The Debt Ceiling: This is getting ridiculous

Discussion in 'Politics' started by Xelor, Sep 7, 2017.

  1. Xelor Registered Member

    Messages:
    42
    Just how lame are the people whom Americans have elected to Congress? Rather than voting to discard the debt ceiling or to appropriate most but not all of the money available for a given fiscal year, the Congress have stood by the notion of having a debt ceiling and periodically increasing it. Come on! What substantive value is there to having a debt ceiling when all that happens is they keep increasing it?

    FEMA's Disaster Relief Fund (DRF) is set to be exhausted this coming Friday. Why? Well, largely because Harvey was a more devastating disaster than the government wagered would hit the U.S. Absent Harvey, or with a less impactful Harvey, the DRF would quite likely not have run out of money and necessitated the GOP-held Congress [1] propose and pass a debt ceiling increase (along with in turn borrowing more money), in order to not only provide assistance to disaster victims but also to avoid appearing as penurious "fat cats."

    Would it have been so bad for Congress to have appropriated what they could, and held back, say, $100B or so from the total $1T+ available for discretionary spending?

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    Quite simply, for a given time period and set of objectives, if one has a fixed sum of money available for budgeting, it's absurd to allocate and spend every last dollar of that sum to fund one's routine endeavors, thereby, in the event of an unforeseen, and unforeseeable at the time of appropriating the budget, disaster (natural or manmade), having only the options of increasing the debt ceiling or leaving citizens "high and dry," so to speak. I mean, seriously, who having a total budget of billions and billions of dollars does that? Um....The members of the U.S. Congress do that.

    Then there is the matter that this time round, it's hurricane Harvey relief that, in part, necessitates the increase. Even the most ardent AGW-deniers assert not that the planet isn't warming, but rather that it is not warming because of human activity. Accordingly, regardless of warmer seas' etiology, the fact remains that a consequence of them is more powerful hurricanes. [2] Does not the better part of prudence oblige Congress, one having a debt ceiling, to appropriate funds such that it doesn't have to raise it when reasonably foreseeable calamities like weather events happen mere weeks before the federal fiscal year ends? After all, it's not as though hurricane and tornado events -- unlike asteroid-strikes, earthquakes, and/or volcanic eruptions -- don't come almost every year.

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    On the contrary, they occur with such regularity that we have identified seasons for them [3], and they consistently wreak more widely spread devastation and directly disrupt the lives of more U.S. citizens than any band of terrorists. Does Congress adopt a "let's hope it doesn't happen" stance when funding DHS and the USIC agencies? Seemingly not; they aren't the organizations that have run out of money and nobody's saying the debt ceiling increase is to provide funding for them.

    At the end of the day, however, the debt ceiling serves as little more than politically induced stress. That's stress that workers and beneficiaries just don't need in their lives.



    Note(s):
    1. Congress, not the POTUS, has the power of the purse and Congress designates how much money gets assigned to each government program. I mention the GOP only because it is the GOP that's most ardent about debt and deficit reduction and about reducing government spending. One'd think, therefore, that the GOP would only pass budgets that don't put the government in the position of needing to pass stopgap debt ceiling increases.
    2. See also:
    3. Atlantic Hurricane Season
      U.S. Tornado Season
    • History, rationale, politics and management of the national debt and the debt ceiling:
      1. The Debt Limit: History and Recent Increases (2015)
      2. The debt limit explained (Aug 2017)
      3. Minimizing debt ceiling crises: Principles and practical advice
      4. Managing Our National Debt Responsibly: A Better Way Forward
     
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  3. joepistole Deacon Blues Valued Senior Member

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    It is has long been ridiculous. It baffles the mind every time I hear a right-wing politician explain how we can default without really defaulting. But their base, i.e. Republicans, eat that shit up and that's why the do it. The debt ceiling is easy bait for demagogues. That's why Congress continues to do what it has always done. If say Democrats were to try to do away with the debt ceiling, Republicans would demagogue the issue to hell and back. That's why neither party will eliminate the debt ceiling. Most Americans don't understand it, and that makes it easy picking for the demagogues.
     
