Things I don't understand about the debt ceiling

[fadedrose]

First of all, why is it called a ceiling.

Second, raising the ceiling makes no sense to me when it's been said over and over that we are paying for services and goods already rendered.

Shouldn't it be called the due date by which all bills must be paid, either in full, or a partial when permitted, like when I pay Sears?

Shouldn't a debt ceiling be discussed in connection with the new budget, to show just how much money can be spent on the programs legislated and the goods ordered and salaries are paid, etc.

Just like sequester. Just what is being sequestered? Money or programs..something is being put separate, but what?

If Congress used the terms with a meaningful definition, people would not be so opposed to "raising the ceiling." It makes absolutely no sense at all to me. People who call CSpan are the most confused, and they follow politics. They claim that the debt is high enough and shouldn't be raised. They don't have a clue that they are paying for the wars that
Cheney started, and think we are in debt because of Obama.

[Agnosticsherbet]

1. It is a ceilng in that it was the highest amount that the Government can borrow...

just as the ceiling is the highest you can jump before you bang your head.

Budget Ceilings

Also known as a budget constraint, a budget ceiling represents that maximum point of a budget, or its cap. When a project reaches its budget ceiling, funds are depleted. Two types of budget ceilings exist: those imposed by some sort of authority as a means of controlling expenditure within a certain sector, and those imposed by extenuating circumstances such as the state of the global economy. The former type of budget ceiling occurs deliberately, when a governing body decides to cap expenditure. The latter type of budget ceiling occurs as a result of a series of external economic forces beyond the control of any one person or group of persons.

Raising the ceiling is allowing the government to borrow more funds, i.e. the ceiling limiting the stack of money is moved up.

No, it is not a due date. The only thing the date to do with it is that is the point when the maximum amount of money allowed has been borrowed.

No, because the ceiling and the budget are two different items. Realistically, there should not be a debt ceiling at all, since the government should be authorized to pay its debts. It was created so Congress could use some voodoo explanation at how they were saving money.

Money was being sequestered by using across the board cuts.

Sequestration
Under sequestration, an amount of money equal to the difference between the cap set in the Budget Resolution and the amount actually appropriated is "sequestered" by the Treasury and not handed over to the agencies to which it was originally appropriated by Congress. In theory, every agency has the same percentage of its appropriation withheld in order to take back the excessive spending on an "across the board" basis. However, Congress has chosen to exempt certain very large programs from the sequestration process (for example, Social Security and certain parts of the Defense budget), and the number of exempted programs has tended to increase over time -- which means that sequestration would have to take back gigantic shares of the budgets of the remaining programs in order to achieve the total cutbacks required, virtually crippling the activities of the unexempted programs.

Congress is, indeed using real words with real definitions.

[fadedrose]

2. Why is there not a term to say when payment is due?

I know what you're saying, that more was spent than budgeted, so the debt itself must be raised to new ceiling...

But where in the hell is there even one word or sentence showing how much we owe who, and how much we must pay to keep our credit rating. My minimum is $25/month or my credit rating is ruined. If I buy more stuff, my minimum might be raised to $50/month with the same terms - a due date that even a day late brings about gargantuan charges added to the debt.

But there is payment involved. Why can't the debt ceiling which is paying a debt and increasing debt say even one teensy thing that something must be paid or we pay a finance charge.

Thanks, I understand sequester better. But the bank says it better. They call it escrow, meaning it goes for payment in connection with loans.

I will have you all mixed up like me yet.

[Agnosticsherbet]

4. Payments come due all the time, and there are hundres of thousands, perhaps several milion distnct

payments. This is not a bill for a mortgage, but the different bills for all the countries regular business.

The government borrows money using bonds, with an agreed upon date for those bonds to mature. You are not a nation of 300 million people. Comparing your finances to the countries is like comparing a camp fire to a black hole They are not the same thing. You have probably been listening to too many republicans that like to compare the national budget and national debt to what people do around the kitchen table. It is one of the big lies republicans use to confuse people.

The ceiling is not involved in borrowing any money or in paying any debts. It has similarities to the limit on a credit card. You can borrow all the money at once by charging something big, or charge a thousands small items. Until something is budgeted and allowed by congress, nothing is spent. So think of the debt ceiling as the limit on a national credit card.

Again, the debt ceiling is not escrow. It has no money in it. It is just the equivalent of the limit on a national credit card. That is a shaky analogy, but close enough to make sense, I think.

By the way, as far as I can find, we are the only country in the world that has a debt ceiling law.

[fadedrose]

7. You just touched a nerve....

Bonds.

I wrote to a whole bunch of Congress people, Senators, TV hosts, TV stations, about the government getting out of the bond business except on the internet.

I was buying a $25 bond a month for grandchildren and they stopped last January selling paper bonds. My son was getting one a pay from his pay check.

They cater to the stock market too much, and the big banks. We people who are poor would like to save a bit now and then, but at .05 Interest? Back in the day people used their 4% interest on savings to once year buy a couch or chair, etc. And toys are so expensive that many of us would rather buy a bond than a barbie doll...

I STILL don't like the term "debt ceiling." I think the name of it is what causes people to HATE hearing about it.

But thank you. All the convincing in the world will not change my mind. The name should be changed to something with "renewal" in it. It works for the library. Hmm, maybe debt renewal sounds better.

