Friends, Treasury Secretary Janet Yellen just announced that the federal government will hit the limit on total federal debt on January 19, just two days from now. After that, the Treasury Department will be forced to take “extraordinary measures” to avoid defaulting on the debt, which would likely trigger a global financial crisis.
I think we should start reductions of all elected politicians' salaries, remove all benefits, to minimum wage, restrict all investment activity, and eliminate lifelong retirement pensions. We may save quite a bit of government expenses, on both sides. Enough of m/billionnaire policies that line their pockets and do nothing for We, the People, who are taxed to pay their salaries and expenses. Let's start thinking in the right direction.
@C'Ann. Except that it is the politicians themselves who set the rules for their compensation and benefits. It is hard to get someone to accept the truth when their salary depends on a lie...
I agree Janet the House of Representatives should have gotten rid of the debt ceiling rule altogether, it is not part of the Constitution, it is a House rule enacted in the late 19th Century. The Democratic Senators did try to get rid of the filibuster rule in the Senate, but those two corporate Democrats, Manchin and Sinema held out so we never had the required majority to win. I believe this new Senate could pass it, and I hope they try.
That AND cut the bloated military budget by AT LEAST 25%. With those TRILLIONS we could easily afford the "scawy" Medicare For All AND a guaranteed income for all Americans with a social security card! We could easily overtake Norway, Finland and Sweden with 100% life satisfaction!
I'm retired Army and I totally agree! We have the strongest military in the world & some of the poorest citizens too. Our priorities are skewed & need to change. We need to break the Military/Industrial complex!
You bet! The Republicans trashed their own Gary Johnson for being “pro-cannabis.” It was his proposal to cut the DOD budget by 60% that got him pushed out of competition.
IIRC the Constitution says Congresscritters' pay can't be reduced during their terms, you have to do it between terms. Just a technicality, but worth noting.
OTOH... there is more debt than there is cash to pay it. So some creditors will be paid before others. We can't not pay Congress, but what's to say we can't put them at the end of the line?
Or maybe we could establish a new cryptocurrency just for paying congressional salaries... a QevinQoin?
The irony is that we have a debt-based currency system. The “cash” used to pay debt is itself based on debt. Debt-based government spending is how money gets into the economy in the first place. (I know it’s confusing — took me years to fully understand.)
People tend to confuse federal debt with consumer and commercial debt - and naively assume they are subject to the same considerations. Yet they are apples-and-oranges different. The latter are loans that need to be repaid, the former is the cyclically-adjusted money supply. But it often *looks* like “borrowing” and “repayment” so people get confused.
Just remember, taxes don't "fund the government" -- the government funds itself, as it is the source of money. Taxes are simply a way to close out the last spending cycle so the next one can proceed. It's a feature, not a bug!
Thank you Bill for explaining this. It makes sense now that you have laid it out, but I can see how confusing it must be to the average citizen of both parties. I doubt that dumb-dumbs like Gaetz, Jordan, Boebert, and Greene could understand it even as clearly as you have written it.
Thanks for the explanation. I shall think on this, as I have always been confused by the term 'debt ceiling'. As my husband says, "It's all made-up sh*t, anyway." I'm beginning to understand.
Debt based government spending does not create money unless the debt is purchased by the Federal Reserve. Federal debt is exactly the same as commercial debt in that real people and businesses buy the debt and must be repaid. Taxes do fund government. Your argument sounds like MMT. The reason MMT has never worked is because when governments have tried to fund their spending by printing money the result is always massive, destabilizing inflation.
Well, this is the hard part for people to “grok”. Over 95% of the money supply is not “printed” by the government. (Only 3% exists as physical coins and bills.) The vast majority of money is created “ex-nihilo” (out of nothing) when the central bank and its affiliates make loans. (That’s why the Fed, in dickering with interest rates, affects the money supply.) Then, that money goes away (except for interest payments) when the loan is repaid. It only works because these virtual dollars are backed by “the faith and credit” of the federal government.
I haven’t read Stephanie Kelton’s book on MMT, but I believe her point also is that the raw level of federal debt does not matter, so long as it is fueling genuine productivity and meeting genuine need. It’s like fueling a fleet of vehicles — if you want to run more vehicles, you’ll need more fuel.
There are 3 ways to increase the money supply. The Fed authorizes Treasury to literally print or coin currency at the US Mint. The Fed purchases securities on the open market and pays for them with an accounting entry on their balance sheet (quantitative easing from March 2020 to March 2022). The Fed reduces interest rates to spur bank lending. Because of our fractional reserve banking system banks create money when they make loans. There is a broad consensus among economists that MMT won't work.
Yes! Prior to that, in principle, currency was gold-backed (you could theoretically redeem it for actual gold). The problem is that there is only a finite amount of gold in the world. If you want the economy to expand/grow, but the medium of exchange is limited, that causes deflation and puts the brakes on the economy.
Despite the problems with debt-currency (e.g. enables extreme inequality) it DOES allow the money supply to be more easily adjusted to match current economic conditions. That’s what the Fed is trying to do with interest rates. The problem there though, is when the money supply needs to shrink, it would make the most sense to take it from the people with the most money (wealth tax). However, if your goal in life is to become rich as possible, by whatever means necessary, you don’t want to give up a penny of your accumulating wealth. So the bill has to be passed to average citizens in the form of austerity measures.
It’s really a sad and unnecessary situation. If we (especially leaders) fully understood the system, funds could be available for every true need — healthcare, education, research, infrastructure, etc. This country could be model for the future. … or, we can have trillionaires and enough weapons to eradicate people and planet many times over. Which is the best deal?
Gracias! I’ve been trying to wrap my brain around the money-supply problem, which appears to be a problem thanks to the imperative to constantly grow. As we know, constant growth on a finite planet called earth is inconsistent with logic — right, Grrrl Scientist? Can a meaningful distinction be made between real growth (more stuff being made) versus fake growth (based on inflation of the currency)?
Thanks for that explanation! It still seems like a heck of a bad way to run our government! We should have balanced books like businesses must have! But even they know how to cook the books.
I appreciate the comments and feedback Shirley! However, I need to challenge one more bit of “common wisdom”. At the federal level, calls for a “balanced budget” generally have the same motive as the phony debt-ceiling — they are both attempts to cripple the proper functioning of government.
I know this is very counter-intuitive, but budgeting at the federal level is a different game, with different rules. Why? Because unlike households, businesses, corporations - even state and local governments - the federal government is the SOURCE of money! Yes, all of the former entities need to take in funds first, before they can spend on needs — and if they spend more than they can receive, they are in trouble.
Because of our debt-based currency system, the money-cycle at the federal level is backwards: the money is spent (i.e. created) into the economy first, it does it’s work, then it is drawn back in the form of taxes and loan repayment, so that the next budgetary cycle can begin. I know it sounds crazy on first hearing, but there are legitimate reasons for running it this way.
The naive objection is that the above will cause inflation. However, inflation (too much money, not enough goods) only happens when new funds are not applied to true needs of the country and its people, but rather are squandered on unnecessary projects designed largely to enrich the already rich — both people and corporations.
The 19 January issue of The Nation magazine has an article by economist James K. Galbraith that discusses the debt ceiling. He points out that the federal government is obligated by law to create money at will, which it does, and that the federal government does not need private investors to provide money to it. He writes that the federal government does not borrow in order to have funds to pay its obligations. In short, our seemingly common-sense view of federal finance -- the household-budget view -- is wrong.
The federal government can always afford to carry debt, just like households can but within the limits of what total income compared to the debt show are affordable. We are really beginning to push the limit of what the government can afford. The ability to just print money to pay for government spending is limited by the amount of inflation it causes. We still need taxes.
But it's always the Republicans. We might not embraces the Democrats for everything they offer but Republican proposals are more often so repugnant and unAmerican that we recoil. Never vote Red, always vote Blue.
I lived through a similar situation when I wuz screwed along with my law clerks and our clerical staff. The federal government partially shut down for 16 days in October 2013 because of a lapse in appropriations. According to OMB, about 850,000 federal employees were furloughed for part of this time. My agency decided to layoff some workers but kept the vast majority on the payroll. My "subagency" comprised of judges and staff were laid off. To this day, I feel that it was done because judges are far older than the rest of DOL agencies. I lost $3500 Never reimbursed. We protested and had to hire lawyers. Miscarriage of justice by the US Ct/ for the Federal Circuit. https://cite.case.law/f3d/772/890/
After I retired, the government shutdown from midnight EST on December 22, 2018, until January 25, 2019 (35 days) was the longest government shutdown in history and the second and final federal government shutdown involving furloughs during the presidency of Donald Trump.
Let's pay the politicians a wage which is in line with their job responsibilities and titles. They grift when in office because, in the private sector, they would make many multiples of their government salaries. Start by campaign finance reform, not by punishing the ones who could actually make a difference to the nation. Getting rid of Citizens United would do more for this country than anything you've proposed here.
Seems to me that the most vulnerable are most of us. There need to be some things that we can all count on. Healthcare (already a mess) and social security need to be dependable and rock solid. Someone who loses their job to illness, then loses health insurance, then can’t get quality healthcare to recover, can’t meet living expenses for rent, food, meds, loses their housing, consequently becomes unemployable at wages that support ….. that is very wrong and it’s offensive. Yet it happens every single day. This country and both political parties need to be better than that. Of course it’s no problem for the 1 percenters who feel like they still need more.
I see this so often Roger. If there was one job I would love it’s helping to untangle big problems such as these. I’m not sure how to do that so all I can do is keep you and so many other good people in my prayers. I do hope you and your wife are able to break through to better health.
So good to hear that you are together and still making a difference! Teachers deserve better too. Although I’m biased perhaps because my wife is a teacher. Another system that needs fixing. Her retirement economics are disappointing. While administrators can stack pensions, teachers cannot. After a private career entitling her to social security she began teaching. Decades later we learned that to claim her teachers pension she must waive her social security and my death benefits if I pass first. Still, our house sees students old and new every week. The closets and cupboards are open to all who enter. A safe place. She makes a difference too and it’s a pleasure to be part of it.
