So we hit the debt limit...

[derspiess]

What people forget is that Bush was right on that issue back then (just as he was right on the response to the S&L crisis).  Bush 41 helped lay the foundations for the economic expanision of the 90s yet he is viewed with contempt in his own camp for those same actions.  And that points to the deep ideological rot that afflicts the present day GOP.

No-- grumbler reminds us about that every chance he gets

The US is raising between 15-16% of its GDP in the form of federal revenue.  Query how does one run a defense establishment in excess of 5% of GDP, plus any pension or health care program plus all the rest of domestic spending plus the state block grants (without which state taxes must increase) at that revenue level.?

You don't.  Cuts are needed across the board, defense included.

[MadImmortalMan]

I wouldn't mind reducing block grants and making the states make up the difference. The states can't run a deficit, so it wouldn't all become debt.

[Neil]

Like all uncritical GOP faithful, you seem to ignore the little inconvenient fact that current deficits to a large degree were caused by tax receipts falling through the floor.

...which were to a large degree caused by the recession. 

...but to an even larger degree were caused by tax cuts.

[MadImmortalMan]

With the G Fund and the CSRDF now drained, there is only one thing left: The Exchange Stabilization Fund
http://www.treasury.gov/press-center/press-releases/Pages/tg1243.aspx

WASHINGTON – Today, the U.S. Department of the Treasury released the following statement from Jeffrey Goldstein, Under Secretary for Domestic Finance, regarding the use of the last of the four previously announced measures available to keep our nation under the statutory debt limit, suspension of reinvestment of the Exchange Stabilization Fund.

"Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund, the last of the measures available to keep the nation under the statutory debt limit.  In order to prevent a default on the nation's obligations, Congress must enact a timely increase of the debt ceiling."

The U.S. reached the debt limit on May 16, 2011, but the Treasury Department has employed three previous measures to temporarily extend our ability to meet the nation's obligations.  Those measures, in order taken, are (1) suspending issuance of State and Local Government Series (SLGS) Treasury securities; (2) declaring a "debt issuance suspension period" of the Civil Service Retirement and Disability Fund (CSRDF); and (3) suspending reinvestment of the Government Securities Investment Fund (G Fund).

As previously stated in the May, June, and July monthly updates, taken altogether, these four extraordinary measures allow the Treasury to extend borrowing authority until August 2, 2011. 

Prepare for volatility!!!!!!11

[mongers]

With the G Fund and the CSRDF now drained, there is only one thing left: The Exchange Stabilization Fund
http://www.treasury.gov/press-center/press-releases/Pages/tg1243.aspx

WASHINGTON – Today, the U.S. Department of the Treasury released the following statement from Jeffrey Goldstein, Under Secretary for Domestic Finance, regarding the use of the last of the four previously announced measures available to keep our nation under the statutory debt limit, suspension of reinvestment of the Exchange Stabilization Fund.

"Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund, the last of the measures available to keep the nation under the statutory debt limit.  In order to prevent a default on the nation's obligations, Congress must enact a timely increase of the debt ceiling."

The U.S. reached the debt limit on May 16, 2011, but the Treasury Department has employed three previous measures to temporarily extend our ability to meet the nation's obligations.  Those measures, in order taken, are (1) suspending issuance of State and Local Government Series (SLGS) Treasury securities; (2) declaring a "debt issuance suspension period" of the Civil Service Retirement and Disability Fund (CSRDF); and (3) suspending reinvestment of the Government Securities Investment Fund (G Fund).

As previously stated in the May, June, and July monthly updates, taken altogether, these four extraordinary measures allow the Treasury to extend borrowing authority until August 2, 2011. 

Prepare for volatility!!!!!!11

You could call this whole crisis the Yakuza theory of economic policy, cutting off individual fingers to prove just how hard you are. 

[grumbler]

GOP House members would have to go back on their pledges not to increase taxes.  IIRC, doing so hurt a certain GOP politician back in the early 90s.  Not to mention that tax increases are likely to fall disproportionately (or exclusively) on the backs of the more productive elements of society, and that's not exactly a smart way to get the economy back on track.

