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.
@staycalm. “Itching for a showdown.” “Just because.” You nailed the bigger issue here. When the history of this cluster fuck is written 40 years from now it might indeed be bigger than the obvious. It might be that the no nothing caucus had a bigger goal in mind. Or nothing in mind except messing up with the existing order.
@hondo, >> 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. ... The liberals have to be stopped at some point.
I think we need to remember that Liberals have taken the worst of corporate capitalism and moderated its worst and greediest impulses. If it weren’t for Liberals there would have been a revolution in this country long ago. Of course the morons of the insurrectionist right just use Liberal as another word for the enemy. They don’t even understand where Liberals stand on the political spectrum.
Just don't see much else to say on this topic. I am not convinced that either political party really wants a debt deficit control bill. The Democrats are devoted to a number of unresolved social issues that are not addressed in the budget. The Republicans are devoted to reducing tax/revenue issues, that burden the wealthy and corporations. We have just completed the first couple of years of the Biden presidency, and there have been some Covid related spending to more "normalize" our future, and then there was Infrastructure spending package that even the Republicans were happy to present to their home constituents, who needed and wanted water/road/bridge/internet etc. help. So the big gesture now is the Republicans trying to undue some "Inflationary" related legislation, that was recently passed. Its all just partisan bulls...t that is not going to change for now. Default consequences will now be broadcast in scary detailed ways, and then when we see many things that will directly impact almost everyone, a magical solution will likely be found, so no one will be blamed for disaster.
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.
Come on Hondo, this is a blame game that goes on with both parties. Neither party wants debt limit controls, when they are in power. It is pure power politics and when either party is in power, they impact the budgeting process, that typically raises the deficit. The biggest debt deficit increase in recent years, came from Trump and the Republicans cutting crucial revenue for our budget, by cutting taxes for the wealthy and corporations, and the Republicans now seem intent on cutting funding for the IRS because of those "pesky" audits to expose tax evasion. I don't see a "high ground" in this process that either party has a right to claim!
From my perspective this is about the egregious spending by the Biden administration...his wacky progressive policies...frightening to think that one person, Manchin prevented the Grifter from spending another what $4 Trillion...to think we don't already have enough inflation. Funny how you don't see that kook Stephanie Kelton spouting her prattle regarding MMT on the propoganda outlets anymore...anyone with a rational thought knew and knows this is insane thinking.
Remove your political beliefs and do the math...it doesn't work, too much monies go towards entitlements and debt service. Tax the rich, tax the rich...No, you need to create a bigger revenue pool for cripes sake! Look at Chicago, getting choked by the pension costs and debt service....just like virtually all democratic run cities in the USA.
Earlier post by Lewis B stated this is what people want...No, this is what some people in a very low percentage of counties who vote for govt handouts want, not the huge majority of counties in the USA.
There has to be some compromise....no one wants to see a default. But this out of control spending needs to stop.
As I'm fairly certain we won't agree on any of this...my question to the class is WHEN exactly does the Schmeissing start in the stock market? Seems to be of not great concern meaning the debt limit to date...could happen any day now meaning a 10-20% drawdown?
Recently I found out that the Orange Julius years produced yuuuge juicy budget surpluses. In fact the surpluses even paid for the entirety of the big and beautiful 2000 mile long and 200 foot tall wall at the border which even the Chinese were awestruck by but didn't have the best words to describe (Cheeto of course as a stable genius has the best words)
The problem is that almost everyone thinks that a solution for the debt-ceiling problem will be found at the last minute. But then, most think (at least in the DC) that it is for others to fix it. A meeting of the main players scheduled for Friday was cancelled and may happen this week.
That is what concerns me. There is no urgency to do anything.
But this stuff is very serious. Treasuries are the foundation of not just the US but global financial system. And if an accident happens, it will affect everything - the risk assets, the safe assets. Treasuries are the foundation of US safe assets - bank a/c, CDs, m-mkt funds, loan collaterals. I can see some panic in the institutional market from the distortion of the very short end of the Treasury yield curve.
Now only 2 more weeks of this manufactured crisis.
