If the DEBT CEILING is not raised? What then?

[Lumpenproletariat]

Why does it matter if the Debt Ceiling is not raised higher?

If it's not raised, it means there will be sacrifice now in order to avoid pain in the future.

In other words,

There shall be wailing and gnashing of teeth!

but that's all.

It does not mean any creditors would not be paid. All those holding bonds will be paid the same anyway. There will be no "default" other than reduction of payments on budget items, like workers getting pay cuts and government contracts being cut, or payments delayed to a later date (maybe by many years).

The cuts could even include reduction in Social Security payouts. The "Lock Box" is probably a myth. Nothing can be exempt if it's dependent on payment from the government. Except payment of interest or principle to creditors, who all will be paid according to schedule.

It would be smart for some of the tax increase to be that of gasoline taxes.

A smart way to cut programs would be just a straight across-the-board cut of everything, the meat ax, perhaps by 10%. Probably this would be enough to then pay for everything, along with some tax increase.

 

[ZiprHead]

That is an astoundingly ignorant post.

Debt ceiling: 5 devastating consequences if Congress doesn’t raise or suspend the limit

1. Government obligations such as Social Security and Child Tax Credit (CTC) payments could be paused

2. Buying a home, car or credit card borrowing could get more expensive

3. Stock prices could sink, threatening companies’ bottom lines

4. The government could default on its debt — but experts say it isn’t inevitable and would (hopefully) be short-lived

5. Default could trigger a recession, meaning job losses and income disruptions for millions

 

[Swammerdami]

I'm not sure two is enough options when one of them is "and life as we know it will end."

I'm still rooting for Biden and Yellen to have enough gumption to mint the trillion-dollar platinum coin.

 

[funinspace]

Silly Songs with Lumpy...

Fun with facts...

Given the recent upheaval from big stimulus spending, the numbers are pretty hard to look at. However, simply based on 2019's numbers your row boat looks more like a sieve. The 2019 budget was about $4.4T, the deficit was about $1T. Even assuming only a small amount of spending growth verses tax revenue, that would be a solid 25% differential to factor in.

Lumpy: Not sure how much you are even fantasizing a tax increase in your imagining what the Democrats could do with their razor thin majority, but Federal tax revenue from the fuel taxes was just $36B in 2016. Now I happen to agree that a fuel tax (or carbon tax being better) increase would be good. But even if the current tax was increased 5x to about a $1/gal, that would only bring in something less than $150B per year. And that revenue would probably decline a little in future years as people adjusted behavior.

So without any specifics beyond that from you, that would be at least 20% meat cleaver attack on everything from SS, Medicare, and even the DoD. Oh my the world would be ending for the DoD and neocons. Can anyone imagine the shrill screams of cutting $146B out of the DoD's $733B budget? DoD procurement of new toys would simply come to a full stop for several years to adjust to such a cleaver strike. And AARP would go ape shit, with seniors getting a double whammy 20% SS cut, and a huge increase in Medicare premiums.


Ref: https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States#Federal_tax_revenues

 

[laughing dog]

After working for more than 40 years, my father received a monthly check of $1,200. Slicing 10% off of that doesn't sound like much, but if it is your sole source of income, it is a lot.

The notion that it is okay to stiff people on social security but not creditors of the US gov't is morally obnoxious and legal nonsense. This nothing to prevent the US gov't from enacting a law declaring their debt worth 90% of its face value.

 

[RVonse]

After working for more than 40 years, my father received a monthly check of $1,200. Slicing 10% off of that doesn't sound like much, but if it is your sole source of income, it is a lot.

The notion that it is okay to stiff people on social security but not creditors of the US gov't is morally obnoxious and legal nonsense.

I agree.

This nothing to prevent the US gov't from enacting a law declaring their debt worth 90% of its face value.

But that would screw other retirees who have pensions that are partially funded by US bonds.

 

[laughing dog]

After working for more than 40 years, my father received a monthly check of $1,200. Slicing 10% off of that doesn't sound like much, but if it is your sole source of income, it is a lot.

The notion that it is okay to stiff people on social security but not creditors of the US gov't is morally obnoxious and legal nonsense.

I agree.

This nothing to prevent the US gov't from enacting a law declaring their debt worth 90% of its face value.

But that would screw other retirees who have pensions that are partially funded by US bonds.

Of course. I am mot advocating thst. I was pointing out that Lumpy was incorrect.

 

[Swammerdami]

After working for more than 40 years, my father received a monthly check of $1,200. Slicing 10% off of that doesn't sound like much, but if it is your sole source of income, it is a lot.