My first reaction is that I keep wondering if it's going to take actual shocks and real suffering to make Americans aware of the deep, structural change that is imperative. For example, a GOP-led default, leading to the total repudiation of the GOP. I'm thinking about the 1929 stock market crash. Or even 9/11, which allowed the Bush morons/criminals to use an Al Qaeda terrorist scheme to rationalize the invasion of Iraq. (The example only illustrates that shock is a motivator.) What will it take to address climate change? How do you get peoples' attention? This follows your last piece about the media's negligence. They were certainly negligent about Iraq. And they elected Trump out of their capitalist desire to attract advertising dollars by being an entertainment vehicle rather than the fourth estate. Maybe it takes a disaster to make change.
It’s not the stock market in danger it’s the bond market. The war is between interest and work . The entire deficit is paid yearly to bond holders . The 1% own 99% of the bonds .. we need usury laws reinstated. I get credit “ offers” at 29.99 percent every day … that’s just wrong . Only people with w4s are paying full fare ..
It does take a disaster. The depression is the only reason FDR was able to put his programs through. But after the worst was over, the republicans immediately started to undermine what he did. They worked at it steadily and in the 1970s went in full war mode to destroy his legacy. They've been very successful and they control the levers of power in the media and the government, so yes it will take a disaster.
Even a short term shutdown of the government didn't do it. It has to be a complete disaster.
Actually, the GOP started as soon as Roosevelt signed the first acts in 1935 to lift the ordinary citizens out of the cesspools and into the sun. In 2008 to 2012 it was the super wealthy who got bailed out. Like Biden, Obama held on to so-called economists from George W's administration, just as Biden has from Trump's, in both cases to the detriment of the working classes in America and the benefit of the super wealthy. I don't understand why.
I think because any pushback against the existing system that preserves the wealth of the haves at the expense of the have nots would immediately spark a sabotage of every single item on the progressive agenda. We liberals are allowed to play with beach balls in the shallow end of the pool, but that’s about it.
We have extreme political polarization because conservatives run a massive disinformation program in right-wing media and online. Our MSM media is corporate owned and increasingly being bought up by right-wing billionaires. They have their own agenda and keeping corporate taxes low is at the top of the list.
Yes, their point of view is a obvious. They do not understand, or want to understand, that people live their lives according to their inbuilt talents, which is reflected in their chosen work. If your inbuilt talent is to be a clever manipulator of the odds of investment, then you will be a banker, a speculator who will profit or lose like a gambler but with no necessary expertise in any trade or profession. I am not a Roman Catholic, but I do understand and sympathize with this church’s official policy against usury. From what I have read, the Islamic financial industry, while adhering to a no-usury policy, actually calculate interest percentages but present financial-handling fees as a fixed price — in order to not offend the Prophet. Looking for commentary on this topic.
The level of income inequality we have now is much broader than usury but it is the same concept. Conservatives have stacked the entire economy to redistribute income from the bottom to the top 1%.
In December 2022, when the Dems were still ruling Congress, why didn’t they raise the debt ceiling? Surely they knew that the Reptilians would try to blackmail the USA after taking control of the House. What strategy is being pursued by the Dems?
The New Republic has a nice piece on why sec. 4 of the 14th Amendment might just be the "red flag" law that allows the removal of the weapon from Mr. McCarthy.
Applying Sec. 3 of the 14th Amendment could eliminate Mr. McCarthy from the speakership if not Congress by expelling his seditious colleagues that broke their oath of office.
I'm seeing journalists and blog commenters talk of McCarthy as a victim of his own ambitions and exploitation by the hard right MAGA sympathizers but he's one of them as has been all along.
Disarm the debt ceiling? From the link you posted today:
(Actually, and I've posted this response to a couple other folks here, today)
I was struck by something said in the article in The New Republic from a link posted earlier today:
"Were Congress to use its power to willfully trigger a debt ceiling default, it would be no ordinary constitutional violation. It would be a repudiation of the Constitution in a much more fundamental way, a betrayal of the very purpose of leaving the Articles of Confederation—which did not grant borrowing powers to Congress—behind; that is to say, it rebukes the very thing that gives our Constitution its legitimacy. From the perspective of Hamilton in Federalist 30, it would be tantamount to terminating the Constitution itself."
Another statement from that same article worth attention is:
"But that’s the original intent of the 1787 Constitution, as set out by its principal soothsayers, Hamilton, Madison, and Jay: Congress has the power to borrow in Article I only on condition of avoiding a default, not for enacting one. Now let’s turn to the restatement of the original intent of the “1867 Constitution,” as modified by the three Civil War amendments, the Thirteenth, the Fourteenth and the Fifteenth. Under these ratified amendments, the argument for the Debt Limit Statute becomes a form of treason."
And finally:
"Debt has been the country’s greatest asset, as Hamilton knew it would be. Debt let us grow. Debt let us win World Wars I and II. In this century, debt saved us from the financial crisis. Debt let us survive Covid. A fine recent book, In Defense of Public Debt, by four distinguished economists, explains how much we owe to debt. We have an obligation to save it for crises ahead and use every means, legal or political, that may help to do so. It is typical of the GOP to treat the country’s debts as dishonorably as Trump treats his own. Default is his business model. The Framers would be horrified if we made it the country’s model too."
I'm thinking about ol' Tweety's call to abolish The Constitution, here.
It appears to me that a debt ceiling is another, unconstitutional Republican hustle.
=================> Don't "disarm" it; >abolish< it and craft law >prohibiting< it!
(Sorry for banging on, but this article got me all worked up!)
Understandably so, and I agree with your conclusion about the willingness of this current slop - oops I mean crop of Republicans, to throw out the Constitution and return to the good ol' days of authoritarianism. The GOP ideal pyramid with them and 'ol' Tweety' atop and 350million slaves obeying their every word.
@Dr. Doug. The problem being that it requires Congress to act on Sec. 4... Hard to get a man to see the problem when his salary depends on him not seeing it.....
has the debt ceiling always been a part of the US fiscal and political landscape? i guess i can read about its history myself, but it's easier to ask here since i've already got numerous deadlines looming this month to avoid my own personal fiscal crisis.
i have no idea where the rethuglicans got the audacity to demand that the biden administration "must" not pay social security and medicare benefits? those are THE PEOPLE'S MONEYS that were taken from their paychecks each pay period throughout their entire working life -- not funds from taxes, and certainly not funds that those thieving rethuglicans should be able to wrap their grubby sticky fingers around. the idea that SS and MC are anything other than the people's money is a gigantic lie, repeated often, to deceive the people whom they plan to rob blind.
the only positive outcome to this economic hostage crisis is that the rethuglicans will hopefully .. maybe .. finally?? cease to exist as a party since they are so determined to sacrifice us all in their quest for absolute power over all our lives. i must say, though, that rethuglicans appear incapable of learning since they are -- once again -- heading down this well-trod road into their own self-inflicted disaster.
Er, this is a wee bit wrong, and a common myth, that people pay for all of their Medicare and Social Security throughout their working lifetimes. The reality is that both are actually subsidized by taxes, mainly by the wealthiest Americans - you know, the Republican paymasters - which is why Republicans are so exercised by both.
But that's OK, that's what taxes are for, according to Adam Smith. They are intended to redistribute wealth in a system where the capitalist is over-rewarded for his or her efforts. Exhibit A, Mark Zuckerberg. Look no further than "Wealth of Friggin Nations." It's all there. Smith invented progressive taxation, and this should be part of every school curriculum.
By the way, people confuse government debt with government deficit. The latter is the difference between what the government takes in, through taxes, and expends, on things like SS and MC. Kitchen table stuff. Deficits are usually run up by Republican presidents - who cut taxes on the wealthy - and are paid down by Democratic presidents.
Debt is far more nebulous. If Joe buys a house for $ 1 million, the national debt goes up by $1 million, even though Joe takes out a mortgage with a US bank. So, debt is, as I understand it, roughly speaking, the total amount of money owed, which includes inflation. So, a bit of debt may actually be a good thing - an indication of economic activity. For example, throughout the 19th century, at the height of British imperial wealth and power, British national debt was 150% of GDP. We're nowhere close, approximately 120% of GDP. Nobody would accuse Victorian governments as being guilty of "runaway spending."
As far as the economy is concerned, national debt is a total non-issue, and should not have to be haggled over every year. The puzzling thing is (i) why average people vote Republican in the first place, and (ii) why Republicans continue to risk extinction.
Time the people wake up and grant Republicans their death wish.
"Wealth of Friggin Nations" gave me a giggle just now when i looked for it on amazon. adam smith, Wealth of Nations, vols 1-5, is, i think, what you were referring to? anywho. i am known as a voracious reader, but i don't think this is a book i'd read anytime soon. (apologies.)
to answer your question about why average people vote rethuglican ... according to what i see and read and experienced until i was 16yo, is either blatant racism or sexism that they now can comfortably vocalize, or the delusion that they too will become insanely wealthy and powerful just like elmo and jeff and mark and they do not want to give up even one thin dime for any reason to the unwashed masses. there probably are other reasons as well, all of which are dystopian.
All “ national “ banks worldwide are privately owned . The idea that anything you get takes something away from me .. you need to be hungry and scared to volunteer as a wage slave and they know it
@taojones. Now you are spewing falsehoods. The Federal Reserve System is not "owned" by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.
The US dollar was copied from the civil war union “ greenbacks “ used as script for army supplies . The fed was formed to verify reserves at say the bank of Denver . Each plank was printing its own script . The fed was formed to fix that and process checks . Nixon put the us treasury out of the money business in 64 floating us off the gold standard and ending the silver certificate . If you don’t want to sound like a horses ass you have to read this in it’s entirety till then bug off .. https://www.dropbox.com/s/628bzu6qp6adxxb/tradgedy%20and%20hope%20banking%20section%20.pdf?dl=0
The balance between private interests and government can be seen in the structure of the system. Private banks elect members of the board of directors at their regional Federal Reserve Bank while the members of the board of governors are selected by the President of the United States and confirmed by the Senate.