Now only 2 more weeks of this manufactured crisis.
I couldn’t agree more. During the 2011’s debt limit debate, the Standard and Poor downgraded US treasury from AAA to AA and all three indexes fell 3-7% on the same days. Most likely this will trigger the downgrade again before the actual “defaulting”. The consequences are grave for the world economy. There is no hiding place in treasury and CDs.
In a world where January 6 is viewed as a peaceful protest, the protesters as patriots who will be pardoned and a live TV audience that laughs when Cheeto jokes about an assault charge and conviction a debt default is a pretty abstract event for a sizable number of GOP voters who wouldn't know default even if hit them in the face.
While not all GOP voters support Cheeto, they're still letting the ones who do call the shots and the stance of the GOP. Cheeto has called for a default so...
Like children who learn by experiment the hard way of what happens when you touch a pot of boiling water, we're about to find out.
@stayCalm. Well stated. For democracy to function the country needs people of good will and competency. The house majority lacks enough of both to be counted on to do the right thing. Plenty of experts think default won’t happen because it would be a disaster but that ignores the fact that many of the players want to see a train wreck. Might even be part of their plan to end democracy as we know it.
James Carville: "I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a . 400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." The thing is there is a growing expectation that Biden being rational should negotiate with these extremists pushing the nation's finances towards a cliff. But they are essentially demanding that to save the securities markets, programs that benefit millions of vulnerable, sick and impoverished Americans be cut and that a new law--Biden's signature piece of legislation so far--that is vital to addressing climate change be eviscerated. The rational thing for him to do is actually not blink or agree to negotiate with these extremists. Who does a collapse of the bond/stock markets hurt more? Who does cutting Food Stamps, Medicaid and trampling on the planet's ecosystem hurt more? Of course, either path will hurt everyone, so I think it is still probable some sort of pound of flesh will be extracted--at great cost to "future generations"--before a crash occurs.
Look at Chicago, getting choked by the pension costs and debt service....just like virtually all democratic run cities in the USA.
There's no question that Chicago's pensions are way underfunded - its four unions have funding ratios ranging from just 21% to 46%, according to this 2022 WTTW (Chicago PBS) report. That's close to, if not at, the bottom of the pack. A 2019 Pew Research Center Report specifically called out Chicago for it low and rapidly declining funding ratio.
And that's the point. It's dangerous to draw inferences from a single data point, especially from an outlier. Instead, use broader data. Here's a 2023 report from the conservative think tank (per Crain's) Truth In Accounting. It presents 2021 debt (or surplus) per taxpayer for the 75 largest US cities, including pension liabilities. 25 cities have surpluses, 50 are in debt.
Ballotpedia reports that in 2020, of the mayors in the 100 largest cities, 64% were Democrats, 29% were Republicans, and 7% were nonpartisan. That's almost exactly in line with the breakdown of the 25 cities reported to have surpluses: 16 Democrats (64%), 8 Republicans (32%), and 1 nonpartisan (4%). Republicans don't seem to have done a better (or worse) job than Democrats in managing city budgets, once one controls for percentage representation.
this is what some people in a very low percentage of counties who vote for govt handouts want, not the huge majority of counties in the USA
Take care not to conflate people and counties. Otherwise one might wind up thinking that Illinois is a deep red state.
Then there's Los Angeles County. Just one of 58 counties in California, yet 25% of the state's people live there. One can have a majority of people in a minority, even a small minority of counties. What counts, or what should count, are the people, not the land.
State budgets have to follow the rules of economics, because they cannot print money. CT was running neck and neck with IL for the most indebted state
consequently, taxes went way up, real estate shriveled ( housing prices were flat from 1987 to 2019!) and people left.
A moderate Democrat has refused the left wing's demand to spend more, and the pension deficit is easing.
Massachusetts was in similar shape in the past but they have a flat rate income tax, passed a law preventing town budgets from rising more than 2 1/2% without voter consent and they let loose Harvard and MIT Biotech and they are no longer Taxachussets.
But with the Covid budget surplus, the politicians want to spend again and they haven't learned their lesson
There are massive amounts of money that can be cut in the Federal budget, if the corporate hogs were kept away from the trough.
