# Playing chicken with the debt limit? **URL:** \ **Category:** Great Debates\ **Created:** [February 21, 2011, 1:07am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070 "2011-02-21T01:07:51Z")\ **Posts on this page:** 20\ **Page:** 8
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [June 10, 2011, 12:03am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/141 "2011-06-10T00:03:21Z")
Of course, complicating all this is that a lot of people simply [don’t understand the consequences, or don’t believe in them.](http://www.washingtonpost.com/business/economy/washington-post-abc-news-poll-shows-americans-torn-over-raising-debt-limit/2011/06/08/AGPvshMH_story.html) Not that I blame them; it is somewhat more complicated than the usual financial transaction, given the global nature of the markets and all the factors involved. Thus a lot of it is trusting the word of those in power in some way, so I can see skepticism arising. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [June 10, 2011, 1:41am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/142 "2011-06-10T01:41:33Z")
Toss in the fact that most of those people who say they are willing to not raise the debt limit even in the face of significant cuts will magically have foxhole conversions when it happens only complicates matters. This is another issue where the American electorate is, quite simply, irrational. Each subgroup considers the others to be expendable and none of them have enough clout to pull it off alone. So everyone will pay the price and that will make them find their love for big government within a week or two of real cutting. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [June 10, 2011, 2:28am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/143 "2011-06-10T02:28:20Z")
> [@Leaper](#): > > Arguably, your employer would be stupid not to prepare. But (to use a federal government metaphor) do you have any insight whether this is “Bin Laden Determined to Attack U.S.” style preparation, or whether it’s “what if we need to nuke Montreal” style preparation? Not sure what you mean. Just preliminary discussions. If the previous budget threat from earlier this year is any indication, for that it was defining non-essential and essential services. It also meant separating employees into the two groups to determine would would be laid off (non-essential - no work at all) and those who would just keep things oiled and greased (essential, working no more than two hours a day). In the case of not raising the debt ceiling, it may be more of the same but with a caveat that essential services would be even further restricted. Keep in mind China has already upped the ante by divesting itself of short-term US securities, is pondering the long-term US securities it still holds, and is putting pressure across the board that the debt ceiling must be raised. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [June 10, 2011, 10:10pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/144 "2011-06-10T22:10:42Z")
> [@Leaper](#): > > Of course, complicating all this is that a lot of people simply [don’t understand the consequences, or don’t believe in them.](http://www.washingtonpost.com/business/economy/washington-post-abc-news-poll-shows-americans-torn-over-raising-debt-limit/2011/06/08/AGPvshMH_story.html) > > Not that I blame them; it is somewhat more complicated than the usual financial transaction, given the global nature of the markets and all the factors involved. Thus a lot of it is trusting the word of those in power in some way, so I can see skepticism arising. It’s because people realize deep down that no matter how we cut the deficit far enough to stop the growth of the debt, we’re going to be plunging America into chaos, which may end in rioting and rebellion. There’s no way around it. You must cut social security, you must cut welfare, you must cut medicare, or the debt will continue to rise. Even if you also cut the military and raise taxes for the rich, you must do this. The word you’re looking for is “Quicksand”. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [June 10, 2011, 10:25pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/145 "2011-06-10T22:25:54Z")
> [@Le\_Jacquelope](#): > > There’s no way around it. You must cut social security, you must cut welfare, you must cut medicare, or the debt will continue to rise. Actually, the Bush tax cuts along with the Iraq fiasco, have created the current excessive debt issue. Social Security is funded separately and can sustain itself if the current cap is removed completely (meaning the rich pat their fair share). ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 12, 2011, 4:28am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/146 "2011-06-12T04:28:22Z")
