after adjusting it for inflation, so we see this bigger number at the game’s end date without considering that GDP and national net worth will also be bigger then after inflation and growth.
Moreover, the national net worth after deducting all debt at the end of 2022 was $148 trillion. The top 10% of the wealthiest control over 70% of that net worth. To reduce or even eliminate the deficit three things could be done: First, create a tax treaty with other nations requiring extradition of any potential tax evaders to do business with the U.S. Then create a stiff exit tax for leaving the U.S. for incremental dollars above a certain baseline net worth, say, $10 million. Then create a significant wealth tax and raise estate taxes. The wealth tax in the game is I believe based on either the Warren or Biden proposals, but it mainly would apply only to billionaires, a too narrow demographic, and the rates if I recall correctly were low. But without extradition and exit tax measures it would just cause flight to sleazy tax havens.
Of course, none of these measures or the game’s ideas will ever be implemented, given our current level of political discourse.
FWIW saying I reloaded the liquor cabinet and went long on popcorn futures the other day. So I'm ready for whatever may come from these lunatics across the river from me.
As I understand it, the Republican bill, in general, would raise the debt limit to avoid the default and reduce spending to stop going above the new debt limit. Biden does not want any debt limit so that he can spend all he desires. There has to be a limit on the debt and a start to decrease it. I hope the Republicans hold the line even if it results in default. The liberals have to be stopped at some point. The default would be on Biden's head if he refuses.
The authors’ (Feldstein and Wrobel) research corroborated the theory that more progressive state tax structures cannot achieve redistribution of income in the long run. In states where high income individuals are taxed more heavily, migration increases high earners’ pretax real incomes and lowers pretax incomes of lower income individuals.
Instead of achieving a long-run redistribution of income, a more progressive tax system distorts economic choices and reduces total real incomes. A change in the progressivity of a state tax structure promotes migration and changes the allocation of resources within the state. As pretax wages of highly skilled individuals rise and wages of low skilled individuals fall, firms are incentivized to reduce the number of higher paying jobs and increase the number of lower paying jobs.
But you don't have to read the data, research and propoganda online etc....just open your own eyes and observe....I submit to you the State of Illinois...you can hear the whooshing sound of the wealth leaving the state...those with means (and gov't pensions) are leaving in a hurry....Cook County (CHI) has over 200,000 residents leave in the past 3 years...
I further submit to you that the Bolshevik's in the White House etc are following Lenin's playbook almost to a T....crushing the middle class (the way to crush the bourgeoisie (middle class) is to grind them between the millstones of taxation and inflation)...destroy the family, destroy the country...(hmm, sound familiar as to things said allouded to by BLM commentary and viewpoint about the family unit)...divide people on nonsense, corrupt the young, I submit to you the Facebook, Instrgram...deny them gun ownership.
Ahh...while I 100% agree we should lock all punks, dingbats, crazies, etc who are not licensed to carry the firearms in jail...of course you Bolsheviks/Demorats want our weapons...that is the only way you can achieve your insane goals and control the country.
Oh god! Biden managed to hide his Bolshevism apparently for decades as the senator from Delaware lobbying to pass legislation highly favorable to the credit card and banking industries.
Sure, erase the new IRS funding, so my family will wait decades ( instead of two plus years and counting) for the refund of thousands of dollars the IRS owes my deceased Mother's estate.
Only since "the Bolshie" in the WH passed the additional IRS funding have they even been able to answer the phone.
Maybe I'm too much of a simpleton but, here it is.....
THERE WILL BE NO DEFAULT.
Default is being used as a negotiating tool...goes without saying really as you all are very intelligent and already know that. No one on either side really desires that other than possibly the political extremes. Biden, McConnell and McCarthy don't really want a default and its implications, why on earth would they want that on their legacy...politicians are all about legacy. Default would devastate their finances same as all of ours unless they have already sold on insider information.
Does deficit spending need to be addressed - of course it does as only people who don't care about our future generations would think otherwise. We didn't get here in a day and the deficit doesn't need to be eliminated in a day. At least slow deficit spending down to where the growth of the economy outpaces the spending increases.
Let's all take a deep breath and urge our representatives to work on rational compromises, and let's please stop voting for political extremists on both sides of the aisle. We have been our own worst enemy in this regard as we have gotten what we deserve.
In the meantime, I'm considering selling all our TRAIX except for placeholder amounts and purchasing bars of gold.
Let's all take a deep breath and urge our representatives to work on rational compromises, and let's please stop voting for political extremists on both sides of the aisle.
The classic false moral equivalency or “bad people on both sides” argument. I remember that “very fine people on both sides” remark in Charlottesville, too. Sorry, but it just ain’t so in this case, and it wasn’t the case in Charlottesville either. This is brinkmanship coming from the right side of aisle which did not have the red wave it wanted so now it is employing hostage taking financial terroristic tactics to extort what it wants. It does not represent the will of the people or else the red wave would’ve happened in the first place. Moreover and crucially, the same GOP didn’t angst about the higher debt ceiling’s impact on “future generations” when they were raising it multiple times during the Trump administration to finance tax cuts for the wealthy, and the Democrats didn’t employ this kind of brinkmanship during that period over the ceiling.
