So we hit the debt limit...

[The Minsky Moment]

There is the small problem that Boehner doesn't appear to have the votes in the House and does not have support from the Senate.

Meanwhile the House Chairman of the "Republican Study Committee" (oxymoron), whose profession before becoming a politician and making critical decisions about financing trillions of dollars in public expenditure was assistant wrestling coach, is bashing his own Speaker's plan because while it forces a vote on a BBA, it does not guarantee that both houses will approve by 2/3.

Seeing stuff like this makes me suspect that we are due for a crash and Congress won't pull it together at the last minute.  I fear the markets are under-estimating the degree of stupidity and irresponsibility that is in play on Capitol Hill.

[MadImmortalMan]

In the end it's going to come down to a completely toothless bill that has a facade of cutting something and raises the debt limit some. That's the only thing that will pass with enough support.

[The Minsky Moment]

There's a defensive tackle behind the Boehner plan now? Well, I guess that settles it then.

Oh yeah - you could probably field a whole NCAA athletic program from the GOP House delegation.  To bad they don't know a spreadsheet from a point spread.

[KRonn]

In the end it's going to come down to a completely toothless bill that has a facade of cutting something and raises the debt limit some. That's the only thing that will pass with enough support.

That may be, agreed, but then, given how rushed this has become, I'm a bit wary of them doing anything major on entitlements, heavy budget cutting, tax reform. Some of those items themselves should require a more lengthy debate and conversation. I mean, they only had over 800 days or so to debate and fix things, so coming down to the last month or so to enact major reforms is damned worrying.

[derspiess]

There is the small problem that Boehner doesn't appear to have the votes in the House and does not have support from the Senate.

Meanwhile the House Chairman of the "Republican Study Committee" (oxymoron), whose profession before becoming a politician and making critical decisions about financing trillions of dollars in public expenditure was assistant wrestling coach, is bashing his own Speaker's plan because while it forces a vote on a BBA, it does not guarantee that both houses will approve by 2/3.

Seeing stuff like this makes me suspect that we are due for a crash and Congress won't pull it together at the last minute.  I fear the markets are under-estimating the degree of stupidity and irresponsibility that is in play on Capitol Hill.

Debt limit aside, what would be your plan to deal with our budget deficit and outstanding debt?

[MadImmortalMan]

[The Minsky Moment]

Debt limit aside, what would be your plan to deal with our budget deficit and outstanding debt?

Any number of the proposals that have been mooted would have been acceptable at this point.  Boehner's latest plan, the Gang of Six plan, the Obama $4 trillion gambit - if any of those had resulted in legislation that moved the ball forward, it would have averted the immediate crisis, and calmed both markets and rating agencies by demonstrating that the political system could function.

At this moment, speculating about what can be done to "solve" the US fiscal problems over the long run is hopelessly over-ambitious.  First it needs to be established that the US government can collectively do anything at all.

[alfred russel]

Default is really bad, but our default wouldn't be like a default in Argentina bad.

At the end of the day people know the US government is going to make good on the interest and debt payments, even if some are missed. Rating agencies may cut our rating to a junk or default status, but we won't have interest rates as bad as those ratings. What will hurt interest rates our future debt becomes slightly more uncertain, people needing interest and debt cash flows will be hurt (though I can't imagine too many people are getting far on the super low interest rates), and institutionals that have legal requirements to hold debt of certain grades may have to dump government debt.

[alfred russel]

Debt limit aside, what would be your plan to deal with our budget deficit and outstanding debt?

Any number of the proposals that have been mooted would have been acceptable at this point.  Boehner's latest plan, the Gang of Six plan, the Obama $4 trillion gambit - if any of those had resulted in legislation that moved the ball forward, it would have averted the immediate crisis, and calmed both markets and rating agencies by demonstrating that the political system could function.

At this moment, speculating about what can be done to "solve" the US fiscal problems over the long run is hopelessly over-ambitious.  First it needs to be established that the US government can collectively do anything at all.

If I wanted to be pessimistic and cynical, I'd suggest this: Obama sees that the Republicans are getting hurt worse in the polls than he is, so he isn't prone to give in to their harder line stances. Politics is zero sum, and he is comparatively winning. Republicans know that their candidate against Obama probably isn't in Congress right now, so while they may crash their popularity and the economy, they will also damage Obama's popularity while leaving their candidate unscathed.

[MadImmortalMan]

I'd make a list of all the spending cuts the GOP wants plus all the tax hikes Obama wants. Then I'd do all the stuff on the list. Then, I'd raise the debt ceiling to 50 Trillion and begin building up a sovereign wealth fund as a new revenue source.

[alfred russel]

I'd make a list of all the spending cuts the GOP wants plus all the tax hikes Obama wants. Then I'd do all the stuff on the list. Then, I'd raise the debt ceiling to 50 Trillion and begin building up a sovereign wealth fund as a new revenue source.

I'd suggest investing that sovereign debt fund entirely in US debt.

[Scipio]

I'd make a list of all the spending cuts the GOP wants plus all the tax hikes Obama wants. Then I'd do all the stuff on the list. Then, I'd raise the debt ceiling to 50 Trillion and begin building up a sovereign wealth fund as a new revenue source.

I'd suggest investing that sovereign debt fund entirely in US debt.

So, would that mean that the social security trust fund would be repleted (nucoinage) due to debt setoff?  Inquiring minds like mine want to know!

[alfred russel]

I'd make a list of all the spending cuts the GOP wants plus all the tax hikes Obama wants. Then I'd do all the stuff on the list. Then, I'd raise the debt ceiling to 50 Trillion and begin building up a sovereign wealth fund as a new revenue source.

I'd suggest investing that sovereign debt fund entirely in US debt.

So, would that mean that the social security trust fund would be repleted (nucoinage) due to debt setoff?  Inquiring minds like mine want to know!

If the government borrows to fund a sovereign debt fund, and then uses that fund to buy the debt it has issued, the net effect will be nil. Nothing will be repleted, depleted, or even just pleted. 

[Admiral Yi]

At the very least we should put $1,000 in a money market account.

[Razgovory]

Debt limit aside, what would be your plan to deal with our budget deficit and outstanding debt?

Prevent Republicans from holding office.  The first step in healing a wound is to remove what ever offending object caused it.