> [@Le\_Jacquelope](#): > > It’s because people realize deep down that no matter how we cut the deficit far enough to stop the growth of the debt, we’re going to be plunging America into chaos, which may end in rioting and rebellion. > > There’s no way around it. You must cut social security, you must cut welfare, you must cut medicare, or the debt will continue to rise. Even if you also cut the military and raise taxes for the rich, you must do this. > > The word you’re looking for is “Quicksand”. Most of our current deficit is the result of the recession. Low economic activity plus high demand for government services (see unemployment/food stamp/medicaid/etc.). In a normal economy, our deficit would be closer to 500 billion. The Bush tax cuts reduce revenues by about 2.5% of GDP. The wars in Iraq and Afghanistan are worth 1% of GDP There, we’ve just balanced the budget. The problem, as you correctly note, is that medicare is going to be a problem some day (social security is entirely manageable because we can peg social security payments to grow at exactly the same rate as the economy without short changing anyone or increasing the relative burden on society, assuming we have reasonable population growth rates). We cannot continue to have the largest line item on our budget growing at significantly higher rates than our economy in general. We have to stunt the growth rate. Also reinstating tax cuts for the lower income brackets gets very hard unless you are in a boom economy and who the heck wants to take away the punch bowl just when everyone starts having fun. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [June 14, 2011, 11:22am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/147 "2011-06-14T11:22:14Z")
> [@Duckster](#): > > Actually, the Bush tax cuts along with the Iraq fiasco, have created the current excessive debt issue. Social Security is funded separately and can sustain itself if the current cap is removed completely (meaning the rich pat their fair share). The Bush tax cuts are indeed slated to take the lion’s share, or close to it, of our budget deficit in the future. If not now. > [@Damuri\_Ajashi](#): > > Most of our current deficit is the result of the recession. Low economic activity plus high demand for government services (see unemployment/food stamp/medicaid/etc.). In a normal economy, our deficit would be closer to 500 billion. And 500 billion, right now, would still be monstrous. As it stands we’re looking at a deficit of 1.4 trillion. [http://www.washingtonpost.com/wp-dyn/content/article/2010/07/23/AR2010072304101.html](http://www.washingtonpost.com/wp-dyn/content/article/2010/07/23/AR2010072304101.html) I don’t see how we’re going to get the deficit down without some major crisis-inducing pain, what with the Republicans not willing to raise taxes for the rich or cut the military. They’re 100% united in Congress, and in fact they want lower taxes for the rich and for corporations. So the reality of it is that unless the Democrats in the Senate cave in again, we’re going to slam into the debt limit at full speed. Which frankly I am not fretting about, because all it will mean is the exchange rates will reverse and American workers will wind up doing jobs exporting stuff to China and Brazil. Now you guys might not like the idea of horrible factory work coming back here but we’ll also be getting back legions of programming, service and textile jobs, too. All of which will be quite welcome to all the millions of unemployed teenagers and workers who are languishing without jobs now. Especially with the benefit of our overtime and workplace safety laws, which China does not and never will have. Bring on the debt limit and the dollar crash. China’s gonna have 700 million middle class by 2020; that’s one hell of an export market that will finally be open to American workers. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [June 23, 2011, 10:55pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/148 "2011-06-23T22:55:31Z")
[Eric Cantor is refusing to go any further in discussions.](http://www.washingtonpost.com/blogs/plum-line/post/cantor-pulls-out/2011/03/03/AGlx1NhH_blog.html) What does this mean for the economic health of the country… indeed, the world? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 24, 2011, 1:05am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/149 "2011-06-24T01:05:38Z")
[Ten GOP sens. vow no debt-ceiling hike without balanced-budget amendment](http://thehill.com/homenews/senate/167857-ten-gop-senators-vow-no-debt-ceiling-hike-without-balnaced-budget-amendment-) > [@](#): > > The 10 GOP senators have signed a document similar to the Taxpayer Protection Pledge, which anti-tax activists have used to block tax increase. > > The document states the signatories will oppose the debt increase unless three conditions are met: substantial cuts in spending that will reduce the deficit, the implementation of enforceable spending caps and passage of a balanced budget amendment. They really want default and all the economic repercussions that portends. At what point will their corporate handlers jerk their chain? ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [June 24, 2011, 3:18am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/150 "2011-06-24T03:18:31Z")