The problem is that every cent spent by the government is financed through a bond issue. The interest on that bond is paid to the 1% but not by corporations or the triple tax free bond holders . You’re wrong about the mortgage going onto the national debt that’s all private debt unless it’s laid off at a discount to Freddy Mac or whatever. The deficit is just the interest owed this year . It amounts to about 2% of the gdp . If you pay 2% of the gdp to 1% of the people for 150 years ( Industrial Revolution) why are you surprised that 20 people own 90 percent of everything….
Lots of disinformation here. First off the Social Security Trust Funds are separate from the general funds of the US. Medicare has a trust fund also as do many other government entities, such as the Black Lung Fund, created by contributions by coal mine owners. IMHO Republicans crave to reach the corpus, trillions, to privatize them. I documented some attempts to bankrupt the funds. https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1601&context=naalj
Girl Scientist, Michael Hutchinson, deficit financing was devised primarily by Al Levine, known in history as Alexander Hamilton, as expressed in the Federalist Papers and later in 1790, Hamilton as our first Secretary of the Treasury presented Congress with his first Report on the Public Credit, which included a plan for addressing the nation's staggering $40 million debt. Hamilton recommended paying only the interest on the debt and deferring principal payment until far into the future. https://www.ouramericanrevolution.org/index.cfm/page/view/m0202#:~:text=In%201790%2C%20Hamilton%20presented%20Congress,until%20far%20into%20the%20future
Chris Martin lays out much of the history after that below. The U.S. budget deficit was sliced in half for fiscal 2022, the biggest drop in history following two years of huge Covid-related spending.
Though still large in historical terms, the budget shortfall declined to $1.375 trillion, compared to the 2021 deficit of $2.776 trillion.
The decline would have been steeper had it not been for the Biden administration’s student loan forgiveness program. Education spending totaled $639.4 billion for the fiscal year, $408 billion higher than estimated.
The 2022 fiscal year saw $4.896 trillion in revenue against $6.272 trillion in outlays. The outlays number represented about a $550 billion decline in spending but an $850 billion increase in revenue. The revenue total is by far the highest ever for the U.S. government. Deficits in the previous two years soared as Congress shelled out massive sums to combat the pandemic..
Federal revenue for 2022 is 19.6% of GDP. In 1948 it was 19.8% of GDP. In 2000 it was 19.75% of GDP just before the Bush tax cuts. In 2020, the United States was ranked 32nd out of the 38 OECD countries in terms of the tax-to-GDP ratio. US safety net spending is less than the OECD average. We don't have a spending problem, we have a revenue problem. Corporate income tax that was 7% of GDP in 1948 barely reached 1% in 2019, 2020 and 2021.
Thank-you, Mr. Solomon...I was considering doing the usual comment trying to explain what you just did...but I get tired to doing this (on other various forums). Such a lot of misunderstanding about who pays what and how much into where...
All of that confusion is deliberate IMO. Furthermore, GOP's penchant to put government spending & deficits in laypersons household terms, so the minions can (mis)understand it, is also deliberate.
The more convoluted the government can make things, the easier it is to deceive the public.
The thing is the deficit trillions are being collected by someone and the finger is always pointing at who’s paying it not whose pockets it ends up in .. meantime your earnings based on minimum wage are generating the money for paying these people back . Especially when it’s the fed being paid back with workers dollars for money it just “ created” to buy bonds with .. why is it only me asking this ?
Some of us are creditors -- we get government "benefits" -- and also are small investors, mainly through mutual funds.
At current rates, some government backed bonds yield 8%. I always ask why we don't arbitrage -- trade our high interest bills and notes for say, Japanese bonds at less than 1%? The answer is that we want our investors to rely on our "stable" and :"secure" government.
My response is "Ho Ho Ho."
Of course, I am the same guy who lost my pants when Mexico devalued the peso in 1982.
@taojones. Again, a bit here is not true. Taxes are the main source of payment for the nation's expenditures. Total federal tax collections, including payroll and other taxes, reached an all-time high in nominal terms of $4.05 trillion in fiscal year 2020. but Federal expenditures were $6.6 trillion the same year. The $2.1 trillion shortfall was financed by debt with the debt pie consisting of Treasury bills, Treasury notes, bonds and inflation with a more opaque element being financed by something called intragovernmental debt. There are lots of folks who like to make a comparison between the deficit and the interest due, but this is a political point, not technically true. The interest costs can be managed by the Board of Governors of the Federal Reserve Bank. When they raise interest rates, as Jerome Powell and the others have been doing, they make everything more expensive for regular folks and they pass over a nice windfall to the people and other governments who have bought the above mentioned debt instruments. Basically, for the Fed to raise rates they are taking money away from regular wage earners and giving a large part of it to China and another large part to the richest people in the world, most of whom are not EVEN Americans.
To me, the topper is that many people doing business and investing in this country do not pay US taxes. Add the domestic tax evaders, price fixers and price gougers.
A big chunk of Medicare funding comes from the general fund but Social Security is a separately funded self contained program. If you google "General Revenue & the Social Security Trust Funds crfb" You will find an explanation of how general fund revenue gets added to SS. All of those methods are there to make SS whole for changes the federal government has made that would otherwise deplete the SS trust fund. SS has nothing to do with federal deficits or the national debt.
Don: The federal government has no primary source of income, other than taxes and bonds. According to the website you allude to (Committee for a Responsible Federal Budget), "when Social Security needs to start cashing in its holdings of Treasury securities to meet its benefit obligations, the federal government [the general fund] will have to increase its borrowing from the public, or raise taxes or spend less, to finance these costs. "
So, SS is, in fact, linked to the Federal deficit, and this Federal contribution will continue to grow as more and more Americans retire.
This means, as the years go by, either taxes will have to increase, or benefits decrease, to balance the federal budget. The Republican party, of course, are laser-focused on reducing benefits.
Now I would say that taxes on the wealthiest Americans should increase. THEY would say that's socialism, to which I would reply, no, that's originalist capitalism. Socialism is what exists now, not for the common man, but for the wealthy. Indeed, the wealthy are the new Welfare Queens, for what is not paying your taxes but government welfare for the richest of Americans?
To Smith, taxes are a badge, not a burden, for any man who is capable of paying taxes thereby demonstrates that he is a slave to no-one. I think Smith viewed taxes as a necessary condition for working capitalism. His system over-rewards the capitalist, and paying taxes is not only a way of redistributing wealth into useful things that the capitalist has little interest in, such as roads, bridges and schools - something we now refer to as infrastructure, but it's also a way of preventing said capitalist to become so powerful that he could distort the market, which to Smith was central.
What do we see now? Market distortion up the wazoo, monopoly, oligopoly, and crumbling infrastructure.
In the early 1980s FICA taxes were increased to build a surplus of SS funds to cover the eventual retirement of baby boomers. Those excess contributions became the SS Trust Fund. The Federal government borrowed that money to cover general fund liabilities. The Federal government is obligated to pay that money back just like it is for any other investor. There is no special connection between SS and the national debt other than an obligation to repay what was borrowed just like money borrowed from any other investor in government bonds. No idea why anyone is even talking about spending cuts. Corporate taxes that were 7% of GDP in 1948 were barely1% of GDP in 2019, 2020, and 2021. That's over a trillion dollar annual reduction in taxes. Corporate profits that averaged 6% of GDP from 1950 to 2000 are now topping 12% of GDP. We're running up the national debt to give breaks to people who are gouging the living daylights out of us. This has to be some kind of mass insanity.
Michael H This would be great to see the demise, should have happened decades ago BUT it’s so much harder to do with a right-wing media monopoly.
But when it cones down to it, the rescumlicon-supporting dupes would be hardest hit by taking down these programs. Too bad we can’t make them volunteer to refuse anything from SS or medicare since they’re the ones who elected their reps.
The US debt ceiling is a relatively new development.
From 1798-1917, Congress had to pass legislation that specified the amount of each new bond issue and authorized the Treasury to issue the bonds. In 1917, Congress passed the Second Liberty Bond Act. This legislation authorized the Treasury to issue bonds and pay for other types of federal debt without specific legislative approval as long as the aggregate amount of debt was below a "debt ceiling" set by Congress. It also specified the amount of debt the Treasury could take on from individual categories like bonds and bills.
In 1939 and 1941, Congress set a hard limit on how much debt the Treasury could absorb regardless of category. They raised the "debt ceiling" each year from 1942-1946. In 1946, Congress set the debt ceiling at $275 billion, which is where it stayed until 1954 (amazingly, the Korean War was paid for via taxation!) The debt ceiling has been raised over 100 times, including 74 in the 20th century.
Another wrinkle in this is the 1979 "Gephardt rule" named for House Majority Leader Dick Gephardt (D-Missouri). Gephardt foresaw the debt ceiling becoming a political issue, and successfully got the House to establish a parliamentary rule that stated the debt ceiling was automatically raised whenever Congress passed a budget. House Republicans repealed the rule in 1996.
I'm tired of playing chicken with a bunch of traitors. The people who actively agreed with the insurrectionists are playing games with the lives of millions of people because they have nothing better to do and are the most irresponsible people in our country.
They get paid their salaries when we, the people who voted them in, depend on them to allow us to get the money we paid into the government for our pensions. They hold those funds hostage to their puerile juvenile antics of oneupmanship and poker for fools.
They don't care if we get evicted or go without food. They don't have those consequences to live with.
What I think is the minute it looks like we go into default, they lose their pay until they capitulate to us on our demands to behave like the representatives of the government of the people, by the people and for the people of this country.
I'm tired of these fools telling me that for 43 years I did nothing to earn my Social Security but I'm supposed to bear with the prospect of being denied it because they don't feel like giving it to me.
Eff them.
I'm fed up with it all. No other country in the world allows this to happen on a regular basis. It's about time they grew up and started acting like adults.
They should never have been on the ballot, nevermind take an oath of office. They clearly do not know the rule of law, or the Constitution. Have no clue what their job is. Should receive no compensation . Our vetting process for candidates for office in government should be much more thorough. They are cynical sell outs,, hell bent on destruction, like tfg.
When you say you're going to pay a legitimate debt, and don't, that's fraud. When you know from up front you aren't going to pay it, that's CRIMINAL fraud. McCarthy and the Repooplickins on the House Budget Committee (for a start) should be locked up.
After that, what? General strike? Massive tax resistance? One can only hope. Are there intermediate steps?