“In the meantime, I'm considering selling all our TRAIX except for placeholder amounts and purchasing bars of gold.”
Oh yes! Please buy gold! Everything I have connected to precious metals got pounded this week. Nice promo for gold from Randal Forsyth in Barron’s today. Maybe he can push it higher.
No one on either side really desires that other than possibly the political extremes.
ONE political extreme in the House appears to be comfortable with the idea, and they have McCarthy by the huevos. (There is NO radical left remotely like the radical right, especially the right-wing fringes in the House who have complete control over McCarthy's speakership.)
The R approach is at least as much about politics as it is about debt: boosting fossil fuels and trying to wipe out any progress on climate, and slashing the IRS, which would make the debt worse.
The debt kept increasing during Drumpf's time in the WH and the GOP thugs happily enabled it. The GOP didn't suddenly discover religion on debt and deficits during Biden.
This is naked politics and McCarthy does not have the cojones to take a principled stand against the renegades who can throw him out as Speaker. McCarthy has always been a weasel his entire political life. He actually makes the toad McConnell look good.
The renegades are itching for a showdown...just because and skepticism about the disaster that will unfold with a default. This path by the GOP is going to bite them in the a@@ when there is a GOP President and Dems control one part of Congress.
All that said, as someone else before commented -- the sole purpose of the GOP is to enrich the top 10% of taxpayers but no question the GOP has done a brilliant job cobbling together a coalition of low IQ sods who actively vote against their own economic interests. The ludicrousness of red states that get more from the federal purse than their contributions to it is tragicomic.
Dems need to wake up and get to the center of hot button topics to expand the tent.
Comments
What the Bolsheviks want is exactly what you see now...defund the police = crime, breakdown in society and chaos. High inflation = tax on everyone. Bat shit crazy monetary and fiscal policy and spending, who cares about the debt limit. the MATH DOES NOT WORK. You can't keep spending into oblivion .
So we get what you see...chaos...so the Bolsheviks can install their Totalarian govt...just like when the Grifter in the White House says he won't debate...
Do agree with the fella in Germany...what he said the other day...we need maturity in the USA to resolve this issue...
"Show your data"? Real American MAGA guys don't got to show no stinkin' data! Real men show GUNS, not data!
No other country has a concept of debt ceiling as far as I know. The stupidity of our system is to handle budgets and debt ceiling as separate issues when they're not. Decisions and projections(or their failure thereof) embedded in the budget is what leads to (mostly) increases in the debt. I don't see anything wrong in Republicans asking for cuts in spending but all of the decisions around income, spend and deficits/debts needs to happen in the context of a budget like every other sane country does.
The current system leads to the stupidity of Republicans casting Democrats as the party of unlimited spend when in fact prior bipartisan decisions have led to a situation of the debt ceiling needing an increase.
If an individual maxes out their credit card limits with an explicit upfront intent of stiffing the cc company, most people would label this as ethically corrupt(minus a former Prez of course who was actually quite proud of this exact same behavior). Ideally we don't want the USG to do the same.
Why Oh why would House Republicans repeal a bill intended to better fund the IRS? ”The Law and Order Party” - Right?
Republicans Block IRS Funding Bill
“The Congressional Budget Office (CBO) estimated Monday that the (repeal) would eliminate about $71 billion of the total $80 billion that was allocated for the IRS but would reduce tax revenue by about $186 billion, translating to a $114 billion increase in deficits over the next decade.”
Live and learn. The EU's concept of a debt ceiling (that's 27 countries) is "enshrined in the Treaty on the Functioning of the European Union (TFEU) and the 'Fiscal Compact' [Treaty on Stability, Coordination and Governance]". In March, the EU agreed to continue the agreed upon debt and deficit ceilings.
Denmark, one of the EU nations, goes further by layering its own absolute (DKK 2 trillion) debt ceiling on top of the EU's percentage limit.
BBC, What Americans can learn from Denmark on handling debt ceiling crisis
Kenya also currently has an absolute debt ceiling. It increased its ceiling by 11% (from Sh 9 trillion to Sh 10 trillion) in mid 2022 as a stop-gap. Still, https://www.pd.co.ke/news/ruto-cabinet-asks-mps-to-raise-public-debt-cap-to-sh17-trillion-171332/
It's no wonder that Moody's just today (May 12) downgraded Kenya from B2 to B3.
Then there's New Zealand. It sets a debt ceiling on a percentage basis, but its rules are complex, taking into consideration the type of spending (operational or capital) and other factors.
Here's a page discussing how specific countries implement and deal with debt limits. Of note is its observation: https://www.atlanticcouncil.org/blogs/econographics/the-us-debt-limit-is-a-global-outlier/
Good post, I stand corrected. As listed towards the end of your post, no country has debt ceiling circus like the USA where the minority party can hold hostage the majority party or the party controlling the WH.
