What will happen if the debt ceiling isn't raised?

[IGotWorms]

Now that the name calling is over, can we get back to answering the question at hand?

 

What will happen if the debt ceiling isn't raised?

 

What will actually happen in terms of the country's ability to pay its debt? I'm not sure. Geithner and the other financial big-wigs have repeatedly assured that the United States will not default. I tend to believe them. If it comes down to it Obama will issue an executive order to prevent that from happening. Is that constitutional? I dunno but at the same time I don't think the courts are going to order that the United States default.

 

So my guess is that an actual default doesn't occur. The problem is that regardless of what actually happens it will spook the markets and convince creditors that the United States can no longer be trusted to pay its financial obligations. Moody's has said that it may downgrade the U.S.'s rating and S&P has indicated the same. The stock market will almost surely take a nosedive. Those are the kinds of things that I'm really worried about.

[BLS]

Even if we do NOT extend the debt ceiling, the US will NOT default on its debt payments. THAT would be catastrophic.

They will simply have to cut spending somewhere else.

[Reality]

Even if we do NOT extend the debt ceiling, the US will NOT default on its debt payments. THAT would be catastrophic.

They will simply have to cut spending somewhere else.

 

This has been my point from the beginning....

[IGotWorms]

Even if we do NOT extend the debt ceiling, the US will NOT default on its debt payments. THAT would be catastrophic.

They will simply have to cut spending somewhere else.

 

Again:

 

1. A drastic and immediate cut in spending is hardly a good idea when you are in the middle of a tepid recovery. Cutting spending over the long term is a great idea, but an immediate reduction in spending (some have said something like a 40% cut would be required) would have disastrous effects on the economy.

 

2. It will harm the markets and the U.S.'s credit rating, regardless of whether the government actually defaults on any debt.

 

You're playing with fire here. I know you want big cuts but this is not the way to do it.

[Strike]

Again:

 

1. A drastic and immediate cut in spending is hardly a good idea when you are in the middle of a tepid recovery. Cutting spending over the long term is a great idea, but an immediate reduction in spending (some have said something like a 40% cut would be required) would have disastrous effects on the economy.

 

2. It will harm the markets and the U.S.'s credit rating, regardless of whether the government actually defaults on any debt.

 

You're playing with fire here. I know you want big cuts but this is not the way to do it.

 

Spending more isn't either.

[Recliner Pilot]

 

 

2. It will harm the markets and the U.S.'s credit rating, regardless of whether the government actually defaults on any debt.

 

 

Why would it hurt our credit rating? Does your credit rating go down if you continue to meet your obligations while at the same time you do not add any additional debt? No. In fact, creditors think that is a good thing.

[IGotWorms]

Why would it hurt our credit rating? Does your credit rating go down if you continue to meet your obligations while at the same time you do not add any additional debt? No. In fact, creditors think that is a good thing.

 

Moody's and S&P says that it will. I'll take their word for it over yours.

[Recliner Pilot]

Moody's and S&P says that it will. I'll take their word for it over yours.

 

 

Moody's announced they will review the credit rating of the U.S., and it would be downgraded IF we default on our debt payments. Since it has been demonstrated that we bring in more than enough to pay our bills there is no reason that we would actually default.

 

I'm guessing S&P is taking the same stance.

 

My comment still stands. We have enough to pay our bills, and by not adding additional debt we improve our long-term outlook.

[IGotWorms]

Moody's announced they will review the credit rating of the U.S., and it would be downgraded IF we default on our debt payments. Since it has been demonstrated that we bring in more than enough to pay our bills there is no reason that we would actually default.

 

I'm guessing S&P is taking the same stance.

 

My comment still stands. We have enough to pay our bills, and by not adding additional debt we improve our long-term outlook.

 

WRONG. Moody's and S&P have said that the mere threat of a default is enough to downgrade the U.S.'s credit rating, regardless of whether an actual default occurs:

 

The U.S. got another warning on its credit rating late Thursday, as Standard & Poors said there was a substantial likelihood it could lower its AAA grade on Treasury debt because of the political battle over the federal debt ceiling and spending cuts.