MLK wouldn't have gotten so far with nonviolence without the likes of the Black Panthers, SNCC, and Malcolm waiting in the wings as Plan B.
After reading this, I was curious to see who holds the greatest amount of US debt. Googled. I thought it was China. It’s actually Japan, China, the UK, Ireland and Luxembourg. Taken from Investopedia.com. Also looked at the debt when former president Obama left office, and then when Trump was in office. And you had Reaganonomics prior. Every president has been dealing with this since. It seems that under the gop, the debt ceiling was more severe, including not creating new jobs. A very interesting article in The African Eye Report by Masahudu Ankilu which provides a chart from Washington to Biden in change in total debt from beginning of term until the end of term. This chart was provided by TradingPedia, so I don’t know how fully accurate it is. But interesting nonetheless. Pre pandemic, Trump was on his way to increasing the amount of debt he inherited from the Obama administration.
As you mentioned, this has huge ramifications for the global economy. In order to protect the regular populace, the debt ceiling has to rise. Thank you for sharing this wisdom, as you’ve dealt with this under Clinton. It’s obscene how the gop is holding us hostage.
Because the Social Security Trust Fund doesn’t use all its generated capital, it invests the excess funds into U.S. Treasuries. If the Social Security Trust Fund needs money, it can redeem the Treasurys. As of June 2021, intergovernmental debt hovers around $6 trillion, making the US government the largest single owner of US debt.
The public debt consists of debt owned by individuals, businesses, governments, and foreign countries. Foreign countries own roughly one-third of U.S. public debt, with Japan owning the largest chunk of American debt hovering around $1.26 trillion. US debt to China ranks second, with that country owning roughly $1.07 trillion of American debt.
How surprising that Kevin McCarthy would sell his country down the river for his own personal power trip. Kick the ladder out from underneath him. After the Southwest Airlines disaster no one will enjoy the FAA or Air Traffic Controllers undermined. Or Social Security or medicare checks not being sent. After the Republicans tank, when it is politically possible, disarm the debt ceiling so these idiots never do this again. Good luck in your next job as dog catcher in Bakersfield, Little Kevin. Bow wow.
Yep. It's a charade they have to play so they can call themselves "fiscal conservatives."
If they prioritize and cut border control and food inspections, they are making the US less safe. Indeed, cutting vital programs is absurd. They're not about sound policy, just appearence.
Shame on the last Congress for failing to raise the debt limit beyond all foreseeable need when it had the chance. This looming train wreck isn't a surprise; it was anticipated months ago.
DZK; CRUELTY is the point . They want to see what they can get while threatening the Common Good by holding it hostage. They really hate us all, not just the 'libtards' ; even those who ignorantly support them and stupidly, hatefully laugh with glee at what is being done to even their own children. They should get a big memo alerting them .
Actually, and I've posted this response to a couple other folks here, today:
I was struck by something said in the article in The New Republic, that someone here posted a link to here today:
"Were Congress to use its power to willfully trigger a debt ceiling default, it would be no ordinary constitutional violation. It would be a repudiation of the Constitution in a much more fundamental way, a betrayal of the very purpose of leaving the Articles of Confederation—which did not grant borrowing powers to Congress—behind; that is to say, it rebukes the very thing that gives our Constitution its legitimacy. From the perspective of Hamilton in Federalist 30, it would be tantamount to terminating the Constitution itself."
Another statement from that same article worth attention is:
"But that’s the original intent of the 1787 Constitution, as set out by its principal soothsayers, Hamilton, Madison, and Jay: Congress has the power to borrow in Article I only on condition of avoiding a default, not for enacting one. Now let’s turn to the restatement of the original intent of the “1867 Constitution,” as modified by the three Civil War amendments, the Thirteenth, the Fourteenth and the Fifteenth. Under these ratified amendments, the argument for the Debt Limit Statute becomes a form of treason."
And finally:
"Debt has been the country’s greatest asset, as Hamilton knew it would be. Debt let us grow. Debt let us win World Wars I and II. In this century, debt saved us from the financial crisis. Debt let us survive Covid. A fine recent book, In Defense of Public Debt, by four distinguished economists, explains how much we owe to debt. We have an obligation to save it for crises ahead and use every means, legal or political, that may help to do so. It is typical of the GOP to treat the country’s debts as dishonorably as Trump treats his own. Default is his business model. The Framers would be horrified if we made it the country’s model too."
I'm thinking about ol' Tweety's call to abolish The Constitution, here.
I'm sure you recall that my position for >months< is that these Q-publicans are a pack of goddam neo-Confederates, and to my thinking, this article supports that position.
Only of the Democrats allow it - for now. Unfortunately, it may end up in the hands of the voters, who may or may not comprehend exactly what is at stake.
Why is the legislation creating the debt ceiling allowed to continue? It threatens the good credit of the United Stated which Politicians swear to up hold. Political life is caught in a wasteful tangle that distracts from solving real
Problems rather than the self created. Practical
People must exist in both parties who would join to repeal this evil .
Our “ system “ is to borrow every cent to run government. There’s a class of people living off that interest … the national debt is owed to someone.. ask yourself who …
@JerryM. LOL! You are right - the answers are not on Hunter's laptop! But Speaker McCarthy will do his damnedest to get everyone looking at the distraction while his cronies are picking our pockets!
When you have a house leader who would sell his own party and office’s interests to be speaker and cut all kinds of deals with the thugs of the non-government caucus for his position, is it surprising that this is the path the speaker with the support of the majority party has now chosen? It is as plain as the sun rising. We need creative solutions to counter this - something that should already have been thought about.
@John G. Tell the Speaker to eff off until he presents responsible measures. One of the 6 sensible Republicans can call to vacate the Speaker's chair every time he brings a stupid bill to the floor.
The US government: "Too big to fail"? Bail outs required? (Again?)
Here's a concept: As it is _politicians_ that keep on causing these Budget crises, how about them helping to pay down the National Debt? If EVERY candidate for any office in the land was required to contribute 5% of what they raise for campaigning to be set aside to be used to pay down the National Debt ONLY, even at $31.5 _trillion_ dollars, that sucker would be paid off in just 20-30 years. Forty years, tops.
Seems extraordinary that it is allowed/accepted that routine processes like appoitment of a Speaker can be subject to blackmail like this. The demands that McCarthy caved in to were made by a small faction of one party without support of senate or president.
The form of election seems wrong because it allows internal politics of one party to derail the government. Better require each party to propose a speaker, and choose between them. Or give members a second choice to apply if first choice not in top 2.
Seems to me that the US is paying the price for not having long ago addressed the democratic deficits it its avowedly 'democratic' system.
When we don't get our SS, we will be forced to live in the streets. I will. I am 70, with a 5 disc fusion that failed. No work for me. Will Congress pay their parents/grandparents SS? Or force them into the streets? It's my money, pay me. Stop with the games. To hell with the "bought speakership" to hell with McCarthy who sold his soul, to hell with MTG, Boebert, Perry, Jordan, Gaetz and the rest of the maga extortionate. Vote them all out of office.
The party of tRump which gave 1.9 trillion to billionaires is at it again, on steroids. Seems that there is no problem with Republicans' raising the debt ceiling when They want to do it. Then, when Democrats get back in power, they have to 'clean up' the mess, for which they are blamed.
@Laurie. AND the Democrats clean up the mess by raising taxes on tax cheaters (oligarchs and corporations) while raising the debt ceiling to pay for obligations already incurred. This is how Republicans drive UP the debt - by allowing the truly wealthy to avoid their fair share of the National tax burden.
I think we should start reductions of all elected politicians' salaries, remove all benefits, to minimum wage, restrict all investment activity, and eliminate lifelong retirement pensions. We may save quite a bit of government expenses, on both sides. Enough of m/billionnaire policies that line their pockets and do nothing for We, the People, who are taxed to pay their salaries and expenses. Let's start thinking in the right direction.
@C'Ann. Except that it is the politicians themselves who set the rules for their compensation and benefits. It is hard to get someone to accept the truth when their salary depends on a lie...
I agree Janet the House of Representatives should have gotten rid of the debt ceiling rule altogether, it is not part of the Constitution, it is a House rule enacted in the late 19th Century. The Democratic Senators did try to get rid of the filibuster rule in the Senate, but those two corporate Democrats, Manchin and Sinema held out so we never had the required majority to win. I believe this new Senate could pass it, and I hope they try.
That AND cut the bloated military budget by AT LEAST 25%. With those TRILLIONS we could easily afford the "scawy" Medicare For All AND a guaranteed income for all Americans with a social security card! We could easily overtake Norway, Finland and Sweden with 100% life satisfaction!
I'm retired Army and I totally agree! We have the strongest military in the world & some of the poorest citizens too. Our priorities are skewed & need to change. We need to break the Military/Industrial complex!
President Eisenhower's parting words of wisdom...
You bet! The Republicans trashed their own Gary Johnson for being “pro-cannabis.” It was his proposal to cut the DOD budget by 60% that got him pushed out of competition.
After all, they do kinda live there. I mean, the Canadians are all nice, but THEY have a military.
IIRC the Constitution says Congresscritters' pay can't be reduced during their terms, you have to do it between terms. Just a technicality, but worth noting.
OTOH... there is more debt than there is cash to pay it. So some creditors will be paid before others. We can't not pay Congress, but what's to say we can't put them at the end of the line?
Or maybe we could establish a new cryptocurrency just for paying congressional salaries... a QevinQoin?
The irony is that we have a debt-based currency system. The “cash” used to pay debt is itself based on debt. Debt-based government spending is how money gets into the economy in the first place. (I know it’s confusing — took me years to fully understand.)
People tend to confuse federal debt with consumer and commercial debt - and naively assume they are subject to the same considerations. Yet they are apples-and-oranges different. The latter are loans that need to be repaid, the former is the cyclically-adjusted money supply. But it often *looks* like “borrowing” and “repayment” so people get confused.
Just remember, taxes don't "fund the government" -- the government funds itself, as it is the source of money. Taxes are simply a way to close out the last spending cycle so the next one can proceed. It's a feature, not a bug!