As I said [in another related thread I started,](http://boards.straightdope.com/sdmb/showthread.php?t=613692) some thing that said “corporate handlers” will just juggle their investments so they’ll make money off the crash(es), and thus not do anything at all. I’m a little skeptical of this, but it’s out there. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [June 24, 2011, 3:32am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/151 "2011-06-24T03:32:19Z")
The Republicans may be betting that with unlimited dollars for swaying voters in the next election thanks to Citizens United, they can persuade voters that the resulting economic crash is all Obama’s fault. Sadly, they may be right. ---
**Author:** ![Cyberhwk](https://avatars.discourse-cdn.com/v4/letter/c/7993a0/32.png) [@Cyberhwk](https://boards.straightdope.com/u/Cyberhwk)\ **Post date:** [June 24, 2011, 4:40am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/152 "2011-06-24T04:40:46Z")
> [@Evil\_Captor](#): > > The Republicans may be betting that with unlimited dollars for swaying voters in the next election thanks to Citizens United, they can persuade voters that the resulting economic crash is all Obama’s fault. Sadly, they may be right. Where would they get said money? From the companies whose stock prices they just cratered? ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [June 24, 2011, 6:29pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/153 "2011-06-24T18:29:15Z")
> [@Cyberhwk](#): > > Where would they get said money? From the companies whose stock prices they just cratered? Sure, there’s plenty of crazy-stupid right wing corporate types out there. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [June 24, 2011, 10:55pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/154 "2011-06-24T22:55:50Z")
> [@Evil\_Captor](#): > > Sure, there’s plenty of crazy-stupid right wing corporate types out there. Devil’s advocate (that I just thought of): why would they do so? In a post-crash America, would such be at all a good investment of their money? ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [June 24, 2011, 11:31pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/155 "2011-06-24T23:31:04Z")
To balance that, a (partisan) blog quote I posted in my other thread about one theory of what might happened, which involves sufficient Congresspeople not being convinced of the stakes behind default: > [@Brian Beutler](#): > > But numerous influential Republicans like DeMint have planted seeds of doubt about the stakes in the minds of rank and file members in both the House and Senate. Thus… Boehner and… McConnell will likely face significant defections when the vote comes down. Thus, in one highy plausible scenario, raising the debt limit will require significant Democratic buy-in. And if that’s the case, it means the legislative package can’t include a GOP wishlist of dramatic spending cuts to big entitlements. But if Republicans don’t get what they want out of the debate, more of them will defect, meaning leaders will need more Democratic support, and a less draconian bill, which could trigger further GOP backlash in a dynamic that could end in a debt limit measure that can’t pass the Republican-controlled House. That’s the nightmare scenario. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [June 25, 2011, 2:09am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/156 "2011-06-25T02:09:31Z")
> [@Leaper](#): > > Devil’s advocate (that I just thought of): why would they do so? In a post-crash America, would such be at all a good investment of their money? It would be a terrible investment. Hence, “crazy/stupid.” But they may be thinking “We need to take a one-time economic hit to get the power of the federal government under control” not realizing that one time hit may sink them for all time. Hence, “crazy/stupid.” Of course, all our fortunes will be destroyed along with theirs, but like those conservatives like to say, “Freedom ain’t free” or to put it in non-moron, “Idiots with money are still idiots.” ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 25, 2011, 4:38am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/157 "2011-06-25T04:38:18Z")