 

S&P follows rival Wall Street ratings firm Moodys Investors Service, which on Wednesday put its top-rung U.S. rating under review for a possible downgrade.

 

The Treasury has set Aug. 2 as the deadline by which Congress must raise the $14.3-trillion debt ceiling or risk the government running out of money to pay some of its bills.

 

But the White House and Republican leaders have been at an impasse on how to cut spending to rein in the deficit. The GOP has been threatening to allow the Treasury to default on its obligations rather than lift the debt ceiling.

 

S&P made its announcement after markets closed, placing the U.S. rating on watch with negative implications, despite signs that a compromise over the debt ceiling might be emerging. The firm in April had revised its outlook on the U.S. rating to "negative," but Thursday's move was far more serious.

 

The decision signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days, S&P said in a statement.

http://latimesblogs.latimes.com/money_co/2011/07/us-credit-rating-sp-warning-aaa-cut-moodys-budget-debt-ceiling.html

[Recliner Pilot]

WRONG. Moody's and S&P have said that the mere threat of a default is enough to downgrade the U.S.'s credit rating, regardless of whether an actual default occurs:

 

 

http://latimesblogs.latimes.com/money_co/2011/07/us-credit-rating-sp-warning-aaa-cut-moodys-budget-debt-ceiling.html

 

Nowhere in your blog did it say that.

 

And once again, we won't be defaulting. There is enough money coming in to pay our debt. Geebus Angus Christ! How can you not grasp that????????????

[titans&bucs&bearsohmy!]

Nowhere in your blog did it say that.

 

And once again, we won't be defaulting. There is enough money coming in to pay our debt. Geebus Angus Christ! How can you not grasp that????????????

 

Yeah. Let's see, I have two of the most respected financial ratings firms in the world... or a psychotically partisan internet moron.

 

I think I'll go with...

[Strike]

Nowhere in your blog did it say that.

 

And once again, we won't be defaulting. There is enough money coming in to pay our debt. Geebus Angus Christ! How can you not grasp that????????????

 

He's dumb? He actually thinks

 

the monthly issuance of life-supporting funds for wounded veterans, disabled children, and countless elderly couples living on barely $2,000 a month

 

are at risk if we don't raise the debt ceiling. No one with half a brain thinks Obama would stop sending out these types of checks. It would be political suicide.

[Recliner Pilot]

Yeah. Let's see, I have two of the most respected financial ratings firms in the world... or a psychotically partisan internet moron.

 

I think I'll go with...

 

Neither of which say what you claim.

 

And then there's that whole "We have enough money to avoid default" thingy you can't grasp.

[Voltaire]

He's dumb? He actually thinks

 

the monthly issuance of life-supporting funds for wounded veterans, disabled children, and countless elderly couples living on barely $2,000 a month

 

are at risk if we don't raise the debt ceiling. No one with half a brain thinks Obama would stop sending out these types of checks. It would be political suicide.

 

Well, if does come to pass, he's going to have to stop sending out some kind of checks to somebody. I think these are all on the list of fine screwable options.

[Recliner Pilot]

 

1. A drastic and immediate cut in spending is hardly a good idea when you are in the middle of a tepid recovery.

 

So the snail darters out in Pelousi's district don't get 24 hour armed guards and breakfast in bed for a while. Fukk em.

 

We will still have enough to pay the debt,SS, medicare, the military, and then some.

[Strike]

Well, if does come to pass, he's going to have to stop sending out some kind of checks to somebody. I think these are all on the list of fine screwable options.

 

You're wrong. He can pay our entitlements. There will be cuts but they don't have to come from entitlements. And I don't see Obama saying to the "American Public" anything like "Well I prioritized and decided to leave the national parks open but not send a check to grandma." So I suspect I know how the prioritizing will go if this were to come to fruition.

[titans&bucs&bearsohmy!]

Neither of which say what you claim.

 

And then there's that whole "We have enough money to avoid default" thingy you can't grasp.

