House passes debt-ceiling increase with no add-ons

CNBC ^

[Red in Blue PA]

This is a developing news story. An earlier version of the article follows:

House GOP leaders announced Tuesday they will advance this week an increase in the government's borrowing cap that's free of any add-ons. A vote is scheduled for Tuesday night because of the threat of a winter storm.

House Speaker John Boehner announced the plan after a poll of the Republican rank and file failed to show enough support for a plan to tie the hike in the debt limit to a plan to reverse a recently passed cut to military pensions.

The Ohio Republican said he expected virtually all of President Barack Obama's Democratic allies to vote for the so-called clean debt cap increase but that he would be one of the few Republicans to back it in the vote.

[highball]

You may insult me all you like, but that won’t change the fact that you’re conflating our national debt with the budget deficit.

The place to have these fights is before the money is spent, not when the bill comes due.

You wouldn’t run your household finances this way, and we cannot allow our representatives to run the country this way.

[kabar]

You may insult me all you like, but that won’t change the fact that you’re conflating our national debt with the budget deficit.

They are connected. We have had the five highest annual deficits in our history over the past five years, which has resulted in the national debt going from $10.4 trillion to $17.3 trillion. Even at artificially restrained interest rates, we are incurring close to $225 billion dollars a year in debt servicing costs. If interest rates return to historical rates, we could be paying nearly a trillion dollars a year in debt servicing costs.

The place to have these fights is before the money is spent, not when the bill comes due.

The Senate didn't pass a budget for Obama's first four years. SS and Medicare are not part of the annual budget process. They are the biggest drivers of our debt. They need be reformed. The average person receiving Medicare gets three time out in benefits than he contributes in payments.

This graph shows that the average man and woman (average defined in the study as average income over their working lives and living to the average life expectancy) who start receiving benefits in 2010 get over 3 times more in benefits than they pay in to the system! Of importance, the study accounts for inflation by calculating all past taxes and future payments in 2010 dollars to provide an accurate comparison.

If the notion that Medicare recipients are simply "getting back what they paid in" is false then where is the money coming from? Simply, the excess received is being borrowed from younger generations and the cost is more than we can bear.

We are constantly reminded of the government's inability to manage a budget under the arbitrary debt ceiling (raised 80 times since 1940) and that the national "on budget" debt is over $17T. The debt conversation all too often omits the "off budget" debt that includes underfunded liabilities to Social Security and Medicare which is about $110T according to a Forbes article; totaling more than $900K per working American.

You wouldn’t run your household finances this way, and we cannot allow our representatives to run the country this way.

Who is defending that? You seem to miss the point that it is one thing to identify a problem and another to find a solution to it. As much as you want to stomp your foot and get red in the face, you provide no real solution. Government spending will increase just due to the demographics of an aging population. And you can add medical costs that are increasing faster than inflation and the GDP.

The debt of the U.S. government has increased by $2.678 trillion in the 2.5 years since House Speaker John Boehner (R.-Ohio) completed his first deal to put legislation increasing the debt limit through a Republican-controlled House of Representatives.

On Aug. 2, 2011, President Barack Obama signed legislation, approved by the Boehner-led House, permitting the Treasury to increase the debt by $900 billion. Since then, the debt limit has been repeatedly suspended by legislation that needed to pass through the Republican-controlled House.

The House once again passed legislation to suspend the debt limit—this time through March 15, 2015, which is after November’s mid-term congressional elections.

We have suspended the debt limit for several years. We no longer have a debt limit. Obama has a credit card with no limits. The Reps have given up any leverage they have to force some reforms of the entitlement programs.

[highball]

So long as the House is involved in the budget process, they still have leverage.

My only assertion is that they should be using it there, before the money is actually spent, and not when the bill comes due.

They’re playing us for suckers, pretending that they’re for fiscal responsibility now after voting for all the waste back then. Don’t fall for it. Don’t let them get away with it.

[kabar]

We keep on going around the same tree. If you look at our exchange, you fail to answer any of the questions I posed to you nor do you address the real drivers of our debt, the entitlement programs.

The money has been spent because these programs are on automatic pilot and represent an unfunded liability of $100 trillion. Unless they are reformed, we will continue to run huge deficits.

For example, the premiums paid for Medicare Parts B and D cover only 25% of the costs--by law. The remaining 75% comes from the General Fund. If you look at the 2013 Trustees Report you will see that $214.8 billion came out of the General Fund. These costs will continue to climb as 10,000 baby boomers retire every day for the next 20 years. Congress doesn't even vote on these expenditures in the annual budget. They are baked into the cake.

They’re playing us for suckers, pretending that they’re for fiscal responsibility now after voting for all the waste back then. Don’t fall for it. Don’t let them get away with it.

You are hopeless. You just don't get it. We will just agree to disagree about your characterization of what is happening and what needs to be done. You haven't even posed any recommendations as to what needs to be cut and by how much. You are just spewing slogans and generalizations. In any event, there is no need to continue this one way dialogue.

[highball]

I have answered your question; you just didn’t like the answer.

We remove these programs from automatic pilot. Require raises to actually be voted upon by Congress, out in the open. But the time to do that is before the money has been spent, not after.

The notion that we somehow have more “leverage” with the debt ceiling is pure fantasy, and not very helpful.

[kabar]

We remove these programs from automatic pilot.

LOL. We? Do you have a mouse in your pocket? The Dems control the Senate and the WH. They don't want to remove these programs from automatic pilot. In case you haven't heard, we just added another huge entitlement program called the Affordable Care Act (Obamacare) that amounts to a government takeover of one-sixth of the economy.

Require raises to actually be voted upon by Congress, out in the open. But the time to do that is before the money has been spent, not after.

The increases go automatically into effect based on COLA indices. SS retirees are claiming that they don't get enough COLA as it is. The SS "DI Trust Fund goes bust in 2016 and will require Congress to pump money into it or else disability payments will be reduced. From the Trustees Report:

DI Trust Fund asset reserves, which have been declining since 2008, are projected to be fully depleted in 2016, as reported last year. Payment of full DI benefits beyond 2016, when tax income would cover only 80 percent of scheduled benefits, will require legislation to address the financial imbalance, possibly including a reallocation of the OASDI payroll tax rate between OASI and DI.

The drawdown of Social Security and HI Trust Fund reserves and the general revenue transfers into SMI will result in mounting pressure on the Federal budget. In fact, pressure is already evident. For the seventh consecutive year, the Social Security Act requires that the Trustees issue a “Medicare funding warning” because projected non-dedicated sources of revenues�primarily general revenues�are expected to continue to account for more than 45 percent of Medicare’s outlays in 2013, a threshold breached for the first time in fiscal year 2010.

The notion that we somehow have more “leverage” with the debt ceiling is pure fantasy, and not very helpful.

It is the only real leverage the GOP has. You are the one living in a fantasy world. Unless the GOP draws a line in the sand and says no more until we address entitlement reform, Obama has a blank check without limits. Ultimately, the entire economy collapses. The Dems want to increase taxes to make up the shortfall. That may be the way we are headed. The Democrats have already pushed thru $2,8 trillion in new tax increases over the next decade. We are taking in record revenue, $2.8 trillion and still running $700 billion deficits.

As I indicated, there in sense in further discourse with you. You have no specific recommendations on cutting spending. The Dems prefer to tax and spend and have no willingness to cut the entitlement programs. And the GOP really doesn't either. We are headed over the cliff.

[highball]

Thank you, good day and God bless.