Australia Just Agreed To The Obvious Debt Ceiling Solution That US Lawmakers Should Copy Right Away

[xchrom]

http://www.businessinsider.com/australia-agrees-to-scrap-the-debt-ceiling-2013-12



Australia just did something really sensible.
From the Sydney Morning Herald:

The federal government will be able to borrow as much money as it wants after Federal Treasurer Joe Hockey cut a deal with the Greens to dispense with the debt ceiling completely.

Mr Hockey has just written to the Leader of the Federal Greens, Christine Milne, setting out the details of the agreement.

It means the government will not have to ask the Parliament for permission whenever it wants to borrow money above a certain limit.



Read more: http://www.businessinsider.com/australia-agrees-to-scrap-the-debt-ceiling-2013-12#ixzz2mVHwMJsM

[dipsydoodle]

1. It does however specify "above a certain limit"

Isn't that what happens in the US anyway ?

[unblock]

2. they do *not* have to ask above a certain limit, i.e., there is no longer any limit.

in the u.s., they *do* have to ask above a certain limit.

[dipsydoodle]

4. I misread it

Print as much as you like - the more the better. That way when the petrodollar scam finally folds the faster the US$ will sink.

[unblock]

9. sorry, this doesn't increase inflation and this helps make the "petrodollar scam" more secure

by preventing an artificial collapse due to washington stupidity.

if anything, this lowers inflation by removing the default drama, thus reducing inflation expectations.

the "print money -> inflation" problem comes not from financing federal expenditures, but by appropriating in excess of revenues in the first place. that process is not affected by eliminating the debt ceiling crap.

[unblock]

3. unfortunately, that would presume that washington wants to *solve* problems.

we've long established that the primary goal of republicans in washington is to *create* problems.

[Uben]

5. Fucking outrageous!

We need Issa on this ASAP! If this spreads to America, what use is it to have a republican party whose primary duty is to obstruct?





/sarcasm

[xchrom]

6. !

[Nuclear Unicorn]

7. So --

--we could have unlimited defense budgets.

Right?

[unblock]

8. no, the debt ceiling limit has *nothing* to do with budgets and appropriations

it *only* has to do with how those budgeted and appropriated items are paid for, and to handle treasury's cash flow issues (they might have a "balanced budget", but if spending happens early in the year and revenue comes later, they still need to borrow to bridge that gap.

[Nuclear Unicorn]

10. I don't see that as a refutation of my point.

If treasury can issue as many bonds as it wants for social services what is to stop it from doing the same for military appropriations?

[unblock]

11. they can only spend what's appropriated.

they could borrow trillions upon trillions, but if congress only appropriates $3,000 for some program, then the government can only spend $3,000 on that program.

congress passes laws that say tax this much, spend that much. the government is stuck with those limits. unlimited borrowing doesn't change the fact that they still can't spend any more than congress authorized, whether it's for social programs or the military.

[Nuclear Unicorn]

12. My point assumes congress, say a GOP congress with a GOP president

decides they want to appropriate a dozen new aircraft carriers and 20 more army divisions.

No debt ceiling, no problem.

[unblock]

13. but that was always possible, and something like that has been done many times.

obviously, they could raise taxes to pay for it (ha!) or they could simply raise the debt ceiling, as has been done over a hundred times.

all the debt ceiling concept does it shift the "reckless spending" grandstanding from the budget and appropriations debates, where they belong, to the debt ceiling debate. it's an artificial problem.

it's a bit like the ceo of a company buying a ton of equipment and services, knowing full well the huge price tag, and then refusing to hand over the company credit card to pay for it because *that* would be irresponsible.

[Nuclear Unicorn]

14. Except it gives more responsible voices another opportunity to halt the madness.

If all spending debates are to be confined solely to the appropriations then perhaps the only way to stop runaway military spending would be a balanced budget law.

[unblock]

15. no, it gives those preaching "responsibility" an opportunity to do it in the most irresponsible way.

the time and place to preach responsibility and to talk about keeping the deficit down is during the budget process.

that's not typically done *because* those arguments are more potent during the debt ceiling debate, when they can take the entire economy hostage instead of just an annual budget.

if we have the debate at budget time, then we worst consequence is that we don't spend what perhaps we should. but that's a legitimate policy debate. at worst, parts of the annual budget are held hostage separately, and the consequence is that spending simply doesn't happen.

with the debt ceiling debate, the entire faith and credit of the federal government is called into question, the entire economy is held hostage. if an agreement is not reached, an unmitigated, disastrous, self-inflicted wound results.

there is *nothing* responsible about threatening to prevent the government for paying what it already authorized and purchased. that's not stopping the madness, that's raising the madness to radical new levels of craziness and stupidity.

[Nuclear Unicorn]

16. So you believe a GOP congress and a GOP president

will have a responsible discussion on defense spending and fiscal restrain with the ability to pass a budget by simple majority and the opposition should be afforded no other tools to focus public attention on those policies and the implications thereof.

I applaud your trusting nature.

ETA -- the "faith and credit" issue is a fake issue. If the DC is not raised the Treasury can still service debt as the government is still collecting revenue. The economic effects of suddenly being forced into a balanced budget would be devastating but that is separate from a full faith and credit default.

[unblock]

17. i have full faith that republicans will rack up huge deficits whenever they have enough seats.

as has happened in the past. the deficit ceiling has never been remotely effective at keeping republican deficits under control, so we're not losing anything in that respect.

recently, republicans have extracted concession from democrats when control has been effectively split, but i wouldn't be touting this as an advantage.

in any event, republicans would simply shift their grandstanding to the budget debate. they'd still be able to rail about inflation and irresponsibility and so on. they'd just have to do it before the government spends (the right way), rather than after.

[Enthusiast]

18. Well done Australia!

Our nation is stupid.