The notion that it is okay to stiff people on social security but not creditors of the US gov't is morally obnoxious and legal nonsense. This nothing to prevent the US gov't from enacting a law declaring their debt worth 90% of its face value.

Donald J. Trump suggested such a discount on U.S. bonds! ("I'm the world's greatest defaulter on debt. Everybody says so. Nobody's ever seen anything like it.")

I don't know how foreign investors and bankers would respond to the U.S. abrogating its SocSec covenant. (Just postponing the mailing of SocSec checks might be a more realistic possibility.) But I think the "haircut" you describe on U.S. Treasury debt would plunge the world into a financial crisis eclipsing any other credit crisis in memory. Not just a stock market crash — exchanges and banks all around the world would close their doors.

 

[Loren Pechtel]

<Tosses Lumpenproletariat out of an airplane>

You have two choices.

Pull the chute, or don't pull the chute. In either case you're going to slow down by the same amount. Why does it even matter if you pull the chute?

 

[Lumpenproletariat]

If the DEBT CEILING is not raised? What then?
Why does it matter if the Debt Ceiling is not raised higher?

If it's not raised, it means there will be sacrifice now in order to avoid pain in the future.

In other words, There shall be wailing and gnashing of teeth!

but that's all.

It does not mean any creditors would not be paid. All those holding bonds will be paid the same anyway. There will be no "default" other than reduction of payments on budget items, like workers getting pay cuts and government contracts being cut, or payments delayed to a later date (maybe by many years).

The cuts could even include reduction in Social Security payouts. The "Lock Box" is probably a myth. Nothing can be exempt if it's dependent on payment from the government. Except payment of interest or principle to creditors, who all will be paid according to schedule.

It would be smart for some of the tax increase to be that of gasoline taxes.

A smart way to cut programs would be just a straight across-the-board cut of everything, the meat ax, perhaps by 10%. Probably this would be enough to then pay for everything, along with some tax increase.

That is an astoundingly ignorant post [which Zipr mostly agrees with, as follows:]

Debt ceiling: 5 devastating consequences if Congress doesn’t raise or suspend the limit

1. Government obligations such as Social Security and Child Tax Credit (CTC) payments could be paused

2. Buying a home, car or credit card borrowing could get more expensive

3. Stock prices could sink, threatening companies’ bottom lines

4. The government could default on its debt — but experts say it isn’t inevitable and would (hopefully) be short-lived

Experts know it won't happen.

This one (#4) is the closest to being in disagreement with the "astoundingly ignorant post" above. And the fact is that there absolutely will be no "default" on the debt. That would totally end any future borrowing (at least for many years/decades) which the Congress would never do. Of course paying the debt obligations would have to take top priority over everything else, and Congress would have to increase taxes enough to pay that and also for whatever programs it prioritizes, so the obvious result of not raising the debt ceiling would be higher taxes and major cuts in programs. And it's true that a nation of crybabies will do some wailing and teeth-gnashing over this (because each generation is entitled to a higher standard of living than the previous generation).

No one has refuted this.

5. Default could trigger a recession, meaning job losses and income disruptions for millions

Of course default would trigger some bad things, but there won't be any default. So forget it.

 

[ZiprHead]

Of course default would trigger some bad things, but there won't be any default. So forget it.

Then why did you start this thread?

 

[Elixir]

Of course default would trigger some bad things, but there won't be any default. So forget it.

Then why did you start this thread?

To talk about some bad things, of course.

 

[Jarhyn]

I'll take "stupid thread subjects" for 500. Don't even bother reading the answer Trebek, the question is "what if conservatives engage in economic suicide attacks?"

I played a stupid game. Do I win a stupid prize?

 

[Jimmy Higgins]

5. Default could trigger a recession, meaning job losses and income disruptions for millions

Of course default would trigger some bad things, but there won't be any default. So forget it.

That has got to be the funniest thing ever said... seriously.

Sure, default will lead to bad things, but not a default.

Why is the US dollar prized? Our economy and our record of paying our bonds. The second the US stops paying for stuff, our bonds are going to become a bit more riskier, which makes our debt more expensive. Forget the recession caused by a large amount of money being cut from the economy. The only way a debt-ceiling crash doesn't hurt us if we do a no-sell on the debt ceiling and continue on using the authorization to spend the money as implicit approval to borrow to spend it.

 

[Wiploc]

That is an astoundingly ignorant post.
3. Stock prices could sink, threatening companies’ bottom lines

I don't understand this one. How do low stock prices threaten a company that has already sold the stock?