 

If you believe that, you are a moron. Oh wait, look who I'm talking to.

[Voltaire]

You're wrong. He can pay our entitlements. There will be cuts but they don't have to come from entitlements. And I don't see Obama saying to the "American Public" anything like "Well I prioritized and decided to leave the national parks open but not send a check to grandma." So I suspect I know how the prioritizing will go if this were to come to fruition.

 

The big money is Social Security, Medicare, the military, and interest on the debt.

 

National Parks are a tenth of one drop in the bucket. Personally, I'm hoping that Social Security and Debt interest are off limits, and all the money comes out of Medicare, welfare, and the military. And the only reason I want Social Security off limits is because that money was supposed to be put in it's own account to begin with, not lent to the government. Otherwise, that'd be the first thing at the top of the list.

[Strike]

 

The big money is Social Security, Medicare, the military, and interest on the debt.

 

 

They absolutely have enough money to make all these payments.

[titans&bucs&bearsohmy!]

They absolutely have enough money to make all these payments.

 

For what? A month? Two?

[Strike]

For what? A month? Two?

 

As long as they want. There is more money coming in than those programs require. But, to fund the groups I mentioned earlier,

 

"wounded veterans, disabled children, and countless elderly couples living on barely $2,000 a month",

 

that could be done easily and indefinitely.

[Voltaire]

They absolutely have enough money to make all these payments.

 

OK fine. Here's where the money goes. They have to cut ~33% of this:

 

http://www.usgovernmentspending.com/budget_pie_gs.php

[Recliner Pilot]

If you believe that, you are a moron. Oh wait, look who I'm talking to.

 

Believe what? That Moody's and S&P don't say what you claim? They don't, so I'm right on that one.

 

That we have enough money coming in to pay our debt? We do, so I'm right about that one too.

 

Next?

[titans&bucs&bearsohmy!]

 

That we have enough money coming in to pay our debt? We do, so I'm right about that one too.

 

 

 

No. We don't. If we did, we wouldn't need to be borrowing in the first place. Moron.

[Recliner Pilot]

No. We don't. If we did, we wouldn't need to be borrowing in the first place. Moron.

 

What part of "our debt" confuses your pea brain. Debt payments are not 100% of the budget, Chowderhead.

[titans&bucs&bearsohmy!]

What part of "our debt" confuses your pea brain. Debt payments are not 100% of the budget, Chowderhead.

 

Depends how you define "debt."

 

See I consider medicare and SS "debt" because people paid into it their whole working lives. I consider much military spending a "debt" because the soldiers are owed a paycheck.

 

I know you'd like to just say "fock everyone", not pay anything to anyone, and let the rich get richer, and everyone else die in a gutter. But it ain't gonna happen.

[Voltaire]

everyone else die in a gutter.

 

No, no. they can live if they're healthy. But yeah, if/when they get terminally ill, that's too much money right there. It's gutter dying time.

[Phurfur]

As long as they want. There is more money coming in than those programs require. But, to fund the groups I mentioned earlier,

 

"wounded veterans, disabled children, and countless elderly couples living on barely $2,000 a month",

 

that could be done easily and indefinitely.

Correct, if these groups don't get their money it will be because the government chose not to give it to them. I wonder why BHO would choose not to send out SS checks. It seems pretty heartless.

[Recliner Pilot]

 

I know you'd like to just say "fock everyone", not pay anything to anyone, and let the rich get richer, and everyone else die in a gutter. But it ain't gonna happen.

 

 

Why don't you just say "I don't know WTF I'm talking about" and avoid humiliating yourself with the above drivel?

[Phurfur]

Depends how you define "debt."

 

See I consider medicare and SS "debt" because people paid into it their whole working lives. I consider much military spending a "debt" because the soldiers are owed a paycheck.

 

I know you'd like to just say "fock everyone", not pay anything to anyone, and let the rich get richer, and everyone else die in a gutter. But it ain't gonna happen.

Talk about a lack of self confidence. Are you such a loser that you believe you couldn’t survive without the government's assistance? Are you just too lazy to work for what you get? Why do you hate the rich? Unfortunately I think your attitude represents the new “American Spirit”, that is why we can’t keep the car from going over the cliff.

