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Debt Ceiling issue may not be so easy to navigate through
Published on January 14, 2013 By terpfan1980 In Current Events

In the current news cycle, we have this headline: Obama: Not raising the debt ceiling 'is absurd'.

Oh, but I agree on that thought completely - not raising the debt ceiling would be stupid, idiotic, moronic, and a host of other names that signify how ignorant things could wind up, which is precisely why the debt ceiling will be raised.  The question is by how much, and how fast will that raise in the ceiling come.

It's there that Mr. President will wind up having to slow down.  Well, him and his friends on the Democrat side of the aisles in Congress.  There will be an increase, but having bent the GOP over the proverbial log when it came to the revenue side of the Fiscal Cliff issue of a few weeks ago, the GOP won't be so quick to capitulate here and they very well may wind up forcing some serious debt reduction (otherwise known as, or also known as (a.k.a.) spending cuts) through for everyone to suffer through.

Yeah, yeah, I know the GOP (members in the congress) doesn't want to look like cruel, evil, heartless bastages that leave Grandma with no money (social security), and they certainly don't want to be the cause of cuts in military spending, but they do recognize that the nation has a spending problem that it just can't stop.  If the only way to force cuts in spending is by holding the debt ceiling hostage, then I think we're finally going to see the GOP take advantage of their own status and position in the governance of this country.

If the Democrats controlled both houses a raise in the debt ceiling would likely be a mere formality.  They've already gotten the revenue increases they demanded (basically).  While they might not have been as high as they wished, or gotten funds from people at levels they wished (as it really seemed that they were always looking for funds from individuals making more than $200,000 - $250,000 per year) but they got close enough to bring in a lot more revenue -- or so they claimed -- than had been flowing into the government coffers in prior years.  Fortunately for the country though we have a split government, with the GOP controlling the house of representatives and with enough members in the senate to keep anything from being rammed down the throats of the country without at least some input from the GOP.

I don't claim to be happy about how things went with the earlier fight.  While I somewhat encouraged the GOP to just let the President and his pals drive us right on off the cliff, it was, all along, with the thought that the only way to really get our fiscal house in order was going to be via serious cuts in spending.  Those cuts aren't likely unless the President and his pals are forced to make those cuts and the only real leverage that the GOP has had is the mandated goals and deadlines that the fiscal cliff was forcing upon us all, and soon the debt ceiling that we are likely to go bumping up against.  Without automatic tax increases (or, technically, as it seemed that the Democrats wanted all along, tax-cuts extended for all but the wealthiest of U.S. citizens) there as a potential hit upon the country, the threat against the tax-paying public is so significantly reduced that the GOP can afford the luxury of forcing concessions from their Democrat counterparts.

Hang in there and stay tuned.  The next few weeks are going to get very interesting, at least in this area.


Comments
on Jan 15, 2013

I was surprised at just how much that revenue increase came out of my pocket.  I make well under 50k and I now get $30 less per paycheck that I'll never see again, going straight to Social Security... so that will totally help the regular budget.  I guess it used to be this way?  Whatever, government.  I was going to have a surplus this year per my budget and not have to go into debt to get the car I need, and I was going to have some savings.  Now, I'm not going to have any of that.  I might end up breaking even.

on Jan 15, 2013

I was surprised at just how much that revenue increase came out of my pocket.  I make well under 50k and I now get $30 less per paycheck that I'll never see again, going straight to Social Security... so that will totally help the regular budget.  I guess it used to be this way?

Yes, it used to be that way and sadly because of the desire for a short-term boost to the economy, it was changed temporarily with a "holiday" on the employee's portion of the Social Security withholdings from all employees.

It did what it was supposed to do in that it put that extra $30 into your paycheck, but once it was gone, you now notice the hit and wonder what happened to your paycheck.

To me it was a horrible idea to begin with.  We basically robbed Social Security to give everyone a stream of cash to spend now.  Great, except, well, uh, isn't Social Security headed for a serious funding gap? (Answer: Yes)  Knowing that, why do harm to Social Security just to get people to pump money into the economy for groceries, gasoline, clothing and such?  Oh, because we have to get the economy moving as it seems to be dead right now and won't get better without outside interference. (Further comment: WRONG.  Eventually the economy will find its own equilibrium.)

Actually a better long-term fix would have been to half the Social Security contributions for all middle class and lower class employees, eliminate the cap on the withholding for all employees (so upper class employees would have to contribute on all of their income and not just the first $xxx,xxx amount (which is approx. $117k)) and basically play Robin Hood by taking the money from those upper class employees to give back to the lower class employees.  That would have allowed that holiday to be permanent without affecting the health of Social Security for the long-term.

Regardless, the government still very much has a spending problem.  They have to cut back and yet if they do, it will mean the loss of jobs and that in turn means the loss of revenue from those same employees.  Growing government isn't the answer for the long term.

It's a shame that the "shovel ready" jobs didn't provide the boost that they should have, and really a shame that we can't seem to figure out how to fund improvements to our transportation system or to our electrical infrastructure.  Both need serious investment and yet we just don't have the money right now.

Interesting times we live in, and no easy answers.

on Jan 15, 2013

Well, easy answers, but not if you're rich - if you're rich, you don't want that cap removed.

on Jan 15, 2013

The republicans will roll over again.  That is a given.  The answer is to NOT raise the debt ceiling.  It will not cause a default.  It will cause a massive cut in spending.  Which is what is needed.  When the so called "poor" are living better than the middle class, there is something institutionally wrong with spending.

on Jan 16, 2013

The poor aren't living better than the middle class.

on Jan 17, 2013

Jythier
The poor aren't living better than the middle class.

Yes they are.  The money the poor receive from the government is not subject to taxes.  For a couple making $70k per year, they only have about $50 (or less) of actual income.  The rest is taken by taxes.

When you add up all the government handouts (like Obamaphones, TANF, EBT, WIC, etc.) a family who is only receiving government assistance is receiving more than that.

on Jan 17, 2013

Where did you get this information?

on Jan 18, 2013

www.dpw.state.pa.us

on Jan 18, 2013

Awesome, thanks!  I'm going to get a free phone then.

on Jan 31, 2013

What is absurd is tripling an already-large national deficit in a grand anti-capitalistic gesture that benefits primarily CEO's. Ask any retired auto worker how their pension plan is working out after being destroyed by the "targeted" "focused" bankruptcy proceedings. How about this: http://www.huffingtonpost.com/2013/01/28/tarp-pay-czar-executive-pay_n_2569328.html

 

on Jan 31, 2013

HangfireW8
What is absurd is tripling an already-large national deficit in a grand anti-capitalistic gesture that benefits primarily CEO's. Ask any retired auto worker how their pension plan is working out after being destroyed by the "targeted" "focused" bankruptcy proceedings. How about this: http://www.huffingtonpost.com/2013/01/28/tarp-pay-czar-executive-pay_n_2569328.html

 

The white collar workers lost their pensions (in the bailout).  The blue collar workers got theirs plus equity in the company at the expense of bond holders, legal owners of GM assets.

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