 

[Keith&Co.]

Of course default would trigger some bad things, but there won't be any default. So forget it.

That has got to be the funniest thing ever said... seriously.

Default would be bad, but that's WHY no one will let us default. It'd be too bad!

Kinda reminds me of Scott Adams in 2016 insisting Trump would be a good president. Why? Because no one wants to be remembered as a bad president. He'll be good just because expectations are so high.

Yeah, whoops.

 

[Lumpenproletariat]

So, sharpen the Meat Ax. WWWWWWWHHHHHHACK!

But even if the current tax was increased 5x to about a $1/gal, that would only bring in something less than $150B per year. And that revenue would probably decline a little in future years as people adjusted behavior.

That's part of the reason to increase this tax (which is a different topic). But other taxes also have to be increased, in order to get down the deficits.

States also should increase property taxes, especially introduce some form of graduated property tax. There are various ways to increase taxes, and property/real estate is one kind of asset to tax, which has been neglected.

Much of the "tax shelter" hidden assets is tied up in real estate investments. In the following PBS News Hour clip, every example of hidden assets referred to is some form of real estate investment.

[video]https://www.njtvonline.org/programs/pbs-newshour/following-the-money-1633383751/[/video]

And this is just one report on hidden assets I grabbed from today's news. Most others say the same. Billionaire tycoons from around the world hide their assets largely in real estate, much of it in the U.S. Though it's the states which tax property, the federal government can easily relinquish much of its spending to states, so that they can take up some of those costs, e.g., infrastructure, etc.

Of course there can also be a Wall St. tax (Bernie Sanders is that broken clock which is right twice a day), and increases in income tax or other federal taxes. It is asinine to simply say there is nothing to tax, and yet we must keep increasing spending by a trillion or so per year, and so we have no choice but to keep running up trillion-$$$$ deficits every year without limit, and so there can be no "debt ceiling" = no limit whatever to federal debt, because "debt" means nothing to the government which can magically just keep running up spending without any increased taxing.

And there are probably a million ways to reduce spending. It is Nutcase Wacko Moonbeam Economics to insist on "free college" for all, at $30 or $40 thousand per year per student. What's wrong with meathead Democrats who can't figure out ways to bring down these education costs?

Shove it down their throats! is the only answer. Both the drastic spending cuts plus the drastic tax increases. What we need is someone who will tell the idiot masses what they don't want to hear, rather than only the current Blue and Red demagogues (elected speech-makers plus also media pundits and talk-show professional babbling machines) who compete with each other to see which can tell more lies that the masses want to hear in order to sell their (Red or Blue) Kool-Aid.

So without any specifics beyond that from you, that would be at . . .

You're not so helpless that you can't figure out some tax increases which would do the job. The rich can be targeted for more, but everyone has to take a hit, including the middle (and poor whose benefits will be reduced).

. . . least 20% meat cleaver attack on everything from SS, Medicare, and even the DoD. Oh my the world would be ending for the DoD and neocons. Can anyone imagine the shrill screams of cutting $146B out of the DoD's $733B budget? DoD procurement of new toys would simply come to a full stop for several years to adjust to such a cleaver strike. And AARP would go ape shit, with seniors getting a double whammy 20% SS cut, and a huge increase in Medicare premiums.

Ref: https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States#Federal_tax_revenu es

translation: The world comes to an end unless the U.S. runs up 2 or 3 or 4 trillion $$$$ in higher debt every year -- reducing the annual deficits is unthinkable -- we must religiously keep increasing the debt without limit forever, because we must repudiate everything people thought prior to 1930 when they didn't know we could just borrow more and more without limit in order to the pay an annual budget increasing without restraint, never decreasing, in order to gratify our instant gratification regardless of the longer-term damage, which doesn't matter because "in the end we're all dead."

Is it true that it would take a "20% meat cleaver"? If so, then slash it 20%. Or if it requires 30%, slash it 30%.

Do what y'gotta do and stop pandering to the instant-gratification crybabies.

 

[Alcoholic Actuary]

What happens if we default? I think something about Chinese overlords... Where's Rvonse, he had some theories about this in another thread?

aa

 

[Lumpenproletariat]

"default" does not mean something bad happens.

Of course default would trigger some bad things, but there won't be any default. So forget it.

Then why did you start this thread?

Don't you follow the news? They keep saying we must raise the debt ceiling because otherwise the U.S. will default on the debt.

Which is not true. You think it's wrong to correct those who are lying?

