# The Debt Crisis Thread **URL:** \ **Category:** Great Debates\ **Created:** [July 21, 2011, 12:56am UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786 "2011-07-21T00:56:21Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [July 21, 2011, 3:44pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/21 "2011-07-21T15:44:37Z")
> [@tim-n-va](#): > > 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 afraid you don’t seem to understand the most basic precept of government operations: without funding in hand, there is no obligation on the part of the government. All those future budget projections about spending and debt or whatnot are not binding upon the United States, with the exception of guaranteeing the debt that is authorized by law. Other than the validity of that debt, everything can be changed because it is the prerogative of the government to do so. Something does not become an obligation of the government until the funding is in hand to turn a commitment (which is an idea that the government would like to do something) into an obligation (which is the legal requirement to do it). ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 21, 2011, 3:49pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/22 "2011-07-21T15:49:50Z")
> [@Qin\_Shi\_Huangdi](#): > > 1. Bachmann Plan-Opposition to raising the debt ceiling shows great principle … 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. Right. Today’s Republicans with their compassionate policies are the true patriots, especially insightful bring-us-together intellectuals like Bachmann. It’s the dastardly Democrats who are bringing the country to its knees with tax-and-spend, foolish wars, Wall St. bailouts and obstinance in Congress. When will voters come to their senses? > [@DirkGntly](#): > > Remember that the Fed is a privately held corporation, independent of the Federal government, and earns interest on money they PRINT… Removing the debt ceiling entirely is a nice benefit for the Federal Reserve Board. 😕 😕 From Wikipedia: > [@](#): > > The U.S. Government receives all of the [Fed Res] system’s annual profits, after a statutory dividend of 6% on member banks’ capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury. ---
**Author:** ![tim-n-va](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tim-n-va/32/3001_2.png) [@tim-n-va](https://boards.straightdope.com/u/tim-n-va)\ **Post date:** [July 21, 2011, 4:04pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/23 "2011-07-21T16:04:40Z")
Words can and do have multiple meanings depending on the context. The US government has obligations in the sense that promises have been made. It is correct there is not an “obligation of funds”. If those promises don’t mean anything, why is anyone talking about the debt ceiling. The issue is what happens if the US government is seen to not be trustworthy regarding promises (obligations) despite there not being an actual issuance of debt. US veterans see an obligation to get their pensions, SS recipients see an obligation to get their checks, current holders of US debt see an obligation to be repaid with interest, etc. I fully understand the difference between legal debt obligations and obligations of promise but I also fully understand that there will dire consequences for defaulting on either. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 21, 2011, 4:16pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/24 "2011-07-21T16:16:09Z")
> [@LonghornDave](#): > > 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. Depends on the “loophole” being discussed. The “[carried interest](http://www.newyorker.com/talk/financial/2010/03/15/100315ta_talk_surowiecki)” loophole is a biggie and a loophole any way you slice it. For corporations you have them do “[transfer pricing](http://www.bloomberg.com/news/2010-07-23/tax-shenanigans-turn-u-s-sales-to-foreign-income-with-billions-offshore.html)” to move profits overseas so they pay no taxes on that money at all. Then you lobby Congress for a “[tax holiday](http://www.rollingstone.com/politics/blogs/taibblog/holiday-in-scambodia-20110720)” to repatriate that money at substantially lower tax rates (e.g. at 5%). Those would be loopholes. I am betting there are more. Point is, you are not raising the tax rate. You are merely asking people and corporations to pay the taxes they are supposed to pay. Taxes you and I (or at least I do) pay as a matter of course. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [July 21, 2011, 4:23pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/25 "2011-07-21T16:23:24Z")
That _is_ a new tax. It’s an additional tax on monies which were not previously taxed. Any way you slice it, closing loopholes or introducing new taxes are functionally indistinguishable. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [July 21, 2011, 4:40pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/26 "2011-07-21T16:40:00Z")