I see that most spending complainers here don’t really know what it is we actually spend on and how much and what we should be spending on and how we should be funding it, that is, the grunt details
Here, play:
https://www.washingtonpost.com/business/interactive/2023/national-debt-cut-game/
FWIW saying I reloaded the liquor cabinet and went long on popcorn futures the other day. So I'm ready for whatever may come from these lunatics across the river from me.
Yet I don’t think there was a mention of what the future deficit would be after adjusting it for inflation, so we see this bigger number at the game’s end date without considering that GDP and national net worth will also be bigger then after inflation and growth.
Moreover, the national net worth after deducting all debt at the end of 2022 was $148 trillion. The top 10% of the wealthiest control over 70% of that net worth. To reduce or even eliminate the deficit three things could be done: First, create a tax treaty with other nations requiring extradition of any potential tax evaders to do business with the U.S. Then create a stiff exit tax for leaving the U.S. for incremental dollars above a certain baseline net worth, say, $10 million. Then create a significant wealth tax and raise estate taxes. The wealth tax in the game is I believe based on either the Warren or Biden proposals, but it mainly would apply only to billionaires, a too narrow demographic, and the rates if I recall correctly were low. But without extradition and exit tax measures it would just cause flight to sleazy tax havens.
Of course, none of these measures or the game’s ideas will ever be implemented, given our current level of political discourse.
Instead of achieving a long-run redistribution of income, a more progressive tax system distorts economic choices and reduces total real incomes. A change in the progressivity of a state tax structure promotes migration and changes the allocation of resources within the state. As pretax wages of highly skilled individuals rise and wages of low skilled individuals fall, firms are incentivized to reduce the number of higher paying jobs and increase the number of lower paying jobs.
But you don't have to read the data, research and propoganda online etc....just open your own eyes and observe....I submit to you the State of Illinois...you can hear the whooshing sound of the wealth leaving the state...those with means (and gov't pensions) are leaving in a hurry....Cook County (CHI) has over 200,000 residents leave in the past 3 years...
I further submit to you that the Bolshevik's in the White House etc are following Lenin's playbook almost to a T....crushing the middle class (the way to crush the bourgeoisie (middle class) is to grind them between the millstones of taxation and inflation)...destroy the family, destroy the country...(hmm, sound familiar as to things said allouded to by BLM commentary and viewpoint about the family unit)...divide people on nonsense, corrupt the young, I submit to you the Facebook, Instrgram...deny them gun ownership.
Ahh...while I 100% agree we should lock all punks, dingbats, crazies, etc who are not licensed to carry the firearms in jail...of course you Bolsheviks/Demorats want our weapons...that is the only way you can achieve your insane goals and control the country.
Best Regards to ALL,
Baseball Fan
Sure, erase the new IRS funding, so my family will wait decades ( instead of two plus years and counting) for the refund of thousands of dollars the IRS owes my deceased Mother's estate.
Only since "the Bolshie" in the WH passed the additional IRS funding have they even been able to answer the phone.
THERE WILL BE NO DEFAULT.
Default is being used as a negotiating tool...goes without saying really as you all are very intelligent and already know that. No one on either side really desires that other than possibly the political extremes. Biden, McConnell and McCarthy don't really want a default and its implications, why on earth would they want that on their legacy...politicians are all about legacy. Default would devastate their finances same as all of ours unless they have already sold on insider information.
Does deficit spending need to be addressed - of course it does as only people who don't care about our future generations would think otherwise. We didn't get here in a day and the deficit doesn't need to be eliminated in a day. At least slow deficit spending down to where the growth of the economy outpaces the spending increases.
Let's all take a deep breath and urge our representatives to work on rational compromises, and let's please stop voting for political extremists on both sides of the aisle. We have been our own worst enemy in this regard as we have gotten what we deserve.
In the meantime, I'm considering selling all our TRAIX except for placeholder amounts and purchasing bars of gold.
Oh yes! Please buy gold! Everything I have connected to precious metals got pounded this week. Nice promo for gold from Randal Forsyth in Barron’s today. Maybe he can push it higher.
The R approach is at least as much about politics as it is about debt: boosting fossil fuels and trying to wipe out any progress on climate, and slashing the IRS, which would make the debt worse.
This is naked politics and McCarthy does not have the cojones to take a principled stand against the renegades who can throw him out as Speaker. McCarthy has always been a weasel his entire political life. He actually makes the toad McConnell look good.
The renegades are itching for a showdown...just because and skepticism about the disaster that will unfold with a default. This path by the GOP is going to bite them in the a@@ when there is a GOP President and Dems control one part of Congress.
All that said, as someone else before commented -- the sole purpose of the GOP is to enrich the top 10% of taxpayers but no question the GOP has done a brilliant job cobbling together a coalition of low IQ sods who actively vote against their own economic interests. The ludicrousness of red states that get more from the federal purse than their contributions to it is tragicomic.
Dems need to wake up and get to the center of hot button topics to expand the tent.