[KSB2424]

I'm stuck at home tonight and enjoying a cold beer so here goes KSB's budget proposal.

 

- Decrease funding for food stamps and Pell grants

- Require federal civilian employees to contribute significantly more money toward their retirement plans

- Reform farm programs

- Wind down Fannie Mae and Freddie Mac, eventually fully privatizing them.

- Decrease funding for job-training programs and low-income housing assistance

- Cut the federal workforce by 10 percent over the next three years and freeze federal employee pay for the next five years

- Cut defense spending by 10 percent.

- Raise SS cap from $106,800 to 250k while lowering the employer and employee match to 5%

- Raise the medicare age to 70

-Simplify the tax code for indiviuals and corporations. We can lower the top individual and corporate rates to 25% while actually increasing tax REVENUE through the elimination or reform of most deductions and credits. Lower the rates but make the people/companies actually pay.

 

How did I do?

[Recliner Pilot]

If no deal is reached here are some of the programs that could be paid for without borrowing another dime

 

Total coming to the treasury for August: $172.4 Billion

 

Interest on Security Treasuries (the debt for Titans) $29 Billion

SS Benefits $49.2 Billion

Medicare/Medicaid $50 Billion

Unemployment Benefits $12.8 Billion

Active Military Pay $2.9 Billion

Veterans Affairs $2.9

Fed Salaries and Benefits $14.2 Billion

IRS refunds $3.9 Billion

 

That totals 164.9 Billion.

 

So you could cover all that and still have money left over.

 

http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL_0.pdf

 

The link has a link for you to prioritize the programs however you want. This proves that Obama is using scare tactics by saying SS payments may not be able to be met, and morons like Titans and Worms fall for it.

[IGotWorms]

Fock these Moody's and S&P guys, let's just let Recliner_Pilot set the nation's credit rating!

[Recliner Pilot]

Fock these Moody's and S&P guys, let's just let Recliner_Pilot set the nation's credit rating!

 

I'm on the same page as them. Educate yourself.

[titans&bucs&bearsohmy!]

I'm on the same page as them. Educate yourself.

 

 

[Recliner Pilot]

If no deal is reached here are some of the programs that could be paid for without borrowing another dime

 

Total coming to the treasury for August: $172.4 Billion

 

Interest on Security Treasuries (the debt for Titans) $29 Billion

SS Benefits $49.2 Billion

Medicare/Medicaid $50 Billion

Unemployment Benefits $12.8 Billion

Active Military Pay $2.9 Billion

Veterans Affairs $2.9

Fed Salaries and Benefits $14.2 Billion

IRS refunds $3.9 Billion

 

That totals 164.9 Billion.

 

So you could cover all that and still have money left over.

 

http://www.bipartisanpolicy.org/sites/default/files/Debt%20Ceiling%20Analysis%20FINAL_0.pdf

 

The link has a link for you to prioritize the programs however you want. This proves that Obama is using scare tactics by saying SS payments may not be able to be met, and morons like Titans and Worms fall for it.

 

[Voltaire]

If you stop paying money that you promised to pay, the effects ripple through the economy. Take Pell Grants for example. As much as it bothers me to say this, I don't mind cutting Pell Grants if it will help the budget. But if you stop funding Pell Grants now, after you promised to pay them and then don't, all these schools are counting on that money and now they're not going to get it. So you put them at risk of default.

 

If you promise Possumscrotum, Arkansas help funding a water waste sewage system then don't give them the money, they're focked with a half completed sewer system, no way to finish it and thus no way to charge consumers to cover the expense they put into building it.

 

It just goes on and on through the economy. Also Federal Securities are the most stable investment in the country. If you pull that piece out, the whole financial system breaks down. Now we just went through that a couple of years ago with the subprime bullsh*t, the Fed is totally tapped out of options now. Congress is useless, we've got to add that to the mix too.

 

And it's all totally unnecessary. Raising the debt ceiling doesn't say anything other than that we're willing to meet our past obligations and commitments.

