Gillespie: The Debt Ceiling Debate Is Full Of Malarkey
For at least three reasons, write Nick Gillespie and Meredith Bragg at reason:
1. August 2 is a phony deadline.
Treasury Secretary Timothy Geithner has pushed back the drop-dead date when the U.S. finally reaches its limit a bunch of times already: March 31, April 15, May 31 were all cited as deadlines before August 2 was inked in as Armageddon. But this time, he means it, man, really.
2. Reaching the debt ceiling is NOT the same as defaulting on our debt - which would indeed be catastrophic.
Think about it: You can max out your credit cards but as long as you keep paying the minimum amount due each month, your creditors don't go crazy. Interest on the debt is a small fraction of total outlays and the government has a series of tools - from using cash on hand to selling assets to scrimping on nonessential payments - to make sure interest payments are made and seniors aren't put on an all cat-food diet.
3. Legislating-by-Panic is no way to run a country.
The reason we're in this mess is because government can't stop spending. And the government can't even pass a budget on a year's notice. But we're expecting them to come up with a good plan for the country's borrowing in a couple of weeks? Trying to force through an expansion of the country's credit line by promising cuts in spending down the road is exactly why we're in this situation to begin with.It makes far more sense to do something like sell some TARP assets -- the government is sitting on $320 billion in outstanding direct loans and equities investments -- to cover interest payments through the end of the fiscal year than to force Congress and the president to come up with a budget that cuts spending -- and borrowing -- for real, next year, not is some distant future.
More details here. And the video:
STOP SPENDING. I have, as much as possible, cutting back in myriad ways. Of course, I'm working with my own money, and unless you're a politician (elected by a bunch of idiots who don't think too much or understand simple math) I bet you've only got yours to spend -- not an unlimited amount of other people's money.
This is a poorly reasoned piece by Gillespie and Bragg.
Their point 2 appears to be based on a naive understand of bond markets. If we hit the debt limit without a deal in place, we can pay the interest on our debt. But we are very likely to see our credit rating drop and our interest rates go up significantly as a result. See McArdle here:
http://www.theatlantic.com/business/archive/2011/07/the-giant-disconnect-between-wall-street-and-washington/241889/
Which means we will have a much harder time paying interest in the future, which means even deeper cuts than predicted (but by who knows how much).
Their point 3 appears to be based upon a naive understanding of Washington. Legislators don't pass painful compromise legislation without serious pressure to do so.
Currently, the attention of the nation is focused on the debt limit issue, which means legislators are going to have to act. Moreover, those who favor a debt limit deal that includes significant spending cuts are winning in court of public opinion – for now. Kick the can down the road only means that a bill is more likely to be watered down or that public opinion is swayed in the other direction by stories of people hurt by entitlement cuts. If they really think giving legislators a lot of extra time to devise a plan is a good idea, they should probably just advocate a so-called "clean" bill to raise the debt ceiling.
Christopher at July 17, 2011 12:15 PM
The debt ceiling issue probably over the heads of the carnival-barkers at Reason Fagazine. Weren't these the catamites working for the Koch brothers?
I would happy to see federal spending decline as percent of GDP. But the debt ceiling antics seem to appeal to the same yahoos who get excited about CFL's or the TSA.
Here's a line of reasoning you never hear from "Reason": When a taxpayer pays into Social Security, he gets his money back (after retirement or disability). A government agency does not eat the money (administrative costs are actually minor in SS). It may not be a great system, but at least the taxpayer gets something back.
But when you pour taxes into the trillion-dollar-a-year Department of Defense, Homeland Security-VA complex, it sinks into federal agenices, and the gaggle of grifters attached thereto, and is never seen again by taxpayers.
So why all the honking about cutting entitlements (which involve a small government role) but not defense spending (the prime example of government coprolite?).
Because the little-boys-in-short-pants Reason sycophants need to get money from the Koch brothers, or other plutocrats, that's why.
BOTU at July 17, 2011 1:26 PM
But when you pour taxes into the trillion-dollar-a-year Department of Defense, Homeland Security-VA complex, it sinks into federal agenices, and the gaggle of grifters attached thereto, and is never seen again by taxpayers.
Right, and a coast to coast America that has never succsesfully been invaded, occupied, or seriously damaged is of no benifit to the citizens what so ever
lujlp at July 17, 2011 1:36 PM
... at least Nobama has back-handedly admitted that there is no "lock box" with funds for Social Security.
Ask you lib friends this:
If Social Security and Medicare are not in financial trouble - if that lockbox is stuffed full, as Pelosi and Reid claim - why is the president threatening to withhold Granny's SS check?
And if the lockbox has been raided - and is empty - when are Democrats going to grow up and address the crisis like adults, instead of wishing it away?
Ben David at July 17, 2011 1:45 PM
Lujlp:
And who can we expect to mount an invasionary force to attack the USA? Should we not at least have an enemy before we spend another $1 trillion?
The War on Terror
The Cod War
The War on Drugs
The War on Poverty
All wars designed to never end, by federal agencies that need annual lard from complicit hacks in both parties.
This is not a Dem or GOP issue--I am just calling it as it is.
But hey--my Social Security check. Let's cut that.
BOTU at July 17, 2011 2:04 PM
@BOTU I don't think the support from the Kochs means Reason can't produce honest opinion pieces. I think they do a lot of good work there (Balko FTW). This just wasn't it.