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  5. iceaura Valued Senior Member

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    The Republican Congress has been acting like this since 1992. That's 25 years, if anyone's keeping score.
     
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  7. mathman Valued Senior Member

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    Today's news? Trump and Congressional Democrats reach agreement to permanently remove the debt ceiling.
     
  8. iceaura Valued Senior Member

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    24,279
    Trump backed Schumer's proposal of a short term (three month) debt ceiling hike.

    It still has to pass Congress - Trump has no vote, and the Dems are minority. But it's likely now.

    There is no agreement to remove the debt ceiling permanently - Trump has mentioned it, and may or may not favor it when action time comes, but that's not the current deal. Three months from now we do it all over again.
     
  9. Quantum Quack Life's a tease... Valued Senior Member

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    17,530
    Your point combining future weather catastrophe and money needed to secure and rebuild etc. is really valid IMO and one that needs to be discussed.
    I and others, have often stated that it is only when the insurance industry ( or any post catastrophe financial support structures) start to fail that Climate change and the consequences of such will actually be taken seriously.

    That time is upon us now, or it will be very shortly.

    It is a no brainer to state with almost 100% certainty, that if the ocean waters are warming up the evaporation rates are increasing. This leads to an incredible and extremely rapid increase in the amount of mass floating around in our atmosphere. Obviously this MUST with out any doubt lead to a massive increase in the extreme nature of storms, hurricanes and cyclones etc. in the short to medium term future. Where it actually leads to in the longer term is another even more challenging question/answer but... the point is that there IS NO DOUBT that extreme weather events such as Hurricane Harvey, Irma etc are not only going to become more and more frequent but also more and more extreme and very quickly...

    Now that being said the ability to recover from these storms is and will become more and more problematic, difficult, if not impossible, as the money to do so runs out. So it is really important to realize that if it isn't this year it may be next or the one after that we are simply going to have to abandon regions due to the incapacity to restore them.

    "Building infrastructure to withstand winds in excess of 300kph and huge rainfall inundations is incredibly expensive"
    but that is what we have to seriously start thinking about doing...
     
    Last edited: Sep 8, 2017
  10. joepistole Deacon Blues Valued Senior Member

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    22,875
    Well, here is the thing, in the US we have a federal flood insurance program to cover incidents like this. So while insurance companies will pay a portion of these costs the federal government will pay the lions share of these costs. US insurance companies will come out of this smelling like roses. They will raise rates next year and will soon be flushed with cash. I'll be buying insurance stocks in a few days. We've been through this many times before and it's always the same.
     
    Last edited: Sep 8, 2017
  11. Quantum Quack Life's a tease... Valued Senior Member

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    Things change... and one wonders where the money is going to come from not only for this year Harvey and Irma and possibly others but subsequent years , year after year of worsening conditions.
     
  12. joepistole Deacon Blues Valued Senior Member

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    22,875
    It will come from the US taxpayer. Congress approved 15 billion dollars for Texas today. https://www.nytimes.com/2017/09/07/us/politics/senate-harvey-irma-aid.html
     
  13. Quantum Quack Life's a tease... Valued Senior Member

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    17,530
    do you believe the situation for the short to medium term future is tenable? ( funding disaster relief for the next say 10 years)
     
  14. Quantum Quack Life's a tease... Valued Senior Member

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    17,530
    The sheer cost of having a city like Houston off line for a week or more must be staggering...
     
  15. joepistole Deacon Blues Valued Senior Member

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    They haven't been much of a problem in the past. But I expect with global warming they will become more and more frequent and more damaging. Eventually, something will be done. I'm not sure what. But something will be done. New Orleans is on the coast and below sea level. That's a problem. Houston is just a few feet above seal level. We have built cities in very low lying areas that are very prone to flooding. The best solution is to recognize global warming and work to mitigate it.
     