Revenues as a proportion of GDP is at its lowest in at least 40 years, while unemployment was just at its highest.  That "guvmnt renevoos harm the economy" dog just won't hunt.  We need to increase revenues enough to get us back to the realm of high employment.  Many Republicans refuse to restore prosperity, because they made a silly promise not to do the things that have restored prosperity in the past.  I think it is time for the Republicans in the House to start caring more about their country and less about the embarrassment of having to concede that their promises were silly and shortsighted and self-serving and unpatriotic.

[Josephus]

Revenues as a proportion of GDP is at its lowest in at least 40 years, while unemployment was just at its highest.  That "guvmnt renevoos harm the economy" dog just won't hunt.  We need to increase revenues enough to get us back to the realm of high employment.  Many Republicans refuse to restore prosperity, because they made a silly promise not to do the things that have restored prosperity in the past.  I think it is time for the Republicans in the House to start caring more about their country and less about the embarrassment of having to concede that their promises were silly and shortsighted and self-serving and unpatriotic.

Exactly. The notion of these Tea Baggers running around waving the American flag when their ideological stubborness and political gamesmanship are destroying their economy , would be laughable, if it was funny.

[derspiess]

Revenues as a proportion of GDP is at its lowest in at least 40 years, while unemployment was just at its highest.  That "guvmnt renevoos harm the economy" dog just won't hunt.  We need to increase revenues enough to get us back to the realm of high employment.  Many Republicans refuse to restore prosperity, because they made a silly promise not to do the things that have restored prosperity in the past.  I think it is time for the Republicans in the House to start caring more about their country and less about the embarrassment of having to concede that their promises were silly and shortsighted and self-serving and unpatriotic.

So... raising taxes = more jobs?  Also, I like how you played the patriotism card there.  So anyone who disagrees with you on economic policy is unpatriotic?

[derspiess]

Exactly. The notion of these Tea Baggers running around waving the American flag when their ideological stubborness and political gamesmanship are destroying their economy , would be laughable, if it was funny.

Honest question: do you hold the Dems and Obama responsible for their stubbornness?

[Admiral Yi]

Honest question: do you hold the Dems and Obama responsible for their stubbornness?

I was very much until Obama came up with 4 and change large package with the cuts to SocSec (assuming they weren't just smoke and mirrors...stat) and Cantor pulled an Arafat.

[OttoVonBismarck]

I've read some rather convincing take downs of that argument. Maybe there is something to the idea that if the debt ceiling isn't increased we will still have to make debt payments from our current revenues, but that doesn't mean people are going to keep getting their medicare (and actually would make it less likely they get their medicare).

Maybe a real lawyer could chime in.

We would almost certainly continue to make our debt payments if the debt ceiling wasn't increased.

Without an inability to issue more debt, next month we'd bring in about $200bn. We have budgeted more than $300bn. Some stuff will not get paid, but here is how it could break down:

Interest on the Debt: $29bn - I argue this would definitely be paid, the Constitution more or less says we have to pay our debts for one and the government deciderers are very serious about it in any case.

Social Security Payments: $49.2bn - Old people wouldn't be able to buy groceries or anything else for the month, these checks will definitely go out.

Medicare & Medicaid: $50bn - I would argue these expenses will also be "definites", just because the government wouldn't let people go without treatment. However, it is possible the government could issue "Medicare & Medicaid" "coupons" to health care providers which are redeemable at some later date for cash--essentially IOUs. It's not as crazy as it sounds, very few healthcare providers get paid right away in any case, they are used to waiting for receivables and the assumption is the IOUs would be paid back relatively quickly. But even assuming they just pay this expense in cash we still have only spent $128.2bn of our $200bn.

