What should be done about raising the debt ceiling and more broadly what should be done to start lowering the US’ massive debts and deficits?
My plans in order of preference:
The Gang of Six Plan-Provided there are no new taxes and it just involves elimination of tax breaks and loopholes (and thus simplify the tax cut) and the majority of savings are spending cuts I will support it (yes I am a fairly moderate Scott Brown-style Republican on most issu3es except abortion).
Cut, Cap, and Balance Plan-The vast majority of the Republicans in the House have approved it and I don’t think a BBA is unreasonable considering 49 states already have such a law.
McConnell Plan-Only a temporizing solution but at least it might raise the debt ceiling
Bachmann Plan-Opposition to raising the debt ceiling shows great principle considering President Obama himself claimed raising the debt ceiling during the Bush years was a “failure of leadership” yet the Republicans have overwhelmingly put country before party and have given up a magnificent opportunity to expose the hypocrasy of the President on the debt ceiling issue to save the country from economic crisis.
As for the debt ceiling, there should be a clean raise of the debt ceiling and the House should immediately reinstate the Gephardt Rule. The time to think about deficit reduction is during the budget debate. Once we’ve already decided to spend money, it’s nonsensical to have a separate vote on whether or not the money should even be raised. It makes little more sense than having a separate tax collection ceiling and a manufactured crisis about that every time April 15th comes around.
Moody’s is suggesting that the US just eliminate the debt ceiling for much the reasons that Lord Feldon listed.
It’s not the Gang of Six plan if there is a no new taxes requirement. Then it is the gang of republicans that signed the no new taxes pledge. I mean I am all for the Gang of Six plan that cuts out loopholes and raises taxes on the rich, but that’s not the plan on the table. I don’t think you’re a moderate Republican if you believe in no new taxes ever for any reason, as you seem to imply.
Did Obama say something to the extent of “we shouldn’t be racking up more debt when the economy is reasonably good and things are functioning pretty normally just because you want to run some wars and entitlement without paying for it” or “we should never raise the debt limit no matter what”? Because his position is not inherently hypocritical unless it’s similar to the latter.
I do like you trying to raise this issue as if the Republicans are being generous by picking country over partisanship when the entire fucking issue we’re talking about here is a routine legislative process that’s only a debate because the Republicans have decided to hold the country hostage over it.
You say they refrain from exposing his hypocrisy “to save the country from economic crisis”, but that makes no sense. Just pointing out that Obama refused to vote for a debt ceiling raise doesn’t cause the country to go into economic crisis. What will is defaulting on our debt. That will create real, lasting, huge amounts of damage, and the Republicans are willing to risk it over some political gamesmanship. How you manage to twist this in your head into them being the country-first responsible adults is so absurd that if cognitive dissonance was a real physical force your head would explode.
We should stop pretending that the debt ceiling wasn’t raised when the money was borrowed. If we must go through the formality, then every member of congress should vote to approve it and Obama should sign it. It should not include any other provisions other than an increase that will cover the debt already acquired. The debt ceiling has absolutely nothing to do with lowering the US debt and deficit.
“Balanced budget” has widely varying meanings (PDF). New York, for example, has a balanced budget provision in its constitution, but it merely requires the governor to submit a balanced budget to the legislature. The final budget as passed by the legislature need not be balanced.
I too struggle to see why we need a separate vote on the debt limit. It’s nonsensical to have a vote authorizing the expenditures of certain moneys but then another vote to actually authorizing gathering those moneys.
I can’t think of a valid scenario where a separate vote would be useful, except in situations where we’d be too far gone for the vote to stop anything anyway (for instance, a runaway Fed and President collaborating to borrow money to ---- help me out here?)
The issue of borrowing is a separate constitutional power than the power to expend, or the power to raise taxes, for that matter. That’s why those issues are largely dealt with in separate processes.
And, I speak as someone who supports bringing down the deficit in a responsible manner that prioritizes the economic recovery, along with a mixed package of spending cuts and tax increases: it is GOOD that we are having a national debate over the long-term fiscal picture. I certainly won’t agree with everything that will be in a final package, however that turns out – but this debate on the long-term fiscal health of the government wouldn’t be happening if there wasn’t a debt limit.