 

The whole fight should be done over future spending not refusing to pay for past spending.

[IGotWorms]

If you stop paying money that you promised to pay, the effects ripple through the economy. Take Pell Grants for example. As much as it bothers me to say this, I don't mind cutting Pell Grants if it will help the budget. But if you stop funding Pell Grants now, after you promised to pay them and then don't, all these schools are counting on that money and now they're not going to get it. So you put them at risk of default.

 

If you promise Possumscrotum, Arkansas help funding a water waste sewage system then don't give them the money, they're focked with a half completed sewer system, no way to finish it and thus no way to charge consumers to cover the expense they put into building it.

 

It just goes on and on through the economy. Also Federal Securities are the most stable investment in the country. If you pull that piece out, the whole financial system breaks down. Now we just went through that a couple of years ago with the subprime bullsh*t, the Fed is totally tapped out of options now. Congress is useless, we've got to add that to the mix too.

 

And it's all totally unnecessary. Raising the debt ceiling doesn't say anything other than that we're willing to meet our past obligations and commitments.

 

The whole fight should be done over future spending not refusing to pay for past spending.

 

Voltaire nails it again! This guy gets it.

[IGotWorms]

Interesting take from various governors:

 

No Matter How Debt Debate Ends, Governors See More Cuts for States

By MICHAEL COOPER

SALT LAKE CITY — The rancorous debate in Washington over whether to raise the federal debt ceiling is alarming many of the nation’s governors from both parties, who fear that whatever the outcome, much-needed money will almost certainly be drained from their states.

 

If the federal debt limit is not raised, several governors said as they gathered here on Friday for the semiannual meeting of the National Governors Association, the ensuing default will harm the economy, make it difficult for states to borrow money and delay some of the vital federal payments that states count on for everything from Medicaid to unemployment benefits.

 

But even if the debt ceiling is raised, as many governors expect it ultimately will be, states could still pay a high price. Both Democrats and Republicans in Washington want to pair any increase in the debt limit with deep new spending cuts — cuts that many governors fear will hurt their states as they are still recovering slowly from the Great Recession.

 

“If I can use a whitewater analogy here, the two rocks we need to shoot between is, on the one side, being needlessly driven into default, which will kill the jobs recovery,” said Gov. Martin O’Malley of Maryland, the chairman of the Democratic Governors Commission. “The other rock is massive public sector cuts, by whatever name, that would also kill the jobs recovery.”

 

Gov. Haley Barbour of Mississippi, a Republican, said that a default stemming from a failure to increase the borrowing limit would be “terrible” for states. But he said that states must also brace themselves for managing a new set of cuts even if the limit is raised. “No matter what happens, states are going to get less money from the federal government,” he said.

 

The uncertainty for states, coming just two weeks after most put new budgets into effect, was a new black cloud on the horizon for governors just when many thought they would have a moment’s respite. State tax collections are improving, but are still below their pre-recession levels, and this month the federal stimulus aid that has helped states balance their budgets in recent years dried up. Now states, already struggling to pay for Medicaid for the many people who lost their jobs and health care in the downturn, face the prospect of less federal money for it.

 

The impact of the standoff in Washington is already being felt in states.

 

Moody’s Investors Service warned more than a dozen states this week that their credit ratings would be re-evaluated in light of the uncertainty in Washington, which could saddle them with higher borrowing costs. Governor O’Malley learned that Maryland was one of them when he stepped off the plane here. “This happens at a time when we’re about to go out for a bond sale,” he said.

 

Governors from around the country — including Christine O. Gregoire of Washington, a Democrat, and Scott Walker of Wisconsin, a Republican — said that employers in their states had been reluctant to hire new workers because of the uncertainty.

 

http://www.nytimes.com/2011/07/16/us/politics/16governors.html?hp

 

 

Again, looks like Republicans are hurting the economy with their craven political games.

[Recliner Pilot]

 

Again, looks like Republicans are hurting the economy with their craven political games.

 

What have the Reps done to hurt the economy?