  16. joepistole Deacon Blues Valued Senior Member

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    22,875
    In the overall scope of things it's not that much. There will be a short downturn. But federal money and insurance money will flood back into the area, and it will be an economic boon. Houses, roads, and other infrastructure will need to be rebuilt. It will actually be a boon to the economy. In Texas most of the oil infrastructure is up and running. Most of the refiners are back on line. Refiners are making a mint because gasoline prices are up 20% or more.
     
    Last edited: Sep 8, 2017
  17. Quantum Quack Life's a tease... Valued Senior Member

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    You are really missing my point...
    It may very well be a boon for local economy...but someone is paying for it...

    Have they finished paying for Katrina yet? Do you know?

    How many times a year and for how many years can you borrow and spend "20 billion dollars" on disaster relief? ( plus pay interest)
     
    Last edited: Sep 8, 2017
  18. joepistole Deacon Blues Valued Senior Member

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    It depends on what you mean by "pay for". Yeah, the Katrina bills have been paid. These disasters are boons for the local economies and for the larger economy as well. Insurance companies are paying for it, but the federal government is paying for the lions share of it. Some people will be hurt, e.g. the people who don't have insurance. Some people will lose their businesses. Some companies will lose business, e.g. cruise lines. But they will aren't going away.
     
  19. Xelor Registered Member

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    That's plausible; however, I don't know that even if it's taken seriously, it'll be understood by most voters. How insurance companies function and the structure of the insurance industry isn't well understood by many and even fewer understand actuarial risk. There's also the matter that insurance companies hold about 11% to 15% of commonly traded equities, which means if they find themselves in dire straits, they'll sell them, thus triggering a huge drop in the stock market. That could very easily lead not to Great Recession II, but Great Depression II.

    I suppose we'll have to wait and see, but the "triple punch" of Harvey, Irma and Jose (?) could alone do it. (Only the "flood exclusion" may be all that keeps insurance industry collapse at bay.) The three combined with some other calamity -- KJU's foolishness, a big quake on the West Coast or a WTC-scale terrorist strike -- almost certainly would, IMO, trigger a Great Recession II, one made even worse by the antics of our loose-cannon "Tweeter in Chief."
     
  20. joepistole Deacon Blues Valued Senior Member

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    Here is the thing, the US government can spend as much money as necessary. It has unlimited ability to spend money. Unlike you and me, the federal government can print as much money as it needs. It can handle any thing short of a cataclysmic species ending event providing it acts appropriately. With Republicans in control of Washington, that may not always be the case. I'm no supporter of Trump, but he does have people around him who know the score, and given his concern with raising the debt ceiling, I think he gets it. Congressional Republicans on the other hand probably don't.
     
  21. Quantum Quack Life's a tease... Valued Senior Member

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    17,530
    From a layman's perspective there is only one thing one needs to keep in mind.
    Insurance companies are there to make a profit and like all companies when they do not believe they can turn a profit on a product they stop offering that product.
    Now if I am not mistaken, and I probably are, most financial lending, borrowings, mortgages etc requires insurance against such disasters like fire flood and tempest, loss of income etc. and if these products are not available or are way too expensive to purchase then what happens to the finance industry, the end consumer and so on.. etc....
     
  22. Xelor Registered Member

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    Be that as it may, the lost productivity, revenue and innovation is, for all intents and purposes, forever lost. When a business or economy loses resources, even if the resources' impotence is short-lived, very few of them recover and outstrip their prior performance to the extent that the loss is made up for. Quite simply, very few organizations, economies and individuals rebound on the scale that, say, Apple did.
     
  23. Xelor Registered Member

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    Yes, the ripple effect to which you and I have alluded is very real, and very hard to stop once it's underway.
     

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