popper wrote:gesa2 wrote:I don't get any of the logic behind the debt ceiling. Congress appropriates funds and sets the tax rates, not the president. Every bit of that debt is already encoded in budgets that have already passed. If you believe in changing the budget, then change the budget, don't default. It's like me saying to my wife "Our spending is out of control, we need to stick to our budget better. So I'm not going to pay our mortgage". It makes no sense at all.
You make a really good point gesa2. I think the simple explanation for why R's would exercise their authority to restrict additional debt now vs. in the past is that the Fed recently announced that they will double their monthly contribution to stimulus, which will now total $80 Billion per month vs. the previous $40 Billion a month. They are doing so to keep interest rates low and because there are not enough pigeons to finance our long term U.S. debt right now. Congress has no control over the Fed however the President does and he is happy about the Fed's actions. The only way the R's can stop the insanity is to restrict debt by way of their authority over the debt limit.
If the Fed refrained from this stimulus interest rates would skyrocket and all hell would break loose. Instead, they are pushing the "all hell breaks loose" down the road and making a solution to our economic problems that much harder and more costly to achieve.
You are missing the most powerful economic stimulus of all. Peoples belief that things are getting better. That is what gets people from hording to investing. That makes the GDP go up. That is what ultimately raises asset values. Interest rates need to stay low right now. The housing problem is getting cleaned up more and more all the time. Once that reaches bottom and starts to recover, people will have more wealth again. That will bring in more state revenue. That revenue get invested back into the system. Then with a stronger economy, you can do a combination of growing the economy and trimming spending to lower the debt to GDP more. That is the process are we currently in. Its not happening over night. Its a process. Eventually the economy is healthy enough to absorb allowing interest raise to start going up. Just go look at what happen post WWII when we peaked at 120% debt to GDP.
We took a major major hit when the banks where failing and the equity bubble was busting. This is the softer landing. In time if we keep these policies in place, we will recover more and more until we are in the clear.
What we need to manage is getting through the baby boomers retiring. But that has been the case all along. We know this 25 years ago. And you know what. Clinton left us in great shape to do it. Some other president and party screwed it up. Two wars. Unpaid for tax cuts. Medicaid D. Dept of HLS.
But they are working it out. All hope is not lost. Progress has been made. We are headed in the right direction. Don't worry. Dems will clean up the Rs mess just like they did after Reagan/Bush. They are used to doing that by now.