[Agnosticsherbet]

8. The debt ceiling law should be repealed and the word burried under a stack of obsolete dictionaries.

[fadedrose]

10. Atta boy!!!!

[procon]

3. The quick answer is

Every year the govt gets a budget and a portion is allocated towards paying off the existing bills. When it reaches the amount allowed (that's the ceiling) the govt can no longer legally spend money until a new budget is signed and funds are once again available to continue paying the bills.

[fadedrose]

5. To the average yokel

"Raising the national debt," does't indicate that there's not enough money to pay - pay what - anything? or just the amount we went over budget?

I'm a fairly average person, no genius, but not a moran either, and the term is not appropriate for what is happening.

What it amounts to is we must pay our bills and borrowing to pay bills isn't something taxpayers don't have sympathy with.

Isn't there a word or term or day that shows we brought our debt down? A good day, and a bigger fuss should be made over it...like burning the mortgage.

Somebody has to come up with terminology that people understand who are not in congress or the banking industry. The President would get a lot more support from people who complain that "he raised the debt," and "how much does he need?".

[fadedrose]

11. "Spending Limit" sounds nicer

and means the same thing.

[Gman]

6. Think of it as a line of credit

To be drawn from as needed. When we reach the limit on the line of credit the limit needs to be increased.

[fadedrose]

9. I would like..

maybe "Credit allowance approval" or something that has a positive ring.

Trust me, the public is really down on the term "debt ceiling." It should be changed immediately if not sooner. A bump on the head does not sound professional, businesslike or friendly....avoid the ceiling if at all possible.

[Uncle Joe]

12. Today it's nothing but a political football.

http://en.wikipedia.org/wiki/Debt_ceiling

Prior to 1917, the United States had no debt ceiling. Congress either authorized specific loans or allowed Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave Treasury discretion over what type of debt instrument would be issued.[6] The United States first instituted a statutory debt limit with the Second Liberty Bond Act of 1917. This legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills). In 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments.[7]

Prior to the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role since Congress had few opportunities to hold hearings and debates on the budget.[8] James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.[9]

In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the "Gephardt Rule," a parliamentary rule that deemed the debt ceiling raised when a budget was passed. This resolved the contradiction in voting for appropriations but not voting to fund them. The rule stood until it was repealed by Congress in 1995.[10]

The Gephardt Rule allowed for the ceiling to be raised when the budget was passed.

When the Republicans under Newt Gingrich came to power in 1994, they eliminated it which in turn led to the government being shut down with Gingrich threatening to not raise the debt limit as a means to extort President Clinton to accept his draconian budget.

http://www.theatlantic.com/politics/archive/2011/05/how-dick-gephardt-fixed-the-debt-ceiling-problem/238571/

How Dick Gephardt Fixed the Debt-Ceiling Problem

In 1979, this very thought occurred to a young congressman named Richard Gephardt, who proceeded to do something about it. "I had just gotten to Congress," Gephardt explained to me recently. "Tip O'Neill, the legendary speaker, gave me the assignment to pass the debt ceiling [increase]." Back then, the ceiling was below $1 trillion, a fraction of the $14.3 trillion it is today. But Gephardt's job was difficult and lousy nonetheless. "We [Democrats] were in charge of Congress, but nobody ever wanted to vote for it. Republicans wouldn't give us votes, so it was our responsibility. Every time it came up I had to go to every member and seek their vote. It was painful and difficult and, I thought, unnecessary. I'd say to members, 'Did you vote for the appropriations bill? The defense bill? The highway bill?' They'd all say yes. And I'd say, 'Well, then you gotta pay the bill. If you didn't mean it, don't vote for it. Then you wont have to pay for it.'"

Gephardt realized that the easiest way to fix the problem and impose some rationality on the process, was to do away with the second vote. He consulted the parliamentarian. "I asked if there was a way that when we pass the budget [the debt ceiling] can be deemed 'raised' to accommodate the budget people are voting for," Gephardt said. "He said, 'Yeah, we think we can work that out.'"

Thus was born the "Gephardt rule." For a period thereafter, the adoption of the conference report on the budget resolution would trigger the Gephardt rule and "deem to have passed" legislation raising the debt limit to accommodate the spending and revenue levels approved in the budget. Presto! Problem solved.

It didn't last. When Republicans took back the House in 1995, they brought back the second vote as a way to pressure members on spending. "They actually wavered back and forth," Gephardt recalled. "Sometimes they'd use the budget procedure to wave it through, and then other times they'd require the vote. It's silly because it's just grandstanding. David Obey used to call it posing for holy pictures. It's a facade; it's not real. If you're real, you vote for budgetary and spending decisions that would balance the budget. If that's what you want, that's what you should do. That's the operative vote. That's where the money is spent.

More on the link regarding the Gephardt Rule.

Thanks for the thread, fadedrose.

[fadedrose]

13. Thank you for the information

It seems that Gephart had the intent that the credit limit be done in concert with the budget, to pay for it, and Newt wouldn't go along with it because he wanted the power to control spending.

An awkward situaton when programs are voted for and the money for them isn't voted for without a separate bill.

The expression, "raising the debt ceiling" is still, in my not-humble-enough opinion, the dumbest name that could have been chosen. It gives the conservatives nightgmares and even makes this old liberal a bit nervous, even tho I know what it means....

thanks....

[Uncle Joe]

14. The Republicans are only in it for power, they have never been about a balanced budget it's

just a game with them.

But screaming about the nation's debt when a Democratic President is in power as if the Republicans were actually concerned about it plays well to their low information base.

Peace to you, fadedrose.