> [@Whack-a-Mole](#): > > Depends on the “loophole” being discussed. Sure, but Obama has focused on corporate jets, oil company subsidies, and hedge funds. The depreciation schedule for corporate jets is not a loophole. Oil companies do not receive subsidies. Hedge funds I agree with. > [@Whack-a-Mole](#): > > The “[carried interest](http://www.newyorker.com/talk/financial/2010/03/15/100315ta_talk_surowiecki)” loophole is a biggie and a loophole any way you slice it.. Agreed. > [@Whack-a-Mole](#): > > For corporations you have them do “[transfer pricing](http://www.bloomberg.com/news/2010-07-23/tax-shenanigans-turn-u-s-sales-to-foreign-income-with-billions-offshore.html)” to move profits overseas so they pay no taxes on that money at all. Then you lobby Congress for a “[tax holiday](http://www.rollingstone.com/politics/blogs/taibblog/holiday-in-scambodia-20110720)” to repatriate that money at substantially lower tax rates (e.g. at 5%). I have not studied up on this enough to speak on it in a detailed way. I will say that in general, if a multinational company legitimately earns profits overseas and pays taxes on those dollars according to that foreign country’s laws, I do not see any legitimate reason why they should also pay taxes to the U.S. government. The fact is that when a foreign company, say Kia for example, makes products here in the U.S. and sells them here in the U.S., we expect them to pay U.S. taxes. It runs both ways. As long as companies are handling things on an arm’s length basis with their foreign subsidiaries then I am okay with it. If they are not handled on an arm’s length basis then that seems like a job for the IRS enforcement agents to me. > [@Whack-a-Mole](#): > > Point is, you are not raising the tax rate. You are merely asking people and corporations to pay the taxes they are supposed to pay. Taxes you and I (or at least I do) pay as a matter of course. Here is a hypothetical. Every single company in the country gets to deduct overhead expenses in determining their taxable income. Congress writes a law saying that everyone can do it except Apple, Google, Facebook, Microsoft, and Amazon. They then come out and say that they are ending subsidies for Big Internet. Big Internet makes enough money, and they should be paying their fair share. They talk about how they are closing loopholes that Big Internet has enjoyed for years. What do we call that? Is it ending a subsidy or closing a loophole like congress has said? ---
**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:** [July 21, 2011, 5:29pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/27 "2011-07-21T17:29:26Z")
> [@DirkGntly](#): > > Remember that the Fed is a privately held corporation, independent of the Federal government, and earns interest on money they PRINT. Really? Strange that the [Fed’s federal government web site](http://www.federalreserve.gov/aboutthefed/default.htm) makes no mention they are a non-government entity. Also, a .gov TLD web site is restricted to agencies and entities of the US Government. A private entity cannot hold a .gov web address. Hmmm. Let’s look some more. Even the [Fed’s overview document](http://www.federalreserve.gov/pf/pdf/pf_1.pdf) (large PDF warning) says they are a government entitity. > [@](#): > > In the current system, private banks are for-profit businesses but government regulation places restrictions on what they can do. **The Federal Reserve System is a part of government that regulates the private banks.** The balance between privatization and government involvement is also seen in the structure of the system. Private banks elect members of the board of directors at their regional Federal Reserve Bank while the members of the Board of Governors are selected by the [President of the United States](http://en.wikipedia.org/wiki/President_of_the_United_States) and confirmed by the [Senate](http://en.wikipedia.org/wiki/United_States_Senate). The private banks give input to the government officials about their economic situation and these government officials use this input in Federal Reserve policy decisions. In the end, private banking businesses are able to run a profitable business **while the U.S. government, through the Federal Reserve System, oversees and regulates the activities of the private banks.** (Bolding mine.) [Federal Reserve - Wikipedia](http://en.wikipedia.org/wiki/Federal_Reserve_System#Balance_between_private_banks_and_responsibility_of_governments) ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [July 21, 2011, 5:46pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/28 "2011-07-21T17:46:41Z")
> [@Qin\_Shi\_Huangdi](#): > > 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: > > 1. 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). > 2. 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. > 3. McConnell Plan-Only a temporizing solution but at least it might raise the debt ceiling > 4. 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. We need to maintain current spending levels, increase deficit spending while we can borrow so cheaply and grow our way out of deficits. Do what worked before when we had higher dwebt levels. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [July 21, 2011, 5:48pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/29 "2011-07-21T17:48:12Z")
Grover Nordquist say letting the Bush tax cuts end would not be a tax raise. Perhaps he sees the damage his philosophy has brought and knows what the correct fix is. ---
**Author:** ![ladyfoxfyre](https://avatars.discourse-cdn.com/v4/letter/l/ad7895/32.png) [@ladyfoxfyre](https://boards.straightdope.com/u/ladyfoxfyre)\ **Post date:** [July 21, 2011, 5:51pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/30 "2011-07-21T17:51:40Z")
> [@Qin\_Shi\_Huangdi](#): > > 1. 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. HAHAHAHahahahaha! You mean like when Mitch McConnell went on TV and told everybody that if the GOP caved on tax increases they were handing Obama a victory in 2012? That is them “putting country before party”? Please. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [July 21, 2011, 5:55pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/31 "2011-07-21T17:55:04Z")