> [@Le\_Jacquelope](#): > > The Bush tax cuts are indeed slated to take the lion’s share, or close to it, of our budget deficit in the future. If not now. > And 500 billion, right now, would still be monstrous. > > As it stands we’re looking at a deficit of 1.4 trillion. > [http://www.washingtonpost.com/wp-dyn/content/article/2010/07/23/AR2010072304101.html](http://www.washingtonpost.com/wp-dyn/content/article/2010/07/23/AR2010072304101.html) > > I don’t see how we’re going to get the deficit down without some major crisis-inducing pain, what with the Republicans not willing to raise taxes for the rich or cut the military. They’re 100% united in Congress, and in fact they want lower taxes for the rich and for corporations. > > So the reality of it is that unless the Democrats in the Senate cave in again, we’re going to slam into the debt limit at full speed. Which frankly I am not fretting about, because all it will mean is the exchange rates will reverse and American workers will wind up doing jobs exporting stuff to China and Brazil. Now you guys might not like the idea of horrible factory work coming back here but we’ll also be getting back legions of programming, service and textile jobs, too. All of which will be quite welcome to all the millions of unemployed teenagers and workers who are languishing without jobs now. Especially with the benefit of our overtime and workplace safety laws, which China does not and never will have. > > Bring on the debt limit and the dollar crash. China’s gonna have 700 million middle class by 2020; that’s one hell of an export market that will finally be open to American workers. The Republicans will cave. They have basically said as much to wall street and the chamber of commerce. If the Democrats fold again when the Republicans have shown everyone how weak their hand is, then Democrats might as well pack it up and build a new party around Kucinich or Nader. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 25, 2011, 4:41am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/158 "2011-06-25T04:41:03Z")
> [@Le\_Jacquelope](#): > > There’s no way around it. : > [@](#): > > You must cut social security, No you don’t > [@](#): > > you must cut welfare, No you don’t > [@](#): > > you must cut medicare, Bingo. > [@](#): > > Even if you also cut the military and raise taxes for the rich, you must do this. Not if you get medicare costs under control. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [June 26, 2011, 3:51am UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/159 "2011-06-26T03:51:17Z")
> [@Damuri\_Ajashi](#): > > The Republicans will cave. They have basically said as much to wall street and the chamber of commerce. If the Democrats fold again when the Republicans have shown everyone how weak their hand is, then Democrats might as well pack it up and build a new party around Kucinich or Nader. I fear the Dems will fold. > [@Damuri\_Ajashi](#): > > : > Not if you get medicare costs under control. That means denying health care coverage to a LOT of seniors. A HELL of a lot. Even the Tea Partiers don’t want anyone touching their Medicare. People even oppose cuts to Medicaid. Republicans are already begging for mercy after touching that rail. BTW how much money do you expect to save by completely eliminating or privatizing Medicare? ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [June 26, 2011, 3:41pm UTC](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070/160 "2011-06-26T15:41:06Z")
> [@Le\_Jacquelope](#): > > I fear the Dems will fold. > That means denying health care coverage to a LOT of seniors. A HELL of a lot. Even the Tea Partiers don’t want anyone touching their Medicare. People even oppose cuts to Medicaid. > > Republicans are already begging for mercy after touching that rail. > > BTW how much money do you expect to save by completely eliminating or privatizing Medicare? The key will be to getting the health care system under control. It’s starting to look like a racket, just like the financial industry. Doctors order expensive tests they don’t really need cause they get a cut of the money. Big Pharma comes out with new drugs that are no more effective than the old, generic drugs, but which they can charge new drug prices for, and prolly slipping money to doctors for prescribing them. HMOs have turned into middlemen that just mark up the cost of health care, they’re doing damned little to control the cost except deny patients coverage. It’s freaking stupid, but our wonderful capitalist system rewards certain kinds of stupidity, so guess what? It’s freaking unstoppable. Just like the finance industry. (For the record, our government still hasn’t bothered to enact legislation or regulations that will prevent a recurrence of the Great Recession. Just so ya know.) [Previous page](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070.md?page=7) [Next page](https://boards.straightdope.com/t/playing-chicken-with-the-debt-limit/572070.md?page=9)