Debt ceiling: why are the pubbies pissed?

The BBQ Pit
181

Okay, here’s an analogy. I kind of doubt it will help, but it’s worth a shot since curlcoat only seems able to think in household terms.

You are thinking of a budget as “I am making $X a month. Whatever I buy each month has to fall under $X.” You are attempting to apply that model to the nation.

There is a different situation, however, that is not uncommon and that applies much more closely.

Picture a house jointly owned by several friends/roommates. To make expenses easier, they have determined those things that are commonly used by everyone and that everyone or a majority want. This can include such things as the house payment, household maintenance, and supplies, groceries, utilities, cable internet/TV, and common-area furnishings such as a couch and TV for the living room.

The costs of all of these things are pooled together, and it’s determined that each person will need to contribute $X a month in order to pay for everything. Well and good. Except that when it comes time to chip in, some roommates don’t pay, either because they can’t or won’t. Maybe one pays their share of the house payment but nothing else and threatens to leave if the others ask for more. The ones who can’t would like to, but you can’t get blood from a stone, and besides they’re your friends and you don’t want to kick them out unnecessarily.

As a result, the revenue for the common expenses is below what was spent. They have to borrow on a credit card to meet the monthly expenses. Talk is made of cutting expenses, but every single possible expense is defended by someone in the house (“I NEED that 50” TV! It’s the only entertainment I have!" “We can’t get rid of the internet, I work from home!”), or the only concessions made are insignificant (“Yeah, we can buy store brand canned vegetables instead of name brand. That’ll save us $10 a month”). So if you can’t cut the expenses, then someone has to step up and pay more. Hopefully it’s the people who’ve been holding out that finally pay in their share, but someone has to, or else that credit card is just going to have more and more money put on it. And once you hit that limit on the credit card, well, either you need to raise the limit or open a new line of credit, and if that’s when people start saying you can’t put more money on the card, then everyone is going to be hungry and homeless in a hurry.

Sure, in that analogy you can claim that you’d just kick the deadbeats out of the house, and certainly on that scale it’s much, much easier to handle expenses. But when you scale that situation up to where you’re talking about several hundred million roommates, or even just 50 different roommates, and there’s nowhere for them to actually go if they can’t or won’t pay, that argument gets a whole hell of a lot harder.

182

curlcoat: Point of information. Textbook economics states that deficits are desirable during recession, and surpluses are desirable during prosperity. It isn’t prosperity yet. Cutting the deficit suddenly would cause the economy to go into a tailspin.

Over the medium and long term, much of the deficit will get smaller provided the economy recovers. And our long term deficit problems are intimately tied up with health care costs.
Health care is key: http://www.cepr.net/index.php/press-releases/press-releases/future-budget-deficits-almost-entirely-due-to-rising-private-sector-health-care-costs

Here’s a deficit calculator, if you want to go beyond platitudes about living within your means: http://www.cepr.net/calculators/calc_deficit.html

And this graphs gives an idea of the sources of medium run deficits. http://tpmlivewire.talkingpointsmemo.com/2010/06/chart-of-the-day-reminder-the-deficit-youre-freaking-out-about-is-bushs-fault.php?ref=fpblg

183

And to keep on with the household analogy here: If you don’t have a job and you’re on hard times, it’s still worth it to you to spend extra to make sure you have an internet connection, because having that infrastructure available in the house means you have more access to job prospects. Sure you have to put it on the credit card, but it means finding a job faster.

Then when you get a good job and your income far outweighs your current expenses, you simply don’t increase your spending to match your income, and let the extra money pay down the debt you had to build while on hard times.

184

In national terms, this boils down to having the debt a declining share of GDP. This can occur when budget deficits are positive, provided they are sufficiently small and nominal GDP growth is positive.

185

If you have something you want to ask me, then do so and quit this dancing around. Either that or you are so dumb/out of touch that you don’t realize that the US is and has been running a huge deficit for a long time.

Even tho you are acting like a jerk, I will point out to you nicely that your analogy doesn’t work beginning with -

The budget should not take up all or even most of X, otherwise there is no wiggle room for emergencies. Such as your example of the roommates. No one in that situation should be using their whole income to pay for their portion of the joint expenses, if for no other reason than it is very likely that one or more room mates will be unable to pay their bills at some time.

The problem is, everyone including the government seems to feel that it makes sense to spend most or all of their income every month and keep nothing back for emergencies. Carrying a heavy credit load seems to be business as usual. A lost job, an serious illness, and the whole house of cards comes down, and when it happens the people involved blame everyone except themselves for being so irresponsible.

186

I’m not advocating that the deficit be cut suddenly at any time, but I do note that we have had a large deficit during prosperity.

The rest of your post I’ll look at tomorrow as I am off to bed and don’t want to wait forever while your links load! One of the ways I keep our budget well below our income is to stay on dial up as long as it is economically possible.

187

It says:

Bosstone is saying it’s less than X. Seriously. Go read it again.