One of the first lessons I was told when I came to Washington is that nothing happens until it absolutely can’t be put off any longer. The more time I spend here, the more true that adage seems. Despite the risks – or really, because of them – the debt limit has served its purpose in focusing people’s attention on whether the government is spending too much on “nice to haves” and whether some people are paying less than their fair share of taxes.
There is no functional difference between “eliminating tax breaks and loopholes” and “new taxes”.
49 states don’t actually balance their budgets, and Congress doesn’t have the power to enact an amendment anyway.
I don’t understand what you’re trying to say here. Bachmann is showing “great principle” by raising the same anti-spending talking points she would anyway?
“Some form of balanced budget amendment” covers rather a broad area. For example, Florida’s constitution requires that anticipated appropriations cannot exceed anticipated revenues by more than 3%, which isn’t quite what I’d call “balanced”. Oh, and the legislature can exceed the 3% cap by a three-fifths vote.
Of course there is. Even when there is no strict budgetary difference between 1) eliminating breaks and loopholes worth X amount of dollars, 2) enacting new taxes we hope will bring in X amount of dollars, and 3) simply raising rates in hopes of bringing in X amount of dollars, there are nonetheless major distinctions to be made.
For one, they’re more politically palatable. Eliminating loopholes hurts a minority. Raising rates hurts a larger group.
Two, and this also speaks to politics, it is generally regarded as fairer. The byzantine tax code with its multitudes of exemptions and credits encourages ordinary folks to think that others – the savvy and/or politically connected – are getting out of paying their fair share by gaming the system. And the ordinary folks are entirely right.
Three, and this is a purely practical consideration which I offer without backing evidence, I suspect that the revenue projections for eliminating or reducing tax breaks will be more accurate than the revenue projections for enacting new or increased taxes. In the former case we have a baseline (we know what people were doing before the credit). In the latter, we don’t know how the economy will respond to new taxes.
Four, and most importantly, the endless system of tax credits and exemptions and loopholes all distorts the normal functioning of the market and impairs overall economic growth. Some of those may serve arguably legitimate functions (e.g. tax credits for electric cars), but many of them are done to benefit political constituencies who are seeking government protection from the free market (e.g. agriculture subsidies).
Now, I understand that hard-line GOP nimrods are going to blur the distinction, but there’s no reason we have to believe them.
Yes the borrowing is in a different part of the constitution and the debt isn’t actually incurred (in one sense of the word debt) yet. In another more realistic sense, the debt was incurred when the net effect of the government made an obligation. In another sense, we created debt in the more strict definition when the interest on debts issued continues to accrue.
To pretend there is no real debt in excess of the current limit because we haven’t actually issued some sort of bond or note is a little pedantic.
Also, the point being raised is not what the current rules are, it’s whether the current rules make sense - you can make an obligation to pay for something and then later decide whether to borrow money to pay for it when it was clear from the start that borrowing would be required.
I’m always leery of these types of suggestions from heads of, or former heads of, the Federal Reserve Board. Remember that the Fed is a privately held corporation, independent of the Federal government, and earns interest on money they PRINT. (Man, I want that deal: Here, I’ve printed you $1 billion - it only cost me the ink and materials - and your interest rate on this money I’ve manufactured is only 4%!) Removing the debt ceiling entirely is a nice benefit for the Federal Reserve Board.
The simple fact is that many of these so-called loopholes are normal deductions that make sense when compared to the entirety of the tax code. Further, the statement that they are eliminating the loopholes is in reality the obfuscating event.
All statements taken from a single speach by Obama where he sort of makes it sound like there is some sort of loophole he is proposing to be eliminated. The reality though is that he wants to change the depreciation schedule for corporate jets from 5 years to 7 years. Modifying this schedule would either: 1) reduce the sales of corporate jets which ultimately reduces tax revenue; or 2) corporate jet sales stay basically the same and tax revenue is identical in dollars but the timing of receipt is sped up a little.