> [@gonzomax](#): > > Grover Nordquist say letting the Bush tax cuts end would not be a tax raise. And this, my friends, is the craziest f’ing thing I’ve ever heard. I assume that Mr. Norquist had one of those worms from Star Trek II attached to his brain when he said that. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 21, 2011, 6:08pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/32 "2011-07-21T18:08:00Z")
> [@Duckster](#): > > Really? > > Strange that the [Fed’s federal government web site](http://www.federalreserve.gov/aboutthefed/default.htm) makes no mention they are a non-government entity. It neither public nor private (or perhaps you could say it is both). > [@](#): > > From one perspective, the Fed looks like a public institution: Congress created it in 1913 to maintain the stability of the financial system; the president appoints, and the Senate confirms, the members of its Board of Governors; and it’s not out to make a profit—after taking care of expenses, the Fed hands off its earnings to the Treasury. Furthermore, the details of its responsibilities are subject to congressional oversight. Still, the Fed is rightly classified as an independent central bank. Neither the executive branch nor the legislature gets a direct say in its decision-making, and it pays for its own operations (primarily by acquiring U.S. government securities on the open market). In short, the Fed is an independent entity within the government. > > SOURCE: [Is the Federal Reserve public or private?](http://www.slate.com/id/2200411/) ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [July 21, 2011, 6:16pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/33 "2011-07-21T18:16:32Z")
> [@gonzomax](#): > > Grover Nordquist say letting the Bush tax cuts end would not be a tax raise. Perhaps he sees the damage his philosophy has brought and knows what the correct fix is. > [@Ravenman](#): > > And this, my friends, is the craziest f’ing thing I’ve ever heard. I assume that Mr. Norquist had one of those worms from Star Trek II attached to his brain when he said that. He’s already taken it back, claiming the Post misinterpreted him. ---
**Author:** ![Susanann](https://avatars.discourse-cdn.com/v4/letter/s/7ab992/32.png) [@Susanann](https://boards.straightdope.com/u/Susanann)\ **Post date:** [July 21, 2011, 6:49pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/34 "2011-07-21T18:49:01Z")
> [@Qin\_Shi\_Huangdi](#): > > 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: > > 1. 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). > 2. 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. > 3. McConnell Plan-Only a temporizing solution but at least it might raise the debt ceiling > 4. 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. My plan is a lot easier and less complicated: \*\* Reduce spending. \*\* Wasn’t that easy? ---
**Author:** ![ladyfoxfyre](https://avatars.discourse-cdn.com/v4/letter/l/ad7895/32.png) [@ladyfoxfyre](https://boards.straightdope.com/u/ladyfoxfyre)\ **Post date:** [July 21, 2011, 6:50pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/35 "2011-07-21T18:50:46Z")
Your plans are usually “less” a lot of things. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [July 21, 2011, 6:53pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/36 "2011-07-21T18:53:08Z")
> [@Susanann](#): > > My plan is a lot easier and less complicated: \*\* Reduce spending. > \*\* > Wasn’t that easy? If we reduce spending so that the debt ceiling isn’t crossed it would destroy the economy and put millions of people out of work. Your plan is less complicated, but it’s also very, very bad. Sometimes complex problems require solutions that are complicated. I’m assuming you care if the economy is destroyed, do you think it’s okay to turn the recession up to 11? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [July 21, 2011, 7:20pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/37 "2011-07-21T19:20:23Z")
> [@Susanann](#): > > My plan is a lot easier and less complicated: \*\* Reduce spending. > \*\* > Wasn’t that easy? Sure, now show what you would cut, and how much it would add up to. Then perhaps you can see how easy it isn’t. ---
**Author:** ![ladyfoxfyre](https://avatars.discourse-cdn.com/v4/letter/l/ad7895/32.png) [@ladyfoxfyre](https://boards.straightdope.com/u/ladyfoxfyre)\ **Post date:** [July 21, 2011, 7:22pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/38 "2011-07-21T19:22:08Z")
You know, all the _wasteful stuff_! That’s got its own column on all the accounting sheet. See, it’s SS, defense, blah blah, then wasteful spending. Just cut that one right out. See how easy that was? ---
**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:** [July 21, 2011, 7:23pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/39 "2011-07-21T19:23:49Z")
> [@gonzomax](#): > > Sure, now show what you would cut, and how much it would add up to. Then perhaps you can see how easy it isn’t. Don’t do that. They just lop off entire cabinet departments, like Education, Labor, Energy. See, it’s easy! ---
**Author:** ![ladyfoxfyre](https://avatars.discourse-cdn.com/v4/letter/l/ad7895/32.png) [@ladyfoxfyre](https://boards.straightdope.com/u/ladyfoxfyre)\ **Post date:** [July 21, 2011, 7:27pm UTC](https://boards.straightdope.com/t/the-debt-crisis-thread/589786/40 "2011-07-21T19:27:55Z")
From what I hear from Bachmann, the EPA is actually the “job-killing organization”. Yeah. So there’s that. [Previous page](https://boards.straightdope.com/t/the-debt-crisis-thread/589786.md?page=1) [Next page](https://boards.straightdope.com/t/the-debt-crisis-thread/589786.md?page=3)