Thank you Bill for explaining this. It makes sense now that you have laid it out, but I can see how confusing it must be to the average citizen of both parties. I doubt that dumb-dumbs like Gaetz, Jordan, Boebert, and Greene could understand it even as clearly as you have written it.
When Albert Einstein stated his theory of relativity the nazis said it was Jewish nonsense, and that the fuehrer could not understand it proved it.
Thanks for the explanation. I shall think on this, as I have always been confused by the term 'debt ceiling'. As my husband says, "It's all made-up sh*t, anyway." I'm beginning to understand.
Debt based government spending does not create money unless the debt is purchased by the Federal Reserve. Federal debt is exactly the same as commercial debt in that real people and businesses buy the debt and must be repaid. Taxes do fund government. Your argument sounds like MMT. The reason MMT has never worked is because when governments have tried to fund their spending by printing money the result is always massive, destabilizing inflation.
Well, this is the hard part for people to “grok”. Over 95% of the money supply is not “printed” by the government. (Only 3% exists as physical coins and bills.) The vast majority of money is created “ex-nihilo” (out of nothing) when the central bank and its affiliates make loans. (That’s why the Fed, in dickering with interest rates, affects the money supply.) Then, that money goes away (except for interest payments) when the loan is repaid. It only works because these virtual dollars are backed by “the faith and credit” of the federal government.
I haven’t read Stephanie Kelton’s book on MMT, but I believe her point also is that the raw level of federal debt does not matter, so long as it is fueling genuine productivity and meeting genuine need. It’s like fueling a fleet of vehicles — if you want to run more vehicles, you’ll need more fuel.
There are 3 ways to increase the money supply. The Fed authorizes Treasury to literally print or coin currency at the US Mint. The Fed purchases securities on the open market and pays for them with an accounting entry on their balance sheet (quantitative easing from March 2020 to March 2022). The Fed reduces interest rates to spur bank lending. Because of our fractional reserve banking system banks create money when they make loans. There is a broad consensus among economists that MMT won't work.
I don’t get it.
Did the abandonment of the gold standard in 1973 result in a different way to think about federal debt?
Yes! Prior to that, in principle, currency was gold-backed (you could theoretically redeem it for actual gold). The problem is that there is only a finite amount of gold in the world. If you want the economy to expand/grow, but the medium of exchange is limited, that causes deflation and puts the brakes on the economy.
Despite the problems with debt-currency (e.g. enables extreme inequality) it DOES allow the money supply to be more easily adjusted to match current economic conditions. That’s what the Fed is trying to do with interest rates. The problem there though, is when the money supply needs to shrink, it would make the most sense to take it from the people with the most money (wealth tax). However, if your goal in life is to become rich as possible, by whatever means necessary, you don’t want to give up a penny of your accumulating wealth. So the bill has to be passed to average citizens in the form of austerity measures.
It’s really a sad and unnecessary situation. If we (especially leaders) fully understood the system, funds could be available for every true need — healthcare, education, research, infrastructure, etc. This country could be model for the future. … or, we can have trillionaires and enough weapons to eradicate people and planet many times over. Which is the best deal?
Gracias! I’ve been trying to wrap my brain around the money-supply problem, which appears to be a problem thanks to the imperative to constantly grow. As we know, constant growth on a finite planet called earth is inconsistent with logic — right, Grrrl Scientist? Can a meaningful distinction be made between real growth (more stuff being made) versus fake growth (based on inflation of the currency)?
Thanks for that explanation! It still seems like a heck of a bad way to run our government! We should have balanced books like businesses must have! But even they know how to cook the books.
I appreciate the comments and feedback Shirley! However, I need to challenge one more bit of “common wisdom”. At the federal level, calls for a “balanced budget” generally have the same motive as the phony debt-ceiling — they are both attempts to cripple the proper functioning of government.
I know this is very counter-intuitive, but budgeting at the federal level is a different game, with different rules. Why? Because unlike households, businesses, corporations - even state and local governments - the federal government is the SOURCE of money! Yes, all of the former entities need to take in funds first, before they can spend on needs — and if they spend more than they can receive, they are in trouble.
Because of our debt-based currency system, the money-cycle at the federal level is backwards: the money is spent (i.e. created) into the economy first, it does it’s work, then it is drawn back in the form of taxes and loan repayment, so that the next budgetary cycle can begin. I know it sounds crazy on first hearing, but there are legitimate reasons for running it this way.
The naive objection is that the above will cause inflation. However, inflation (too much money, not enough goods) only happens when new funds are not applied to true needs of the country and its people, but rather are squandered on unnecessary projects designed largely to enrich the already rich — both people and corporations.
I wish I’d learned this in Econ 101.
The 19 January issue of The Nation magazine has an article by economist James K. Galbraith that discusses the debt ceiling. He points out that the federal government is obligated by law to create money at will, which it does, and that the federal government does not need private investors to provide money to it. He writes that the federal government does not borrow in order to have funds to pay its obligations. In short, our seemingly common-sense view of federal finance -- the household-budget view -- is wrong.
The federal government can always afford to carry debt, just like households can but within the limits of what total income compared to the debt show are affordable. We are really beginning to push the limit of what the government can afford. The ability to just print money to pay for government spending is limited by the amount of inflation it causes. We still need taxes.
But it's always the Republicans. We might not embraces the Democrats for everything they offer but Republican proposals are more often so repugnant and unAmerican that we recoil. Never vote Red, always vote Blue.
Like this but how?
I lived through a similar situation when I wuz screwed along with my law clerks and our clerical staff. The federal government partially shut down for 16 days in October 2013 because of a lapse in appropriations. According to OMB, about 850,000 federal employees were furloughed for part of this time. My agency decided to layoff some workers but kept the vast majority on the payroll. My "subagency" comprised of judges and staff were laid off. To this day, I feel that it was done because judges are far older than the rest of DOL agencies. I lost $3500 Never reimbursed. We protested and had to hire lawyers. Miscarriage of justice by the US Ct/ for the Federal Circuit. https://cite.case.law/f3d/772/890/
After I retired, the government shutdown from midnight EST on December 22, 2018, until January 25, 2019 (35 days) was the longest government shutdown in history and the second and final federal government shutdown involving furloughs during the presidency of Donald Trump.
I add that had Secretary of Labor Tommy Perez and his principal deputy Chris Liu been leaders, they would have waived their salaries.
Perez is a Clintonista. He tried to run for Gov of MD this time, but lost in the primary.
Yep. Accountability. That was a big part of the framers original premise wasn’t it?
Let's pay the politicians a wage which is in line with their job responsibilities and titles. They grift when in office because, in the private sector, they would make many multiples of their government salaries. Start by campaign finance reform, not by punishing the ones who could actually make a difference to the nation. Getting rid of Citizens United would do more for this country than anything you've proposed here.
Me too me to!!!
I'm having trouble understanding what you're saying here. Your plan seems to hurt the most vulnerable? Am I wrong?
Seems to me that the most vulnerable are most of us. There need to be some things that we can all count on. Healthcare (already a mess) and social security need to be dependable and rock solid. Someone who loses their job to illness, then loses health insurance, then can’t get quality healthcare to recover, can’t meet living expenses for rent, food, meds, loses their housing, consequently becomes unemployable at wages that support ….. that is very wrong and it’s offensive. Yet it happens every single day. This country and both political parties need to be better than that. Of course it’s no problem for the 1 percenters who feel like they still need more.
I see this so often Roger. If there was one job I would love it’s helping to untangle big problems such as these. I’m not sure how to do that so all I can do is keep you and so many other good people in my prayers. I do hope you and your wife are able to break through to better health.
So good to hear that you are together and still making a difference! Teachers deserve better too. Although I’m biased perhaps because my wife is a teacher. Another system that needs fixing. Her retirement economics are disappointing. While administrators can stack pensions, teachers cannot. After a private career entitling her to social security she began teaching. Decades later we learned that to claim her teachers pension she must waive her social security and my death benefits if I pass first. Still, our house sees students old and new every week. The closets and cupboards are open to all who enter. A safe place. She makes a difference too and it’s a pleasure to be part of it.
My first reaction is that I keep wondering if it's going to take actual shocks and real suffering to make Americans aware of the deep, structural change that is imperative. For example, a GOP-led default, leading to the total repudiation of the GOP. I'm thinking about the 1929 stock market crash. Or even 9/11, which allowed the Bush morons/criminals to use an Al Qaeda terrorist scheme to rationalize the invasion of Iraq. (The example only illustrates that shock is a motivator.) What will it take to address climate change? How do you get peoples' attention? This follows your last piece about the media's negligence. They were certainly negligent about Iraq. And they elected Trump out of their capitalist desire to attract advertising dollars by being an entertainment vehicle rather than the fourth estate. Maybe it takes a disaster to make change.
It’s not the stock market in danger it’s the bond market. The war is between interest and work . The entire deficit is paid yearly to bond holders . The 1% own 99% of the bonds .. we need usury laws reinstated. I get credit “ offers” at 29.99 percent every day … that’s just wrong . Only people with w4s are paying full fare ..
@taojones. Here I totally agree with you!
It does take a disaster. The depression is the only reason FDR was able to put his programs through. But after the worst was over, the republicans immediately started to undermine what he did. They worked at it steadily and in the 1970s went in full war mode to destroy his legacy. They've been very successful and they control the levers of power in the media and the government, so yes it will take a disaster.
Even a short term shutdown of the government didn't do it. It has to be a complete disaster.
Actually, the GOP started as soon as Roosevelt signed the first acts in 1935 to lift the ordinary citizens out of the cesspools and into the sun. In 2008 to 2012 it was the super wealthy who got bailed out. Like Biden, Obama held on to so-called economists from George W's administration, just as Biden has from Trump's, in both cases to the detriment of the working classes in America and the benefit of the super wealthy. I don't understand why.
I think because any pushback against the existing system that preserves the wealth of the haves at the expense of the have nots would immediately spark a sabotage of every single item on the progressive agenda. We liberals are allowed to play with beach balls in the shallow end of the pool, but that’s about it.
Damn straight, Kerry! Spot on!