Medicare is a prime example. The US spends twice as much as any other country on health care, with worse results.
"Of the 10 highest paid among all corporate executives in the US in 2020, 3 were from Oak Street Health, and salary and benefits included, reportedly, $568 million for the chief executive officer (CEO). Executives in large hospital systems commonly have salaries and benefits of several million dollars a year."
The state budget/pension situation is why I gleefully bought into the 403(b) option versus the state pension when I joined the uni system. Not only was the 403b portable and fully-vested immediately, but if I was going to lose (or make) money, I wanted to be the one responsible, not some politically-appointed state investment board who might, for example, think 25% or more in high-priced hedge funds is a good idea.
While it is possible for a billionaire to leave a high tax country for a low tax one with relative ease, it is far less likely for the average high-earning wealthy person to do this. Among the reasons is that normally people are usually later in their lives when they are at their peak earnings levels, and have established important career and business ties in their local area that are not so easy to rebuild in a new state. Moreover, moving is a pain, and causes disruption of family and friends.
The evidence indicates that Feldstein and Wrobel's research was skewed by the fact that progressive tax states already had high levels of income inequality to begin with before such taxes were enacted. It is one of the reasons the taxes were enacted in the first place. The taxes reduce inequality, but there remains often a higher than average level of income inequality in such states. No tax is going to fix the difference between a Silicon Valley millionaire/billionaire and the average person. But it eases the pain.
Yes I played the WaPo game once through quickly. I shaved off 6 billion without cutting defense, mainly by increasing taxes on wealthy. Unfortunately the game would not let you really get into the weeds where all the savings is.
The money savings in healthcare alone is astronomical. that JAMA editorial is just the tip of the iceberg.
Private Equity in health care is bleeding the country dry. Prospect Medical sold their hospitals to MPW to repay a Billion dollar loan they used to pay their owner a $600 million dividend, as I have posted before.
Add to that the money we spend on drugs that continue to be patent projected in the US years after coming to market, but nowhere else. Humira is one of the most expensive examples.
Corporate Welfare is far far more expensive than helping poor people.
According to recent data compiling spending on social insurance, means-tested programs, tax benefits, and financial aid for higher education, the average household in the bottom 20 percent of the income distribution receives roughly $25,733 in government benefits a year, while the average household in the top 20 percent receives about $35,363. Every year, the richest American families receive almost 40 percent more in government subsidies than the poorest American families.
You would think (meaning I would think) that anyone who reads Desmond would know not to overstate:
>> ... get into the weeds where all the savings is >> The money savings in healthcare alone is astronomical >> Private Equity in health care is bleeding the country dry >> There are massive amounts of money that can be cut in the Federal budget ...
Here's a rather more conservative calculator for you to play with.
If they only would appoint us co-budget czars with absolute control over deciding which sacred Ox was to be gored and which Billionaires would loose most, the country would be in a lot better place.
Passing anything in the House to stop a debt default is no slam dunk, no matter what the negotiators come up with. The lunatics are still in charge of the asylum. Are there any "moderate" House Repubs left to stop this suicide pact?
@AndyJ. +100. So many of the so called experts think it won’t happen because it would be so catastrophic. The problem is that kind of thinking is RATIONAL. It will take plenty of repuglicans to make a deal and it’s very unlikely you can find very many RATIONAL repuglicans in congress. Or anyplace else. So hang on to your Stroh’s. That is a Detroit reference.
A default will happen, the 14th will be invoked, emergency petition will be filed in SC and SC will validate the use of the 14th.
That should put a nail in the coffin of a debt ceiling law that conflicts with a constitutional amendment and return(rightfully so) budget and debt related decisions to the annual budget process.
A default will happen, the 14th will be invoked, emergency petition will be filed in SC and SC will validate the use of the 14th.
That should put a nail in the coffin of a debt ceiling law that conflicts with a constitutional amendment and return(rightfully so) budget and debt related decisions to the annual budget process.
Comments
>> 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. ... The liberals have to be stopped at some point.
you believe such bunk and handle money ?