@Ben David: 1) it puts puts political pressure on Republicans 2) it's not your country. You've got our own noxious internal politics to deal with. kthxbye
Christopher at July 17, 2011 2:47 PM
Bulkhead, I thought you had offed yourself already. You are an anti-american pricked who will not go away, and your anti-military wants on every thread are very old. Either die or move to Russia or China already.
ronc at July 17, 2011 3:09 PM
BOTU you keep moving the goal posts and I'll take my 10 inch dick and go home and you wont get to play with it anymore
lujlp at July 17, 2011 5:37 PM
Lujlp: I guess you think 10-inches is a lot.
Ron: How is wanting to stop my country from going into bankruptcy un-American?
BOTU at July 17, 2011 7:32 PM
That's why Social Security is going broke. Because it has enough money and low administrative costs. By your financial standars, medicare, GM, and California are fiscally sound entities.
Social Security is going broke because the money paid into it is then "loaned" to the federal government and repaid with IOUs.
Social Security is also going broke because when it was started, it was based on having more workers than retirees. When it was started and life expectancy was lower, the chances of a retiree getting his full input was low. With a higher life expectancy and fewer workers, the pyramid scheme we know as Social Security is teetering on the brink of insolvency.
Entitlements involve low administrative costs, but huge outlays overall. The low expense of cutting a check doesn't mean the amount of the check doesn't also come out of your account.
Combined welfare, pensions, and healthcare are close to 20% of GDP...and growing. Defense? It's less than 6% and remaining fairly steady at that level.
Conan the Grammarian at July 17, 2011 8:20 PM
Conan: I am all for constraining some entitlements, but also for raising taxes on the rich and cutting the hell out of defense.
Do you realize we will spend $10 trillion in next 10 years on DoD, VA and Homeland Security? And have nothing to show for it at the end? Not only that, I assure that after that $10 trillion orgy of spending, DoD mouthpieces will sally forth about all the global threats we face, the crummy equipment they have, and how retention rates are falling etc.
Everywhere and always, militaries are parasites upon productive tax-paying citizens.
Ask yourself: Has Russia suffered one iota from de-funding its military? And what do you suppose their military said before it was de-funded? What would be the consequences of that de-funding?
BOTU at July 17, 2011 8:50 PM
"I am all for ... raising taxes on the rich and cutting the hell out of defense."
Great. Let's punish people for trying to be successful, and make sure we can't defend ourselves when we need to. Awesome, we'll just be a bunch of lazy pussies and let the enemy take over. You must be Canadian. Or French.
KimberBlue at July 17, 2011 9:21 PM
If you raised the income tax to 100% on anyone making over $250K tomorrow that would be, generously, about $3 billion dollars.
The government is spending that in about 12 hours.
There is not a revenue/tax problem. There is a spending problem. And if you say that is the DOD's fault, then you are contradicting the $1M a year claim per troop for the 150K that are in Afghanistan and Iraq.
Please go find someone to hit you with a clue stick.
Jim P. at July 17, 2011 10:03 PM
BOTU, if you think Reason doesn't attack defense spending then you aren't paying attention.
Astra at July 18, 2011 6:33 AM
KimberBlue, BOTU is our resident troll. Just about all of his posts, no matter what the topic of the thread, concern one of two things: (1) his fixation with the DoD, and (2) anal sex. (Actually, I'm beginning to wonder if he's really an alias for Ana Marie Cox...)
Cousin Dave at July 18, 2011 9:35 AM
To follow up on something that I posted on a thread that is now buried: I think it was Christopher who pointed out that, historically, federal revenues have averaged about 19% of GDP. But currently, they are only running at about 15%. I speculated that the cause of that is that the federal government has become a larger part of the overall economy.
So I did some Googling for information on what the GDP has been for the past ten years after you subtract out the government sector. And I found this. Sure enough: the private sector has actually contracted by about 9% since 2008, while the government sector has grown. The percentage of private-sector earnings that is being paid in taxes is about the same, but it winds up being a smaller percentage of total GDP as the government sector (which of course is untaxed) becomes a larger percentage of the overall economy.
My conclusion is that the 15% revenue number does not indicate that there is more revenue to be had via tax increases. The percentage of private sector income that is going towards taxes is still at the historical norm. And as several economists have shown recently, tax revenue has no direct correlation to tax rates. The way to increase government revenue is to allow the private sector to expand. Unfortunately, the Obama administration seems bound and determined to do the opposite.
Cousin Dave at July 18, 2011 9:46 AM
The Chechens and the Georgians might dispute that Russia has defunded its military.
And, yes, the Russians have suffered from defunding its military. Russia's military competence is at an all-time low (and it wasn't very high to begin with).
With no money to train its soldiers, the Russian military resorts to brute force tactics by default.
Inability to provide promised rewards (housing upon retirment, higher pay and better living conditions while serving) have left the Russians with a very dis-satisfied military establishment that must be bribed and cajoled to be kept in line. And one that is, according to the latest estimates, unable to defend the motherland if called to repel an invasion.
Morale is low, drug use and alcoholism are rampant, equipment maintenance is low, theft is high, and unit cohesion is lacking in all but the most elite units.
What consequences of defunding?
=========================
The US military is a scalpel, Russia's is a meat grinder.
When the US Air Force took out the al Jazeera satellite dish in Kabul, the owner of the building marvelled that the Americans were able to do it with only one bomb, without causing casualties, and without damaging the surrounding buildings.
The Russians, he said, would have needed to take out the entire block just to get that one satellite dish. And that was when the Russian military was better-funded than it is now.
Conan the Grammarian at July 18, 2011 11:26 AM
Egal ob das nervt, aber kann mir bitte mal jemand helfen?
FetischFreak at July 23, 2011 2:08 PM
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