Posted on 07/14/2011 8:47:07 PM PDT by bolobaby
BTW - when the president said he couldn't guarantee that SS checks would go out, the *immediate* follow-up question should have been, "What about the White House staff? Will they get paid? Can you guarantee that? Is there any condition under which Grandma would not get her check but a staffer of yours would?"
There is no reason not to, except that apparently every member of the leadership from Boehner and Cantor and McConnell on down to the janitor, is corrupt and a game player.
Otherwise no problema.
If we cut spending by 40%, then we should reflect upon the implications of the equation:
GDP = C + I + G + NE
where C is consumption, I is investment, G is government spending, and NE is net exports.
Cut spending by 40% and GDP declines sharply. If you like the present recession, you'll just love the greater depression.
There is no good solution. No matter what happens, it will hurt.
I am wondering why there even is a debt limit. Where did it come from? What is its purpose. Why all this insanity over it. I say get rid of it and fight it out on the House and Senate floors. WTF with all these secret meetings? This whole thing STINKS!
Before any benefit checks are printed or interest is paid, Congress and the POTUS loses their pay until they meet the budget. Same as us lowly little taxpayers have to do each month with our own home budgets.
Yeah - I’m fully aware that a spending cut causes major pain in GDP. I’m ready for the country to suffer for that. Because, honestly, we have to if we want to ever get back to a proper private economy.
Yeah, sad but true analysis, it would seem...
Oh please.
Government spending is a net NEGATIVE for the economy. They suck the blood from the economy. They produce NOTHING.
Cut 40% and watch the economy bloom.
It would work as long as we don’t care about funding any defense spending except military paychecks, don’t care about funding the border patrol, federal prisons, FBI, etc.
I may be wrong (I’d love see figures if someone has them from a reliable source) but what I’ve heard is that interest payments, SS, Medicare and Medicaid, Military paychecks and Veteran’s benefits would be about all that the revenue would fund.
It won’t work because you are thinking bonds are like credit cards. They are not. I have posted this on 20 boards in the last few days, it is becoming irritating to deal with people who dont understand the first damn thing about bonds.
Bonds have two components. There is the interest which is called the coupon. For your $1000.00 bond you get $12.50 a quarter. But at the end of the term which now a days is typically two years you must repay the principle, $1000.
I August we have $474 Billion in principle due
We pay this by ‘rolling over ‘ this debt. That is using new debt to part the old. Without new borrowing we will have to pay this out of taxes. Taxes for august might hit $175 Billion.
Leaving $300 Billion unpaid.
Default.
People doing stupid analysis saying we can pay this based on their lack of understanding of bonds are idiots.
No debt limit increase equals default.
A nyone who doesn’t admit this is an idiot.
It won’t work because you are thinking bonds are like credit cards. They are not. I have posted this on 20 boards in the last few days, it is becoming irritating to deal with people who dont understand the first damn thing about bonds.
Bonds have two components. There is the interest which is called the coupon. For your $1000.00 bond you get $12.50 a quarter. But at the end of the term which now a days is typically two years you must repay the principle, $1000.
I August we have $474 Billion in principle due
We pay this by ‘rolling over ‘ this debt. That is using new debt to part the old. Without new borrowing we will have to pay this out of taxes. Taxes for august might hit $175 Billion.
Leaving $300 Billion unpaid.
Default.
People doing stupid analysis saying we can pay this based on their lack of understanding of bonds are idiots.
No debt limit increase equals default.
A nyone who doesn’t admit this is an idiot.
It's purely a creation of Congress. Good description at http://fpc.state.gov/documents/organization/105193.pdf
Very clear and succinct. Thanks.
better include the military and medicare along with social security.
H.R.728
Latest Title: To require that the Government give priority to payment of all obligations on the debt held by the public, payment of Social Security benefits, and military funding in the event that the debt limit is reached.
Sponsor: Rep Stutzman, Marlin A. [IN-3] (introduced 2/15/2011) Cosponsors (None)
Related Bills:H.R.568, S.259
Latest Major Action: 2/15/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.
..............................
H.R.568
Latest Title: To require that the Government give priority to payment of all obligations on the debt held by the public and payment of Social Security benefits in the event that the debt limit is reached.
Sponsor: Rep Heller, Dean [NV-2] (introduced 2/9/2011) Cosponsors (None)
Related Bills:H.R.421, H.R.728, S.163, S.259
Latest Major Action: 2/9/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.
..............................
And this one is in committee in both House and Senate
H.R.421
Latest Title: Full Faith and Credit Act
Sponsor: Rep McClintock, Tom [CA-4] (introduced 1/25/2011) Cosponsors (101)
Related Bills:H.R.568, S.163, S.259
Latest Major Action: 1/25/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.
Full Faith and Credit Act - Requires the authority of the Department of the Treasury to pay the principal and interest on debt held by the public to take priority over all other obligations incurred by the government in the event the federal debt reaches the statutory limit.
..................
But nothing is on the floor.
No. You and Rush are totally wrong. If we only paid debt in August we would be $300 B short of what we needed.
Talk Radio is a ghetto of morons.p
No. You and Rush are totally wrong. If we only paid debt in August we would be $300 B short of what we needed.
Talk Radio is a ghetto of morons.p
Uh...
I’m not so sure you are right. Let’s play with numbers.
Say our debt limit is $1000. We have it maxed out.
Let’s also say I earn $100/mo. And, just for the sake of argument, let’s say that the interest on my $1000 debt is $25.
In August, $400 worth of the principle comes due. OK, fine. I pay out that $400 worth of principle, reducing my total debt by $400. Now I am at $600 worth of actual debt *with a $1000 debt limit.*
It’s a shell game.
It doesn’t matter whether or not you sell NEW DEBT totaling $400 first or second, at the end of the day, you still have $1000 worth of debt. So you can pay that old debt principle with new debt. It doesn’t affect the debt limit.
The revenue still pays the $25 coupon on $1000, leaving $75 surplus for other expenditures.
An overlooked fact. But...
Every dime paid off frees up a dime to borrow.
Only the interest is NEW debt.
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