I wish the debt ceiling threat could be neutralized by not needing it.

[cags]

It would be awesome if the pres could say " We are not asking for the debt ceiling to be raised anymore"

Then they would have nothing.

[DetlefK]

1. They would howl impeachment over ... something.

"People are asking: Should Obama be impeached over this? Let's pass this question to our Fox News analysts."

[LonePirate]

2. Whenever Dems control both houses of Congress again, the debt ceiling needs to be eliminated

[el_bryanto]

3. In fairness if we get both houses of Congress we need to raise taxes

and get a balanced budget. In which case the Debt Ceiling is no longer an issue.

But it should still be repealed.

Bryant

[PETRUS]

8. Why would you call for a balanced budget?

The US is experiencing around $1 trillion a year in lost output, which means millions of under- and un- employed people. Unless we start running a trade surplus, we need bigger deficits.

[el_bryanto]

10. The number one priority would be to get people working again

But i do think a balanced budget can help in that regard as well - depending on what economic route we want to take. I favor well regulated capitalism (a far cry from what we have now).

I do have a lot of sympathy for the argument that while borrowing can be part of our strategy, having a budget that is that far out of whack is problematic. It just seems unsustainable. The problem is that most of the people who want to balance the budget want to do so on the backs of the working poor and the middle class; I think we need to do it on the backs of Corporations and the Wealthy.

Bryant

[PETRUS]

11. I don't know if you want to discuss this further.

But if you do, I'd like to know by what reasoning do you think balancing the budget will do anything for job creation, and what about the current budget you think is unsustainable. Without more detail it appears to me as though your macroeconomics is a bit confused.

[el_bryanto]

12. Part of it is the legacy of the Clinton Era

Which had some good points and some bad points; but they did balance the budget, and the economy was chuggling along pretty good. Part of that was the Tech Bubble but part of it wasn't.

As for why I think balancing the budget and getting our borrowing in line relates to a pretty simple question; is there a finite or infinite amount of money available to borrow? I believe that it's finite. I don't know what the dollar value is; I don't think anybody does. But there is an upper limit for how much can be lent out on a global economy. The more the Government takes of that finite amount of lendable money, the less is available for others to borrow. If the market is flooded with T-Bills, corporate securities or foreign securities just aren't as compelling.

Companies require a certain amount of funds to get going and to keep going; that's part of what fueled the Tech Bubble, there was plenty of money available for start ups.

I should make it clear, though, that this is a long term goal. In our current economic conditions I am not a favor of austerity. We need to be spending more money, particularly on Infrastructure projects that put people to work and build things we desperately need. And I don't favor balancing the budget by reducing government services, but by increasing taxes on Corporations and the Wealthy, which have been slashed pretty terribly during the Bush era.

Bryant

[PETRUS]

13. I'm glad you know austerity is counterproductive.

But the balanced budget (and economic boom) of the Clinton years was, in fact, attributable to the bubble. You say it isn't the whole story; what's the rest of the explanation as far as you're concerned?

Your comment about money being finite is telling. It's not finite. It's a symbol, and we can't collectively run out of money any more than we can run out of letters or numbers. There are good reasons to restrict the money supply (preventing inflation) and bad reasons (subordinating people). Also, deficit spending needn't be financed via borrowing, that's just the way we do it - which is awfully convenient for people who have large amounts of money to lend.

[doc03]

4. The way I understood if it wasn't for "W" we were on a

path to pay off the national debt by 2016 I beleive.

[Nuclear Unicorn]

6. We need to get back to Clinton-era budgets. FAST

[Nuclear Unicorn]

5. There will come a day when the interest payment on the debt will, by itself

be more than the entire tax receipts the government collects. On that day we will default. Eliminating the debt ceiling wil only hasten that day.

[blm]

7. In 2000 the US debt was on path to be paid off by 2009, but GOP voters wanted Bush's

tax and economic policies to replace Clinton's surplus budget policies.

Bush/GOP congress's jobkilling, deficit growing tax and economic policies.

Don't EVER let them off the hook for that.

They even voted in 2008 and 2010 and 2012 to KEEP Bush's policies protected through an intransigent GOP congress that would block any chance of Obama returning to Clinton's budget policies.

[Yo_Mama]

9. Constitutionally, only Congress has the authority to borrow

Until the early 1900s, Congress itself approved each new bond issue. That was replaced with the debt ceiling/limit, which gave Treasury more flexibility.

If the debt limit were ceased, and if bonds were issued purely on the executive authority, there would be a huge constitutional issue about the status of those bonds, because THEY WOULD NOT TECHNICALLY BE US PUBLIC DEBT according to the Constitution. That's in Section 8:
http://www.law.cornell.edu/constitution/articlei#section8

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

Thus, if it is debt not authorized to be raised under some Act of Congress, it is not based on the credit of the United States. Get it?

If we get rid of the debt limit, then Congress would still have to pass some authorizing act for Treasury to issue notes, bills or other debt instruments that would literally be US debt. That would be a procedural nightmare.

Now it is possible that Treasury could issue a bond and Congress could retroactively endorse it as being United States public debt, but I don't think anyone wants to go there for a number of reasons.

Congress could theoretically pass a law giving the US Treasury a much higher debt limit or an infinite debt limit, but I don't think anyone wants to go there, because our already-accrued public federal debt (including the future liabilities contained in all the intragovernmental accounts such as SS/DI & federal government retirement) is already past GDP:


The only thing saving us from much higher interest rates already is that a good hunk of theoretical debt is contained in the intragovernmental accounts, and is not market-issued. And until it IS floated on the market, it poses no risk to Mr. Market because Mr. Market's actual risk is a much-lower percentage of GDP that should concern no one:


However, as soon as Mr. Market perceives that all restraint is gone, Mr. Market is going to start staring at the first graph when assessing risk instead of the second graph, and then begin supplementing that by staring at net outlays as a percent of US GDP:


We know that is not going down. And it is easy to do the calculation as to what taxation level would be required to offset that deficit, and just as easy to see that US GDP would shrink hard and fast if it were imposed.

Already we have only achieved our current low interest rates by having the Fed purchase an ever-increasing proportion of federal debt:


This process is not infinite, the US defaulted on its public debt in the 30s (Fourth Liberty Bond), and it is only the belief of private investors that we will this time choose to default on the intragovernmental trust funds (our retirements) that is currently keeping this going. As soon as the Fed stops buying bonds, the interest rates will jack up and make things look worse, so the federal deficit will increase.