We have extreme political polarization because conservatives run a massive disinformation program in right-wing media and online. Our MSM media is corporate owned and increasingly being bought up by right-wing billionaires. They have their own agenda and keeping corporate taxes low is at the top of the list.
Yes, their point of view is a obvious. They do not understand, or want to understand, that people live their lives according to their inbuilt talents, which is reflected in their chosen work. If your inbuilt talent is to be a clever manipulator of the odds of investment, then you will be a banker, a speculator who will profit or lose like a gambler but with no necessary expertise in any trade or profession. I am not a Roman Catholic, but I do understand and sympathize with this church’s official policy against usury. From what I have read, the Islamic financial industry, while adhering to a no-usury policy, actually calculate interest percentages but present financial-handling fees as a fixed price — in order to not offend the Prophet. Looking for commentary on this topic.
The level of income inequality we have now is much broader than usury but it is the same concept. Conservatives have stacked the entire economy to redistribute income from the bottom to the top 1%.
In December 2022, when the Dems were still ruling Congress, why didn’t they raise the debt ceiling? Surely they knew that the Reptilians would try to blackmail the USA after taking control of the House. What strategy is being pursued by the Dems?
Strategy? Dems? Oxymoron of the Day!
Great post Kerry, thanks
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WTF? That post is totally out of character for Prof. Reich. He's got to respond here.
Is this really Robert Reich? I've never seen you respond to anything.
>Exactly!< I posted a request to confirm it's Dr Reich's post, and not someone who hijacked his ID.
It is time to disarm the debt ceiling.
The New Republic has a nice piece on why sec. 4 of the 14th Amendment might just be the "red flag" law that allows the removal of the weapon from Mr. McCarthy.
https://newrepublic.com/article/169857/debt-ceiling-law-terminate-constitution
Applying Sec. 3 of the 14th Amendment could eliminate Mr. McCarthy from the speakership if not Congress by expelling his seditious colleagues that broke their oath of office.
DO IT NOW!
I'm seeing journalists and blog commenters talk of McCarthy as a victim of his own ambitions and exploitation by the hard right MAGA sympathizers but he's one of them as has been all along.
Disarm the debt ceiling? From the link you posted today:
(Actually, and I've posted this response to a couple other folks here, today)
I was struck by something said in the article in The New Republic from a link posted earlier today:
"Were Congress to use its power to willfully trigger a debt ceiling default, it would be no ordinary constitutional violation. It would be a repudiation of the Constitution in a much more fundamental way, a betrayal of the very purpose of leaving the Articles of Confederation—which did not grant borrowing powers to Congress—behind; that is to say, it rebukes the very thing that gives our Constitution its legitimacy. From the perspective of Hamilton in Federalist 30, it would be tantamount to terminating the Constitution itself."
Another statement from that same article worth attention is:
"But that’s the original intent of the 1787 Constitution, as set out by its principal soothsayers, Hamilton, Madison, and Jay: Congress has the power to borrow in Article I only on condition of avoiding a default, not for enacting one. Now let’s turn to the restatement of the original intent of the “1867 Constitution,” as modified by the three Civil War amendments, the Thirteenth, the Fourteenth and the Fifteenth. Under these ratified amendments, the argument for the Debt Limit Statute becomes a form of treason."
And finally:
"Debt has been the country’s greatest asset, as Hamilton knew it would be. Debt let us grow. Debt let us win World Wars I and II. In this century, debt saved us from the financial crisis. Debt let us survive Covid. A fine recent book, In Defense of Public Debt, by four distinguished economists, explains how much we owe to debt. We have an obligation to save it for crises ahead and use every means, legal or political, that may help to do so. It is typical of the GOP to treat the country’s debts as dishonorably as Trump treats his own. Default is his business model. The Framers would be horrified if we made it the country’s model too."
I'm thinking about ol' Tweety's call to abolish The Constitution, here.
It appears to me that a debt ceiling is another, unconstitutional Republican hustle.
=================> Don't "disarm" it; >abolish< it and craft law >prohibiting< it!
(Sorry for banging on, but this article got me all worked up!)
Understandably so, and I agree with your conclusion about the willingness of this current slop - oops I mean crop of Republicans, to throw out the Constitution and return to the good ol' days of authoritarianism. The GOP ideal pyramid with them and 'ol' Tweety' atop and 350million slaves obeying their every word.
Can you say: "Confederate States of America" ‽
A >very< good article!
@Dr. Doug. The problem being that it requires Congress to act on Sec. 4... Hard to get a man to see the problem when his salary depends on him not seeing it.....
Congress has already done its work by appropriations to spend and therefore borrow.
The Executive needs to take steps to invoke the red flag law of the 14th Amendment and end the debt ceiling game.
thanks for posting. have passed on. seems like trying.
Thank you for this article. I hope the President and his staff read and get into action quickly.
I was never a big Hamilton fan, but I like this.
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has the debt ceiling always been a part of the US fiscal and political landscape? i guess i can read about its history myself, but it's easier to ask here since i've already got numerous deadlines looming this month to avoid my own personal fiscal crisis.
i have no idea where the rethuglicans got the audacity to demand that the biden administration "must" not pay social security and medicare benefits? those are THE PEOPLE'S MONEYS that were taken from their paychecks each pay period throughout their entire working life -- not funds from taxes, and certainly not funds that those thieving rethuglicans should be able to wrap their grubby sticky fingers around. the idea that SS and MC are anything other than the people's money is a gigantic lie, repeated often, to deceive the people whom they plan to rob blind.
the only positive outcome to this economic hostage crisis is that the rethuglicans will hopefully .. maybe .. finally?? cease to exist as a party since they are so determined to sacrifice us all in their quest for absolute power over all our lives. i must say, though, that rethuglicans appear incapable of learning since they are -- once again -- heading down this well-trod road into their own self-inflicted disaster.
Dear GirlScientist:
Er, this is a wee bit wrong, and a common myth, that people pay for all of their Medicare and Social Security throughout their working lifetimes. The reality is that both are actually subsidized by taxes, mainly by the wealthiest Americans - you know, the Republican paymasters - which is why Republicans are so exercised by both.
But that's OK, that's what taxes are for, according to Adam Smith. They are intended to redistribute wealth in a system where the capitalist is over-rewarded for his or her efforts. Exhibit A, Mark Zuckerberg. Look no further than "Wealth of Friggin Nations." It's all there. Smith invented progressive taxation, and this should be part of every school curriculum.
By the way, people confuse government debt with government deficit. The latter is the difference between what the government takes in, through taxes, and expends, on things like SS and MC. Kitchen table stuff. Deficits are usually run up by Republican presidents - who cut taxes on the wealthy - and are paid down by Democratic presidents.
Debt is far more nebulous. If Joe buys a house for $ 1 million, the national debt goes up by $1 million, even though Joe takes out a mortgage with a US bank. So, debt is, as I understand it, roughly speaking, the total amount of money owed, which includes inflation. So, a bit of debt may actually be a good thing - an indication of economic activity. For example, throughout the 19th century, at the height of British imperial wealth and power, British national debt was 150% of GDP. We're nowhere close, approximately 120% of GDP. Nobody would accuse Victorian governments as being guilty of "runaway spending."
As far as the economy is concerned, national debt is a total non-issue, and should not have to be haggled over every year. The puzzling thing is (i) why average people vote Republican in the first place, and (ii) why Republicans continue to risk extinction.
Time the people wake up and grant Republicans their death wish.
"Wealth of Friggin Nations" gave me a giggle just now when i looked for it on amazon. adam smith, Wealth of Nations, vols 1-5, is, i think, what you were referring to? anywho. i am known as a voracious reader, but i don't think this is a book i'd read anytime soon. (apologies.)
to answer your question about why average people vote rethuglican ... according to what i see and read and experienced until i was 16yo, is either blatant racism or sexism that they now can comfortably vocalize, or the delusion that they too will become insanely wealthy and powerful just like elmo and jeff and mark and they do not want to give up even one thin dime for any reason to the unwashed masses. there probably are other reasons as well, all of which are dystopian.
All “ national “ banks worldwide are privately owned . The idea that anything you get takes something away from me .. you need to be hungry and scared to volunteer as a wage slave and they know it
@taojones. Now you are spewing falsehoods. The Federal Reserve System is not "owned" by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.
The US dollar was copied from the civil war union “ greenbacks “ used as script for army supplies . The fed was formed to verify reserves at say the bank of Denver . Each plank was printing its own script . The fed was formed to fix that and process checks . Nixon put the us treasury out of the money business in 64 floating us off the gold standard and ending the silver certificate . If you don’t want to sound like a horses ass you have to read this in it’s entirety till then bug off .. https://www.dropbox.com/s/628bzu6qp6adxxb/tradgedy%20and%20hope%20banking%20section%20.pdf?dl=0
@taojones. How does this old history alter the 1913 act?
The balance between private interests and government can be seen in the structure of the system. Private banks elect members of the board of directors at their regional Federal Reserve Bank while the members of the board of governors are selected by the President of the United States and confirmed by the Senate.
... then presumably they can be fired by Congress?
No because congress did not appoint them . Arlen Spector annually brought up the fact the building on the national mall should pay rent to the fed .. they are NOT a branch of government because politicians want money policy at arm’s length https://www.dropbox.com/s/628bzu6qp6adxxb/tradgedy%20and%20hope%20banking%20section%20.pdf?dl=0
Spot on GrrlScientist!
The problem is that every cent spent by the government is financed through a bond issue. The interest on that bond is paid to the 1% but not by corporations or the triple tax free bond holders . You’re wrong about the mortgage going onto the national debt that’s all private debt unless it’s laid off at a discount to Freddy Mac or whatever. The deficit is just the interest owed this year . It amounts to about 2% of the gdp . If you pay 2% of the gdp to 1% of the people for 150 years ( Industrial Revolution) why are you surprised that 20 people own 90 percent of everything….