188

We sure did. Personally, I think all wars exceeding $100 billion should be accompanied by automatic tax increases. And while health care reform contained measures to “Bend the cost curve” that were applauded by experts, it would be nice if we could have another round of restructuring in a couple of years.

Also: cutting infrastructure during recession (which we did on net once state and local cuts are taken into account) deprives future generations as well. Indeed, with interest rates at record lows we should be borrowing hand over fist to shore up our dodgy infrastructure. During prosperity, the economy will have less slack and repairing a bridge will displace other activities. Not so much now.

189

I think it’s a great analogy! You may want to add more humorous details. For example, when the deadline for making a token payment on the credit card bill comes due, one guy refuses to sign off unless the others agree to certain sexual demands and to buy toilet paper from the guy’s brother-in-law.

When new muddle-brains show up in these threads in future, I’ll try to remember to ask them, first thing, whether they’ve examined that graph.

190

and somehow of the two science students in the house, one doesn’t believe central heating could possibly work and the other doesn’t want to pay rent because they believe the house was magicked into existence a few seconds ago and will disappear any moment now.

And that one rich guy that everyone knows is paying less and less rent each month and complaining about how Johnny the dishwasher gets to sleep on the couch for free.

191

You mean that one rich guy who’s one of the 100 people in the house and is paying 37% of the total rent?

Or maybe that one rich guy who’s one of the 20 people in the house and is paying 60% of the total rent?

Is that the rich guy you mean?

192

Yes, that rich guy who gets approximately 87% of the total benefits of living in that house. This is, of course, where the analogy falls apart, because one cannot equate this. Maybe it’s like if that one person paying 60% of the rent demanded both bedrooms, the study, the upstairs bathroom, and the kitchen to himself, and everyone else could make do with the attic, basement, and the tiny downstairs bathroom (which has no shower).

193

As a general principle, Bricker is simply in error. There are times where Congress gives discretion to the Executive Branch that “up to $x may be spent,” but that is not common. I don’t often do this, but the Supreme Court made it clear in 1975 that the former practice of impoundment (which Thomas Jefferson first used) had been prohibited by an act of Congress: cite.

There is a general acceptance that there are events that will reasonably lead to the Executive not carrying out every dollar of appropriations that is ever made available. For example, if something simply cannot be done (build a highway though an area flooded by a hurricane), or proper stewardship of taxpayer funds requires something (maybe a new R&D program for the Pentagon is failing and turning into a waste of money, the Executive Branch can terminate it in the best interest of the government), and similar reasons. But the President can’t simply decide as a policy matter that he refuses to spend funds that Congress directs by law to be spent.

If the President does disagree with the proposed use of certain funds, he can ask Congress to rescind those funds with a special message. Congress basically never approves those requests.

Now, if we got into a situation where there was no money in the Treasury, we would be in unexplored territory as to the President’s power to decide how the remaining funds are prioritized. In my opinion, the President would probably have considerable latitude to make decisions on what to fund and what not to fund until the Treasury is replenished, at which time he must go back to following the law and fulfilling the spending directions of Congress.

194

curlcoat, be honest: did you read my links or not?

The first one tells what happened to Thomas Paine. Remember him? The guy who wrote “Common Sense” (the same theme you’re driving at), foundational ideas to the American Revolution? Yah, once everyone got riled up and the war was won he got kicked to the curb. France tried to have him executed and the Americans branded him a blasphemer… for continuing to talk common sense. He died a pauper and was buried like a dog. Things haven’t changed so much. Anyway, the rest of the article describes how the wealthy behave now and have always behaved.

I’m not saying it is impossible to balance the budget. The points the others are making are also valid, but what I am saying is that the wealthy don’t give a shit and will do whatever it takes to improve their own lot. The deficit is largely on purpose. It is a political strategy to force the government into a fiscal corner such that it has simply no choice but to cut Social Security, Medicare and the like. Rich people hate paying taxes to fund those programs for the lazy slobs on whose backs they became wealthy. Do you understand what I’m saying?

We haven’t given up, but imagine me v. Romney in this struggle. Romney makes millions in dividends every year and can spend all his time scheming with a team of lobbyists over the minutiae of the law to devise ways to tilt things in his favor. I have to go to work in like 10 minutes, the government has never heard of me and I don’t have a representative. Whose will do you think will prevail?

Anyway, I forgot to mention that my first two links come with a soundtrack.

195

Right. I admitted the details don’t scale down that well. But it is perfectly acceptable as an illustration of how one can have a budget where the necessary revenue is driven by spending (and how it’s not that easy to lower spending) as opposed to the other way around, which curlcoat has been fixating on.

196

Oh, your use of the metaphor was good. It was Terr that abused the shit out of it.

Yep.

197

I agree. There has been overspending. Much of it by both parties. So we need to pay off those bills now.

198

Wait what

199

He is saying we need to raise taxes to pay off some of the debt we’ve accumulated.

200

Yeah that.