If they say 2 + 2 = 5, shouldn't someone correct them? No one has given any reason why default is necessary just because the debt is not increased. The creditors can be paid from existing revenue with no new debt. It shouldn't require more than a 4th- or 5th-grade education to figure that out.

"default" means creditors (bond-holders) don't get paid on schedule. It does not mean crybabies have to pay higher taxes and/or have their benefits cut.

 

[funinspace]

That's part of the reason to increase this tax (which is a different topic). But other taxes also have to be increased, in order to get down the deficits.

States also should increase property taxes, especially introduce some form of graduated property tax. There are various ways to increase taxes, and property/real estate is one kind of asset to tax, which has been neglected.

Much of the "tax shelter" hidden assets is tied up in real estate investments. In the following PBS News Hour clip, every example of hidden assets referred to is some form of real estate investment.

That is very progressive of you. Yes, that would definitely help a lot of state finances...not that it really is 'hidden'.

And this is just one report on hidden assets I grabbed from today's news. Most others say the same. Billionaire tycoons from around the world hide their assets largely in real estate, much of it in the U.S. Though it's the states which tax property, the federal government can easily relinquish much of its spending to states, so that they can take up some of those costs, e.g., infrastructure, etc.

Of course there can also be a Wall St. tax (Bernie Sanders is that broken clock which is right twice a day), and increases in income tax or other federal taxes. It is asinine to simply say there is nothing to tax, and yet we must keep increasing spending by a trillion or so per year, and so we have no choice but to keep running up trillion-$$$$ deficits every year without limit, and so there can be no "debt ceiling" = no limit whatever to federal debt, because "debt" means nothing to the government which can magically just keep running up spending without any increased taxing.

And there are probably a million ways to reduce spending. It is Nutcase Wacko Moonbeam Economics to insist on "free college" for all, at $30 or $40 thousand per year per student. What's wrong with meathead Democrats who can't figure out ways to bring down these education costs?

Shove it down their throats! is the only answer. Both the drastic spending cuts plus the drastic tax increases. What we need is someone who will tell the idiot masses what they don't want to hear, rather than only the current Blue and Red demagogues (elected speech-makers plus also media pundits and talk-show professional babbling machines) who compete with each other to see which can tell more lies that the masses want to hear in order to sell their (Red or Blue) Kool-Aid.

As we get thru this latest fiasco, yes it wouldn't be that hard to get deficits heading back in the right direction. We were there in 2000. Back in 2016, the numbers again were heading in the right direction. A simple fix, would be to get rid of the 2017 Repug tax cuts, and the early 2000's Bush-Repug tax cuts. Then we could reset (say over 5 years) the budget to the FY2000 one, with inflation adjustments to each department. That should do it. But yeah, the red and blue guys are just the same...to a color blind person...

Note: One exception to resetting to the 2000 budget, would be the VA. That fuster cluck cost we are stuck with for decades. Maybe we could put a 30% tax on gun purchases to help cover that cost, since we can't really tax just neocons...(joke folks)

You're not so helpless that you can't figure out some tax increases which would do the job. The rich can be targeted for more, but everyone has to take a hit, including the middle (and poor whose benefits will be reduced).

Yeah, I can figure it out (see above). I wanted you to also stake out a position beyond magic brownies.

. . . least 20% meat cleaver attack on everything from SS, Medicare, and even the DoD. Oh my the world would be ending for the DoD and neocons. Can anyone imagine the shrill screams of cutting $146B out of the DoD's $733B budget? DoD procurement of new toys would simply come to a full stop for several years to adjust to such a cleaver strike. And AARP would go ape shit, with seniors getting a double whammy 20% SS cut, and a huge increase in Medicare premiums.

Ref: https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States#Federal_tax_revenu es

translation: The world comes to an end unless the U.S. runs up 2 or 3 or 4 trillion $$$$ in higher debt every year -- reducing the annual deficits is unthinkable -- we must religiously keep increasing the debt without limit forever, because we must repudiate everything people thought prior to 1930 when they didn't know we could just borrow more and more without limit in order to the pay an annual budget increasing without restraint, never decreasing, in order to gratify our instant gratification regardless of the longer-term damage, which doesn't matter because "in the end we're all dead."

Is it true that it would take a "20% meat cleaver"? If so, then slash it 20%. Or if it requires 30%, slash it 30%.

LOL...not at all, but you sure like to project onto others. You posted w/o any concrete answers other than slash with BS percentages. Remember, you are the one who wrote "perhaps by 10%". I just pointed out the real cuts, without specific and real tax increase ideas.