Lots of disinformation here. First off the Social Security Trust Funds are separate from the general funds of the US. Medicare has a trust fund also as do many other government entities, such as the Black Lung Fund, created by contributions by coal mine owners. IMHO Republicans crave to reach the corpus, trillions, to privatize them. I documented some attempts to bankrupt the funds. https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1601&context=naalj
Girl Scientist, Michael Hutchinson, deficit financing was devised primarily by Al Levine, known in history as Alexander Hamilton, as expressed in the Federalist Papers and later in 1790, Hamilton as our first Secretary of the Treasury presented Congress with his first Report on the Public Credit, which included a plan for addressing the nation's staggering $40 million debt. Hamilton recommended paying only the interest on the debt and deferring principal payment until far into the future. https://www.ouramericanrevolution.org/index.cfm/page/view/m0202#:~:text=In%201790%2C%20Hamilton%20presented%20Congress,until%20far%20into%20the%20future
Chris Martin lays out much of the history after that below. The U.S. budget deficit was sliced in half for fiscal 2022, the biggest drop in history following two years of huge Covid-related spending.
Though still large in historical terms, the budget shortfall declined to $1.375 trillion, compared to the 2021 deficit of $2.776 trillion.
The decline would have been steeper had it not been for the Biden administration’s student loan forgiveness program. Education spending totaled $639.4 billion for the fiscal year, $408 billion higher than estimated.
The 2022 fiscal year saw $4.896 trillion in revenue against $6.272 trillion in outlays. The outlays number represented about a $550 billion decline in spending but an $850 billion increase in revenue. The revenue total is by far the highest ever for the U.S. government. Deficits in the previous two years soared as Congress shelled out massive sums to combat the pandemic..
Federal revenue for 2022 is 19.6% of GDP. In 1948 it was 19.8% of GDP. In 2000 it was 19.75% of GDP just before the Bush tax cuts. In 2020, the United States was ranked 32nd out of the 38 OECD countries in terms of the tax-to-GDP ratio. US safety net spending is less than the OECD average. We don't have a spending problem, we have a revenue problem. Corporate income tax that was 7% of GDP in 1948 barely reached 1% in 2019, 2020 and 2021.
Thank-you, Mr. Solomon...I was considering doing the usual comment trying to explain what you just did...but I get tired to doing this (on other various forums). Such a lot of misunderstanding about who pays what and how much into where...
All of that confusion is deliberate IMO. Furthermore, GOP's penchant to put government spending & deficits in laypersons household terms, so the minions can (mis)understand it, is also deliberate.
The more convoluted the government can make things, the easier it is to deceive the public.
Al Levine? really? New one on me. But see:
https://web.archive.org/web/20110615161002/http://www.jewishpress.com/pageroute.do/21464
Apparently there was a significant Jewish community on Nevis, Hamilton's birthplace. And IIRC he was an rphan.
His mother Annie Levine's grave is on the island of St. Kitts. The bastard allegation followed him.
Abused as a lawyer. According to some sources that, and the allegation that Burr was an incestous pedophile, probably led to the duel.
Wow--thanks for that link. Isn't it fascinating what we can learn when we have time to pursue obscure references!
Hell, he wrote the musical, and got a Tony for it, according to his official congressional bio.
The thing is the deficit trillions are being collected by someone and the finger is always pointing at who’s paying it not whose pockets it ends up in .. meantime your earnings based on minimum wage are generating the money for paying these people back . Especially when it’s the fed being paid back with workers dollars for money it just “ created” to buy bonds with .. why is it only me asking this ?
Some of us are creditors -- we get government "benefits" -- and also are small investors, mainly through mutual funds.
At current rates, some government backed bonds yield 8%. I always ask why we don't arbitrage -- trade our high interest bills and notes for say, Japanese bonds at less than 1%? The answer is that we want our investors to rely on our "stable" and :"secure" government.
My response is "Ho Ho Ho."
Of course, I am the same guy who lost my pants when Mexico devalued the peso in 1982.
@taojones. Again, a bit here is not true. Taxes are the main source of payment for the nation's expenditures. Total federal tax collections, including payroll and other taxes, reached an all-time high in nominal terms of $4.05 trillion in fiscal year 2020. but Federal expenditures were $6.6 trillion the same year. The $2.1 trillion shortfall was financed by debt with the debt pie consisting of Treasury bills, Treasury notes, bonds and inflation with a more opaque element being financed by something called intragovernmental debt. There are lots of folks who like to make a comparison between the deficit and the interest due, but this is a political point, not technically true. The interest costs can be managed by the Board of Governors of the Federal Reserve Bank. When they raise interest rates, as Jerome Powell and the others have been doing, they make everything more expensive for regular folks and they pass over a nice windfall to the people and other governments who have bought the above mentioned debt instruments. Basically, for the Fed to raise rates they are taking money away from regular wage earners and giving a large part of it to China and another large part to the richest people in the world, most of whom are not EVEN Americans.
To me, the topper is that many people doing business and investing in this country do not pay US taxes. Add the domestic tax evaders, price fixers and price gougers.
A big chunk of Medicare funding comes from the general fund but Social Security is a separately funded self contained program. If you google "General Revenue & the Social Security Trust Funds crfb" You will find an explanation of how general fund revenue gets added to SS. All of those methods are there to make SS whole for changes the federal government has made that would otherwise deplete the SS trust fund. SS has nothing to do with federal deficits or the national debt.
Don: The federal government has no primary source of income, other than taxes and bonds. According to the website you allude to (Committee for a Responsible Federal Budget), "when Social Security needs to start cashing in its holdings of Treasury securities to meet its benefit obligations, the federal government [the general fund] will have to increase its borrowing from the public, or raise taxes or spend less, to finance these costs. "
So, SS is, in fact, linked to the Federal deficit, and this Federal contribution will continue to grow as more and more Americans retire.
This means, as the years go by, either taxes will have to increase, or benefits decrease, to balance the federal budget. The Republican party, of course, are laser-focused on reducing benefits.
Now I would say that taxes on the wealthiest Americans should increase. THEY would say that's socialism, to which I would reply, no, that's originalist capitalism. Socialism is what exists now, not for the common man, but for the wealthy. Indeed, the wealthy are the new Welfare Queens, for what is not paying your taxes but government welfare for the richest of Americans?
To Smith, taxes are a badge, not a burden, for any man who is capable of paying taxes thereby demonstrates that he is a slave to no-one. I think Smith viewed taxes as a necessary condition for working capitalism. His system over-rewards the capitalist, and paying taxes is not only a way of redistributing wealth into useful things that the capitalist has little interest in, such as roads, bridges and schools - something we now refer to as infrastructure, but it's also a way of preventing said capitalist to become so powerful that he could distort the market, which to Smith was central.
What do we see now? Market distortion up the wazoo, monopoly, oligopoly, and crumbling infrastructure.
Time for a change.
In the early 1980s FICA taxes were increased to build a surplus of SS funds to cover the eventual retirement of baby boomers. Those excess contributions became the SS Trust Fund. The Federal government borrowed that money to cover general fund liabilities. The Federal government is obligated to pay that money back just like it is for any other investor. There is no special connection between SS and the national debt other than an obligation to repay what was borrowed just like money borrowed from any other investor in government bonds. No idea why anyone is even talking about spending cuts. Corporate taxes that were 7% of GDP in 1948 were barely1% of GDP in 2019, 2020, and 2021. That's over a trillion dollar annual reduction in taxes. Corporate profits that averaged 6% of GDP from 1950 to 2000 are now topping 12% of GDP. We're running up the national debt to give breaks to people who are gouging the living daylights out of us. This has to be some kind of mass insanity.
Michael H This would be great to see the demise, should have happened decades ago BUT it’s so much harder to do with a right-wing media monopoly.
But when it cones down to it, the rescumlicon-supporting dupes would be hardest hit by taking down these programs. Too bad we can’t make them volunteer to refuse anything from SS or medicare since they’re the ones who elected their reps.
Things would change very quickly then.
Is Joe buying a house because he needs a place to store classified documents?
Sorry, couldn't resist.
you've had your moment of shame, now sit down, greg, and listen. the adults are speaking.
OTOH, Charlie (Koch) is trying to buy THE House.
robert? is that YOU??
>taps computer screen<
methinks our mentor has been hacked.
This number has been reported for spam.
@JerryM. Please say who you are addressing?
The US debt ceiling is a relatively new development.
From 1798-1917, Congress had to pass legislation that specified the amount of each new bond issue and authorized the Treasury to issue the bonds. In 1917, Congress passed the Second Liberty Bond Act. This legislation authorized the Treasury to issue bonds and pay for other types of federal debt without specific legislative approval as long as the aggregate amount of debt was below a "debt ceiling" set by Congress. It also specified the amount of debt the Treasury could take on from individual categories like bonds and bills.
In 1939 and 1941, Congress set a hard limit on how much debt the Treasury could absorb regardless of category. They raised the "debt ceiling" each year from 1942-1946. In 1946, Congress set the debt ceiling at $275 billion, which is where it stayed until 1954 (amazingly, the Korean War was paid for via taxation!) The debt ceiling has been raised over 100 times, including 74 in the 20th century.
Another wrinkle in this is the 1979 "Gephardt rule" named for House Majority Leader Dick Gephardt (D-Missouri). Gephardt foresaw the debt ceiling becoming a political issue, and successfully got the House to establish a parliamentary rule that stated the debt ceiling was automatically raised whenever Congress passed a budget. House Republicans repealed the rule in 1996.
thank you for the clear explanation. very interesting.
@Chris. The facts really help the conversation here! Thank you!
Crris: Thanks. Incorporate my remarks above by reference as if fully set forth at length.
Of course they did...
I'm tired of playing chicken with a bunch of traitors. The people who actively agreed with the insurrectionists are playing games with the lives of millions of people because they have nothing better to do and are the most irresponsible people in our country.
They get paid their salaries when we, the people who voted them in, depend on them to allow us to get the money we paid into the government for our pensions. They hold those funds hostage to their puerile juvenile antics of oneupmanship and poker for fools.
They don't care if we get evicted or go without food. They don't have those consequences to live with.
What I think is the minute it looks like we go into default, they lose their pay until they capitulate to us on our demands to behave like the representatives of the government of the people, by the people and for the people of this country.
I'm tired of these fools telling me that for 43 years I did nothing to earn my Social Security but I'm supposed to bear with the prospect of being denied it because they don't feel like giving it to me.
Eff them.
I'm fed up with it all. No other country in the world allows this to happen on a regular basis. It's about time they grew up and started acting like adults.
