So we hit the debt limit...

[Caliga]

How did the US come to be so badly mismanaged?

It became a democracy.

[alfred russel]

Well no...it isn't status quo ante. First, the debt limit has been negotiated. Obviously not raising the limit is a default, and obviously that is Armaggedon. That is a terrible precedent, and I'm not sure where it ends. That rubican has been crossed.

Second, just the threat of a default--even if it is just missing a couple payments which are made up at a later date--is going to affect interest rates. I'd say even at this point, but certainly the longer this goes on, people are going to begin looking at government debt as potentially unstable during parts of the calendar. It isn't the kind of thing that helps keep a currency as the world's reserve currency (admittedly our major rival is doing its best to exit the competition atm).

You utterly and totally lost me Fredo.  I thought we were talking about whether Obama could end the game of chicken by telling the GOP to do whatever they wanted with the debt limit.

I'm been more focused on why trying to play chicken with the debt limit is not legitimate, is dangerous, and should be ignored by Obama.

Yi, if you think what the Repbublicans are doing is legit, are there any limits? What would you say if Cantor added, "Either nominate Scalia clones to the bench, or we won't increase the debt limit," or "lets get a constitutional amendment to ban abortion, or we won't increase the debt limit."

[Neil]

How did the US come to be so badly mismanaged?

It became a democracy.

That was definitely a mistake.  Democracy coupled with a welfare state leads inevitably to disaster.

[Camerus]

How did the US come to be so badly mismanaged?

It became a democracy.

That was definitely a mistake.  Democracy coupled with a welfare state leads inevitably to disaster.

Now cue that de Tocqueville quote in 3,2,1...

[Iormlund]

Our budget may be worse than you think.

http://en.wikipedia.org/wiki/2011_United_States_federal_budget

The highlights:
Estimated Revenue: $2.17 trillion
Estimated Expenditures: $3.82 trillion
Deficit: $1.65 trillion

Holy crap! And still top ratings.

[The Minsky Moment]

Personally I can't wait to see the US crumble under the weight of its own internal contradictions. 

Which are?

Besides, History teaches us that no power is so great as to escape decadence. 

Surely you are not suggesting decadence is bad thing?

[The Minsky Moment]

How do they pay the people who are using the revenue that would normally go for pay as interest payments? 

What would probably happen is the issue of some kind of scrip or IOUs like California did.

Of course, practically what that would mean is a significant expansion of the money supply through Treasury issuance of what is effectively fiat currency.  Which is the kind of thing I would think most of the characters who are also debt limit deadenders would hate. 

Seems like cutting off the nose to spite one's face but clear logical thinking has often been scarce on the ground in DC

[DontSayBanana]

I'm just curious, Yi; why are you so eager to bend the rules of logic to cast the GOP in a more positive light over this one?  After all, the GOP's "playing chicken," too.  In fact, they're the ones tacking on demands.  As a matter of principle, I can understand why Obama and Reid would be reluctant to rubber-stamp a bill arising from that kind of childish behavior.

DEVIL'S ADVOCATE DISCLAIMER: Just pointing out that we're each putting our own spin on it.  I'm kinda fed up with both sides over this.  While I understand the "principle" argument, I think that's a piss-poor reason for taking a huge gamble on something of this magnitude.  Insert "needs of the many" or other applicable cliches here.

[The Minsky Moment]

The whole notion of a congressionally mandated debt ceiling is screwed up to begin with.  If Congress authorizes the expenditure of money, and refuses to impose taxes sufficient to pay for those expenditure, then it should provide the Executive Branch with the appropriate authority to issue whatever debt necessary to make up the difference.  It is ludicrous that the Congress can raise X in taxes, then turnaround and spend X+Y, while at the same time refusing the Executive Branch the authority to issue debt equal to more than a fraction in Y.

[MadImmortalMan]

I don't really care how childish they are as long as they can close that gap. If it takes playing chicken by both sides, then so be it. The problem with raising the debt limit is that even though it's necessary it isn't a solution to the problem--it's more of the problem. So, I guess I can't really fault the GOP for wanting to make some kind of progress in exchange for it. Obama should be focusing on making sure the spending cuts are not just in things the GOP doesn't like.

[grumbler]

I don't really care how childish they are as long as they can close that gap. If it takes playing chicken by both sides, then so be it. The problem with raising the debt limit is that even though it's necessary it isn't a solution to the problem--it's more of the problem. So, I guess I can't really fault the GOP for wanting to make some kind of progress in exchange for it. Obama should be focusing on making sure the spending cuts are not just in things the GOP doesn't like.

The problem that I see is that the Republicans have basically issued a set of demands that amount to no increased revenue, no matter how much sense it makes.  Democrats are defending a lot of bad ideas as well, but are not as dogmatic about it.  Negotiations about solving a problem are not going t be very fruitful if one side isn't interested in negotiating.

And I say this despite the fact that I agree with about 75% of the Republican position and about 25% of the Democrats'.  The difference is that I think we need to raise revenue.  Our troops can eat their belts, but our tanks gotta have gas.

[Razgovory]

Doubt Siegy can.  Probably not Kosher.

[The Minsky Moment]

So, I guess I can't really fault the GOP for wanting to make some kind of progress in exchange for it.

I can. 
It's like threatening to cut the throttle on an aircraft in midflight unless airline management agrees on a new proposal to reduce fuel expenses.

[alfred russel]

So, I guess I can't really fault the GOP for wanting to make some kind of progress in exchange for it.

I can. 
It's like threatening to cut the throttle on an aircraft in midflight unless airline management agrees on a new proposal to reduce fuel expenses.

Even worse, you have a meeting on a new fuel expense agreement just around the corner. If the Republicans in the House want cuts in the budget, just don't pass the spending in the next budget. Legislatively, Republicans hold the better cards--they can block anything they don't like, and both the spending and tax changes they don't want require legislation to pass.

[Admiral Yi]

I'm been more focused on why trying to play chicken with the debt limit is not legitimate, is dangerous, and should be ignored by Obama.

Yi, if you think what the Repbublicans are doing is legit, are there any limits? What would you say if Cantor added, "Either nominate Scalia clones to the bench, or we won't increase the debt limit," or "lets get a constitutional amendment to ban abortion, or we won't increase the debt limit."

First of all, I like Scalia so that's probably not the best example.

Second of all, I'm a little ambivalent about threatening to nuke the credit rating to win legislative passage.  If someone doesn't blink then bad things are going to happen.  On the other hand, why have a legislated debt limit unless increasing is NOT automatic?  And of all the legislation in the world that could potentially be barrell-rolled with the debt limit, debt-reduction budget talks seem the most legitimate.  And you can't exactly say that Democrats have dived head first into talks about deficit reduction, and this maneuver has certainly focused their attention.