Active Duty Troop Pay: $2.9bn - Most of this would be paid, and politically I'd be shocked if less than 100% of it were paid. Logically you could probably tell soldiers overseas they won't be receiving pay checks until this clears up, instead they will receive IOUs that will be converted to real money later on. Deployed soldiers are some of the ones who are least likely to actually need their regular pay check to survive. They will still have food, shelter without it and real money could be disbursed for soldiers with dependents who could demonstrate hardship. Nonetheless, it's still only $2.9bn for the whole thing and politically I'd be shocked if it wasn't paid.

Food Stamps and Welfare: $9.3bn - Would almost definitely be paid, Treasury won't let people starve.

Unemployment Benefits: $12.8bn - Would almost definitely be paid. I'm basically working under the assumptions any program that pays out benefits that constitute the majority of a regular American's income or provides them food or housing will almost definitely be paid before they pay people like me to come in and ride a desk or they buy a bunch of new planes from Boeing.

That puts us at $153.2bn so we have about $46.8bn to spend divvy it up between the following parties:

Veterans Affairs Programs - $2.9bn budgeted
Defense Vendors - $31.7bn budgeted
IRS Refunds - $3.9bn owed
Department of Ed. - $20.2bn budgeted
Housing and Urban Dev. - $6.7bn
Other Spending - $73.6bn - Essentially all other Federal agencies/functions

I'm not sure which of those gets shafted the most, probably the Defense Vendors who would probably get IOUs and Other Spending who would only get a portion of what was budgeted. From the Other Spending category we would keep any Federal law enforcement going, Prisons, Air Traffic Controllers, and the like. Most everyone else would close down (Commerce, Labor, large portions of civilian DoD, large portions of EPA, large portions of Dept. of Justice outside of LEOs.)

[OttoVonBismarck]

I was very much until Obama came up with 4 and change large package with the cuts to SocSec (assuming they weren't just smoke and mirrors...stat) and Cantor pulled an Arafat.

Yup. I was on a long road trip for work when I heard Obama talking about being willing to make cuts to sacred cows and he even mentioned that in a compromise everyone has to give up something they want. Commentators were going on and on about how this meant that behind the scenes some members of the GOP had agreed to tax increases. Then Cantor goes off the deep end, he's actually my congressman by the way and I had never before regretted voting for him, but he's coming off as fucking insane now.

It's fine and reasonable to oppose taxes tax hikes generally but it is unreasonable to say "not a cent more in taxes under any circumstances" especially when it comes with dramatic reductions in spending.

[Josephus]

Exactly. The notion of these Tea Baggers running around waving the American flag when their ideological stubborness and political gamesmanship are destroying their economy , would be laughable, if it was funny.

Honest question: do you hold the Dems and Obama responsible for their stubbornness?

Well, no. I think Obama has been fairly pliable and hasn't been so ideological. Look how he has refused to end the Bush tax cuts, for one. In this particular case it seems as though he's trying to put some compromises on the table, isn't he? Honest question.

[mongers]

I was very much until Obama came up with 4 and change large package with the cuts to SocSec (assuming they weren't just smoke and mirrors...stat) and Cantor pulled an Arafat.

Yup. I was on a long road trip for work when I heard Obama talking about being willing to make cuts to sacred cows and he even mentioned that in a compromise everyone has to give up something they want. Commentators were going on and on about how this meant that behind the scenes some members of the GOP had agreed to tax increases. Then Cantor goes off the deep end, he's actually my congressman by the way and I had never before regretted voting for him, but he's coming off as fucking insane now.

It's fine and reasonable to oppose taxes tax hikes generally but it is unreasonable to say "not a cent more in taxes under any circumstances" especially when it comes with dramatic reductions in spending.

Are your saying this tea party virus is now infecting regular conservative congressmen as well ?

[Admiral Yi]

Well, no. I think Obama has been fairly pliable and hasn't been so ideological. Look how he has refused to end the Bush tax cuts, for one. In this particular case it seems as though he's trying to put some compromises on the table, isn't he? Honest question.

  Dude, the guy campaigned on not raising taxes on people earning less than 200K.  That was his initiative, not theirs.