Remove your political beliefs and do the math...it doesn't work, too much monies go towards entitlements and debt service. Tax the rich, tax the rich...No, you need to create a bigger revenue pool for cripes sake! Look at Chicago, getting choked by the pension costs and debt service....just like virtually all democratic run cities in the USA.
Earlier post by Lewis B stated this is what people want...No, this is what some people in a very low percentage of counties who vote for govt handouts want, not the huge majority of counties in the USA.
There has to be some compromise....no one wants to see a default. But this out of control spending needs to stop.
As I'm fairly certain we won't agree on any of this...my question to the class is WHEN exactly does the Schmeissing start in the stock market? Seems to be of not great concern meaning the debt limit to date...could happen any day now meaning a 10-20% drawdown?
The fake news media will never tell you all this.
That is what concerns me. There is no urgency to do anything.
But this stuff is very serious. Treasuries are the foundation of not just the US but global financial system. And if an accident happens, it will affect everything - the risk assets, the safe assets. Treasuries are the foundation of US safe assets - bank a/c, CDs, m-mkt funds, loan collaterals. I can see some panic in the institutional market from the distortion of the very short end of the Treasury yield curve.
Now only 2 more weeks of this manufactured crisis.
While not all GOP voters support Cheeto, they're still letting the ones who do call the shots and the stance of the GOP. Cheeto has called for a default so...
Like children who learn by experiment the hard way of what happens when you touch a pot of boiling water, we're about to find out.
The thing is there is a growing expectation that Biden being rational should negotiate with these extremists pushing the nation's finances towards a cliff. But they are essentially demanding that to save the securities markets, programs that benefit millions of vulnerable, sick and impoverished Americans be cut and that a new law--Biden's signature piece of legislation so far--that is vital to addressing climate change be eviscerated. The rational thing for him to do is actually not blink or agree to negotiate with these extremists. Who does a collapse of the bond/stock markets hurt more? Who does cutting Food Stamps, Medicaid and trampling on the planet's ecosystem hurt more? Of course, either path will hurt everyone, so I think it is still probable some sort of pound of flesh will be extracted--at great cost to "future generations"--before a crash occurs.
There's no question that Chicago's pensions are way underfunded - its four unions have funding ratios ranging from just 21% to 46%, according to this 2022 WTTW (Chicago PBS) report. That's close to, if not at, the bottom of the pack. A 2019 Pew Research Center Report specifically called out Chicago for it low and rapidly declining funding ratio.
And that's the point. It's dangerous to draw inferences from a single data point, especially from an outlier. Instead, use broader data. Here's a 2023 report from the conservative think tank (per Crain's) Truth In Accounting. It presents 2021 debt (or surplus) per taxpayer for the 75 largest US cities, including pension liabilities. 25 cities have surpluses, 50 are in debt.
Ballotpedia reports that in 2020, of the mayors in the 100 largest cities, 64% were Democrats, 29% were Republicans, and 7% were nonpartisan. That's almost exactly in line with the breakdown of the 25 cities reported to have surpluses: 16 Democrats (64%), 8 Republicans (32%), and 1 nonpartisan (4%). Republicans don't seem to have done a better (or worse) job than Democrats in managing city budgets, once one controls for percentage representation.
this is what some people in a very low percentage of counties who vote for govt handouts want, not the huge majority of counties in the USA
Take care not to conflate people and counties. Otherwise one might wind up thinking that Illinois is a deep red state.
Then there's Los Angeles County. Just one of 58 counties in California, yet 25% of the state's people live there. One can have a majority of people in a minority, even a small minority of counties. What counts, or what should count, are the people, not the land.
consequently, taxes went way up, real estate shriveled ( housing prices were flat from 1987 to 2019!) and people left.
A moderate Democrat has refused the left wing's demand to spend more, and the pension deficit is easing.
Massachusetts was in similar shape in the past but they have a flat rate income tax, passed a law preventing town budgets from rising more than 2 1/2% without voter consent and they let loose Harvard and MIT Biotech and they are no longer Taxachussets.