They should never have been on the ballot, nevermind take an oath of office. They clearly do not know the rule of law, or the Constitution. Have no clue what their job is. Should receive no compensation . Our vetting process for candidates for office in government should be much more thorough. They are cynical sell outs,, hell bent on destruction, like tfg.
@Laurie. They're all lawyers. They all know it. They just cynically don't show it...
Benjamin R. ; MTG is a lawyer? Gosar is a lawyer too ?
When you say you're going to pay a legitimate debt, and don't, that's fraud. When you know from up front you aren't going to pay it, that's CRIMINAL fraud. McCarthy and the Repooplickins on the House Budget Committee (for a start) should be locked up.
After that, what? General strike? Massive tax resistance? One can only hope. Are there intermediate steps?
MLK wouldn't have gotten so far with nonviolence without the likes of the Black Panthers, SNCC, and Malcolm waiting in the wings as Plan B.
We need a Plan B now.
After reading this, I was curious to see who holds the greatest amount of US debt. Googled. I thought it was China. It’s actually Japan, China, the UK, Ireland and Luxembourg. Taken from Investopedia.com. Also looked at the debt when former president Obama left office, and then when Trump was in office. And you had Reaganonomics prior. Every president has been dealing with this since. It seems that under the gop, the debt ceiling was more severe, including not creating new jobs. A very interesting article in The African Eye Report by Masahudu Ankilu which provides a chart from Washington to Biden in change in total debt from beginning of term until the end of term. This chart was provided by TradingPedia, so I don’t know how fully accurate it is. But interesting nonetheless. Pre pandemic, Trump was on his way to increasing the amount of debt he inherited from the Obama administration.
As you mentioned, this has huge ramifications for the global economy. In order to protect the regular populace, the debt ceiling has to rise. Thank you for sharing this wisdom, as you’ve dealt with this under Clinton. It’s obscene how the gop is holding us hostage.
@Kevin. It really helps when you bring in the facts! Thank you.
Because the Social Security Trust Fund doesn’t use all its generated capital, it invests the excess funds into U.S. Treasuries. If the Social Security Trust Fund needs money, it can redeem the Treasurys. As of June 2021, intergovernmental debt hovers around $6 trillion, making the US government the largest single owner of US debt.
The public debt consists of debt owned by individuals, businesses, governments, and foreign countries. Foreign countries own roughly one-third of U.S. public debt, with Japan owning the largest chunk of American debt hovering around $1.26 trillion. US debt to China ranks second, with that country owning roughly $1.07 trillion of American debt.
How surprising that Kevin McCarthy would sell his country down the river for his own personal power trip. Kick the ladder out from underneath him. After the Southwest Airlines disaster no one will enjoy the FAA or Air Traffic Controllers undermined. Or Social Security or medicare checks not being sent. After the Republicans tank, when it is politically possible, disarm the debt ceiling so these idiots never do this again. Good luck in your next job as dog catcher in Bakersfield, Little Kevin. Bow wow.
@D. White. I'm really catching your vibe here! Woof!
Not just "woof!" GRRRR!! {SNAP!}
Meow!
Isn't totally absurd the whole point? That's the platform - totally absurd nihilism.
Yep. It's a charade they have to play so they can call themselves "fiscal conservatives."
If they prioritize and cut border control and food inspections, they are making the US less safe. Indeed, cutting vital programs is absurd. They're not about sound policy, just appearence.
Danny Piper ; and hatred of the voters.
It's just another power trip for the illegitimate, greedy minority. They should not have been on the ballot. They are anti Democracy seditionists.
JerryM ; the obscenely wealthy own k-mac's idol. Tfg., from whom he gets his marching orders.
Shame on the last Congress for failing to raise the debt limit beyond all foreseeable need when it had the chance. This looming train wreck isn't a surprise; it was anticipated months ago.
Just like the overruling of Roe, which the Democrats had 50 years to prevent.
Indeed. They could've simply passed that "Gebhart Rule" someone mentioned elsewhere here today.
DZK; CRUELTY is the point . They want to see what they can get while threatening the Common Good by holding it hostage. They really hate us all, not just the 'libtards' ; even those who ignorantly support them and stupidly, hatefully laugh with glee at what is being done to even their own children. They should get a big memo alerting them .
Actually, and I've posted this response to a couple other folks here, today:
I was struck by something said in the article in The New Republic, that someone here posted a link to here today:
"Were Congress to use its power to willfully trigger a debt ceiling default, it would be no ordinary constitutional violation. It would be a repudiation of the Constitution in a much more fundamental way, a betrayal of the very purpose of leaving the Articles of Confederation—which did not grant borrowing powers to Congress—behind; that is to say, it rebukes the very thing that gives our Constitution its legitimacy. From the perspective of Hamilton in Federalist 30, it would be tantamount to terminating the Constitution itself."
Another statement from that same article worth attention is:
"But that’s the original intent of the 1787 Constitution, as set out by its principal soothsayers, Hamilton, Madison, and Jay: Congress has the power to borrow in Article I only on condition of avoiding a default, not for enacting one. Now let’s turn to the restatement of the original intent of the “1867 Constitution,” as modified by the three Civil War amendments, the Thirteenth, the Fourteenth and the Fifteenth. Under these ratified amendments, the argument for the Debt Limit Statute becomes a form of treason."
And finally:
"Debt has been the country’s greatest asset, as Hamilton knew it would be. Debt let us grow. Debt let us win World Wars I and II. In this century, debt saved us from the financial crisis. Debt let us survive Covid. A fine recent book, In Defense of Public Debt, by four distinguished economists, explains how much we owe to debt. We have an obligation to save it for crises ahead and use every means, legal or political, that may help to do so. It is typical of the GOP to treat the country’s debts as dishonorably as Trump treats his own. Default is his business model. The Framers would be horrified if we made it the country’s model too."
I'm thinking about ol' Tweety's call to abolish The Constitution, here.
I'm sure you recall that my position for >months< is that these Q-publicans are a pack of goddam neo-Confederates, and to my thinking, this article supports that position.
I'll repost the link: https://newrepublic.com/article/169857/debt-ceiling-law-terminate-constitution
DZK ; It looks like they are trying to get rid of the Constitution. Tfg said he wanted to. Can it happen?
DZK ; Can the Biden administration do what is suggested here?
Since I don't think Q-publican initiatives will get past the Senate, I don't think Biden will need to pull out his veto pen, though.
Well, he's a Democrat with a Veto! Government offices may end up gathering dust, for awhile, though.
Then what? No remedy but to live in chaos amongst crazies, armed to the teeth?
Only of the Democrats allow it - for now. Unfortunately, it may end up in the hands of the voters, who may or may not comprehend exactly what is at stake.
Dr Reich: please confirm this is you and not someone who hijacked your ID.
It's a hijack.
I figured as much.
It was grown/ nurtured and now weaponized, like anything else they can and will wield.
Why is the legislation creating the debt ceiling allowed to continue? It threatens the good credit of the United Stated which Politicians swear to up hold. Political life is caught in a wasteful tangle that distracts from solving real
Problems rather than the self created. Practical
People must exist in both parties who would join to repeal this evil .
Our “ system “ is to borrow every cent to run government. There’s a class of people living off that interest … the national debt is owed to someone.. ask yourself who …
@JerryM. LOL! You are right - the answers are not on Hunter's laptop! But Speaker McCarthy will do his damnedest to get everyone looking at the distraction while his cronies are picking our pockets!
Pay no attention to the party behind the curtain! LOL!
When you have a house leader who would sell his own party and office’s interests to be speaker and cut all kinds of deals with the thugs of the non-government caucus for his position, is it surprising that this is the path the speaker with the support of the majority party has now chosen? It is as plain as the sun rising. We need creative solutions to counter this - something that should already have been thought about.
@John G. Tell the Speaker to eff off until he presents responsible measures. One of the 6 sensible Republicans can call to vacate the Speaker's chair every time he brings a stupid bill to the floor.
Can one Democrat not also call for a vote to vacate the speakers chair? Then the six sensible Republicans might vote with them? Just asking.
The US government: "Too big to fail"? Bail outs required? (Again?)
Here's a concept: As it is _politicians_ that keep on causing these Budget crises, how about them helping to pay down the National Debt? If EVERY candidate for any office in the land was required to contribute 5% of what they raise for campaigning to be set aside to be used to pay down the National Debt ONLY, even at $31.5 _trillion_ dollars, that sucker would be paid off in just 20-30 years. Forty years, tops.
Seems extraordinary that it is allowed/accepted that routine processes like appoitment of a Speaker can be subject to blackmail like this. The demands that McCarthy caved in to were made by a small faction of one party without support of senate or president.
The form of election seems wrong because it allows internal politics of one party to derail the government. Better require each party to propose a speaker, and choose between them. Or give members a second choice to apply if first choice not in top 2.
Seems to me that the US is paying the price for not having long ago addressed the democratic deficits it its avowedly 'democratic' system.
Yes, like the Electoral College, as one example of many such Democratic deficits.
When we don't get our SS, we will be forced to live in the streets. I will. I am 70, with a 5 disc fusion that failed. No work for me. Will Congress pay their parents/grandparents SS? Or force them into the streets? It's my money, pay me. Stop with the games. To hell with the "bought speakership" to hell with McCarthy who sold his soul, to hell with MTG, Boebert, Perry, Jordan, Gaetz and the rest of the maga extortionate. Vote them all out of office.
Kick 'em out!
The inmates are in charge AGAIN.
The people who actually should be inmates based on their traitorous behavior.
The party of tRump which gave 1.9 trillion to billionaires is at it again, on steroids. Seems that there is no problem with Republicans' raising the debt ceiling when They want to do it. Then, when Democrats get back in power, they have to 'clean up' the mess, for which they are blamed.
@Laurie. AND the Democrats clean up the mess by raising taxes on tax cheaters (oligarchs and corporations) while raising the debt ceiling to pay for obligations already incurred. This is how Republicans drive UP the debt - by allowing the truly wealthy to avoid their fair share of the National tax burden.
Benjamin R. Yes, they thrive on cheating and stealing. Then make the real taxpayers take another hit!