But with the Covid budget surplus, the politicians want to spend again and they haven't learned their lesson
There are massive amounts of money that can be cut in the Federal budget, if the corporate hogs were kept away from the trough.
Medicare is a prime example. The US spends twice as much as any other country on health care, with worse results.
"Of the 10 highest paid among all corporate executives in the US in 2020, 3 were from Oak Street Health, and salary and benefits included, reportedly, $568 million for the chief executive officer (CEO). Executives in large hospital systems commonly have salaries and benefits of several million dollars a year."
https://jamanetwork.com/journals/jama/fullarticle/2801097
The budget busting Alzheimer's drugs are just the start.
>> There are massive amounts of money that can be cut in the Federal budget,
So this means you took the WaPo cuts calculation quiz? Tell all, please.
https://cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth
https://researchgate.net/publication/4731605_Do_Redistributive_State_Taxes_Reduce_Inequality
While it is possible for a billionaire to leave a high tax country for a low tax one with relative ease, it is far less likely for the average high-earning wealthy person to do this. Among the reasons is that normally people are usually later in their lives when they are at their peak earnings levels, and have established important career and business ties in their local area that are not so easy to rebuild in a new state. Moreover, moving is a pain, and causes disruption of family and friends.
The evidence indicates that Feldstein and Wrobel's research was skewed by the fact that progressive tax states already had high levels of income inequality to begin with before such taxes were enacted. It is one of the reasons the taxes were enacted in the first place. The taxes reduce inequality, but there remains often a higher than average level of income inequality in such states. No tax is going to fix the difference between a Silicon Valley millionaire/billionaire and the average person. But it eases the pain.
Yes I played the WaPo game once through quickly. I shaved off 6 billion without cutting defense, mainly by increasing taxes on wealthy. Unfortunately the game would not let you really get into the weeds where all the savings is.
The money savings in healthcare alone is astronomical. that JAMA editorial is just the tip of the iceberg.
Private Equity in health care is bleeding the country dry. Prospect Medical sold their hospitals to MPW to repay a Billion dollar loan they used to pay their owner a $600 million dividend, as I have posted before.
Add to that the money we spend on drugs that continue to be patent projected in the US years after coming to market, but nowhere else. Humira is one of the most expensive examples.
Corporate Welfare is far far more expensive than helping poor people.
Reducing the deficit will certain gore someone's sacred ox
https://www.nybooks.com/articles/2023/04/20/the-high-cost-of-being-poor-matthew-desmond/?printpage=true
According to recent data compiling spending on social insurance, means-tested programs, tax benefits, and financial aid for higher education, the average household in the bottom 20 percent of the income distribution receives roughly $25,733 in government benefits a year, while the average household in the top 20 percent receives about $35,363. Every year, the richest American families receive almost 40 percent more in government subsidies than the poorest American families.
Taken from Desmond's new book Poverty, by America
You would think (meaning I would think) that anyone who reads Desmond would know not to overstate:
>> ... get into the weeds where all the savings is
>> The money savings in healthcare alone is astronomical
>> Private Equity in health care is bleeding the country dry
>> There are massive amounts of money that can be cut in the Federal budget ...
Here's a rather more conservative calculator for you to play with.
https://www.crfb.org/debtfixer
and one from Brookings
https://fiscalship.org/
and a third
https://www.federalbudgetchallenge.org/app#/r
When I have run through these, it makes it clearer to me that it's bogglingly complex / difficult.
https://www.msnbc.com/opinion/msnbc-opinion/gop-debt-ceiling-cuts-military-budget-rcna84459
If they only would appoint us co-budget czars with absolute control over deciding which sacred Ox was to be gored and which Billionaires would loose most, the country would be in a lot better place.
“There should be no further discussion until the Senate passes the legislation,” a statement from the Republican group said.
Passing anything in the House to stop a debt default is no slam dunk, no matter what the negotiators come up with. The lunatics are still in charge of the asylum. Are there any "moderate" House Repubs left to stop this suicide pact?
That should put a nail in the coffin of a debt ceiling law that conflicts with a constitutional amendment and return(rightfully so) budget and debt related decisions to the annual budget process.