(If this is more GD, feel free to move; I couldn’t figure it out.)
Obama seems pretty firm that he isn’t negotiating this time, although Paul Ryan says he’s sure he will. The Tea Party congressfolk show no sign of wanting to end up with anything but everything they want, and show great resistance to outside influence from any quarter. The only reason John Boehner seems to want to avoid shutting down the government is that he thinks he’ll get more out of holding out on the debt limit. And to make matters worse, some argue that there’s literally no action Obama can take (including allowing default) that would be legal!
So, do you think the country will default? If not, how will it end? Will all future debt ceiling negotiations look like this from now on?
At this time, it looks like a default is imminent.
To be fair, the “financial Markets” understand that this is Kabuki theater as opposed to a real life default. As long, of course, as the gubmint gets funded “pretty soon.”
Frankly, at this point, I hope we default and the Republican party gets ratfucked to 2100 since they have so clearly caused this cluster. I expect that in the future, much like Newt’s lesson learned, is that taking the government hostage only plays well with a small percentage of the electorate and plays horribly with the majority of voters.
It is possible that democrats and a handful of republicans in the house will come together and get something passed. Will 17 republicans join the democrats? I have no idea. But that could happen. Then again, Obama could give in and delay the health reform bill (that really wouldn’t surprise me, this could be like his Syria ‘red line’ speech, he was tough until he had to back up his words with actions). If so it would require a few democrats in the senate joining with the GOP.
No matter how bad the GOP fuck things up they can count on 45%+ of the electorate supporting them. I’ve lost hope on things like this backfiring in elections for them.
But what are the odds of default? Probably better than even. A shutdown seems imminent. This congress is so dysfunctional I wouldn’t put it past them.
As far as I’m aware, since the U.S. government can literally print as much money as it needs, the U.S. government can’t actually default. You and I can default on our debt, and the individual States can default on their debt but not the federal government.
“…and in breaking news, the whole nation breathed a sigh of relief today as some guy on a message board figured it all out. President Obama has made an official declaration, the thanks of a grateful nation, to some guy on a message board…”
High. In one corner, Republicans have every incentive to cause a shutdown because it’s exactly what their constituents want. On the other corner, Obama and Reid are no longer willing to ingratiate themselves to Republican demands this time. What I don’t understand is why Republicans are so confident, when their game plan seemed doomed to failure from the start.
As Terr pointed out, I was asking about a default, not a shutdown.
One of the more interesting (in the Chinese sense and otherwise) points about this whole thing is the claim that Obama is Constitutionally and/or legally barred both from default and doing anything about it. Is this true? If so, then that could actually provide a lot of cover/breathing room for certain actions.
I think that, regardless of whether the Crazy Party agrees to a budget Monday, Obama should appear on television October 1 and announce that he’s minting the trillion-dollar platinum coin. He’ll promise to redeem it if/when sane people regain control of Congress.
In prior SDMB threads, some Dopers have shown their disconnect from reality by arguing that minting such a coin as monetary policy is inferior to the present system. I’ll dispose of their confusion with the following analogy:
Paracetamol is recommended over aspirin in the treatment of high fever of unknown cause. But when an armed psychopath has announced he’ll kill your sons and rape your daughters if you touch paracetomol … take an aspirin.
You are asking about a federal government “default”. What are the odds it can happen?
According to several experts in the field -
*“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” Alan Greenspan
“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” Peter Zeihan, Vice President of Analysis for STRATFOR
“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” Erwan Mahe, European asset allocation and options strategies adviser
“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” Mike Norman, Chief Economist for John Thomas Financial
“There is no inherent limit on federal expenses and therefore on federal spending…When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target Federal Funds rate.” Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund
“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.” Federal Reserve Bank of St. Louis
“A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.” L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City and a Senior Scholar at the Levy Economics Institute*
This begs the question, “Who is actually saying that the U.S. government will/intends to “default” on it’s debt?” Words are bandied about as if they have no meaning. “Default” certainly sounds serious, doesn’t it. But does it apply to the current situation?
Will the refusal by both sides of the U.S. Congress to attempt to reach a compromise on spending, ObamaCare, and debt limits lead to the U.S. “defaulting” on it’s debts? No, it won’t. Why? Because the dollar is an international standard for currency and the U.S. government can print as many dollars as it deems necessary. (The dollar may not be worth as much as it does today but the debt WILL be paid.)
Obama and Reid have never been willing to ingratiate themselves to Republican demands. This is nothing new. The Democrats are upset because the Republicans won’t give them everything they want. The Republicans are upset because Democrats won’t give them everything they want. Neither side has the votes, or enough support from the voters, to force the other side into compromising or finding a workable solution.
The Democrats won’t compromise, so there may be a government shutdown.
The Republicans won’t compromise, so there may be a government shutdown.
Both sides will blame the other if a shutdown occurs. SSDD
Almost zero chance of that happening. Obama is well aware that the GOP’s purpose in demanding a one-year delay is completely cynical and self-serving - they want to prevent the law from going into effect so they can base their campaign next year around baseless scaremongering, which won’t be possible once people realize the law isn’t going to have their doctors forcing them to gay-marry their braindead grandmas.
The analyses you quote to are talking about whether economic circumstances could force a default, not whether Congress could pass a law that forces default. They can and have done so, unless they amend it in the next two weeks or so, as the author points out in the first three sentences.
Last time we had a potential default (not shutdown), the Democrats offered the Republicans more than what they’d asked for. The Republicans turned it down.
‘We want you to meet 80% of our demands.’
‘OK, fine. You can have 90%.’
‘NO! We want 100 PERCENT!’
I think the odds of default are very low, it’s not like a sporting event so I don’t know how to come up with meaningful odds. I’ll just say that “almost beyond a shadow of a doubt” we will not default on our debts.
I’m actually going to defend the media a little bit, while they haven’t always explained the difference, I’ve heard commentators on NPR and a few other radio stations I listen to while driving on longer trips (I’ve been on the road relentlessly the past two weeks) actually are going out of their way to explain the difference between default and shutdown.
The government almost certainly is going to shutdown at this point. It’s Sunday now, and very little work is being done from what I can see. Come Monday, that’s the last day of the Federal fiscal year and without a continuing resolution funding the Federal government then we go into a shutdown similar to the Gingrich/Clinton shutdowns. We have until 12:00 AM on 10/1, but many parliamentarians and such who know a lot about Senate procedure have said the latest volley of “non-starter” bills the House passed leave simply too little time for the Senate to actually go through all of its procedural steps to allow for a compromise.
If Boehner and the GOP were to immediately cave, most likely we have enough time. But the sort of negotiations that have typically averted shutdowns in the past take too long given the Senate’s procedures for there to be any room for negotiations to play out prior to a shutdown starting.
The real question is probably how long the shutdown lasts and how big its impact will be. Most people agree a short shutdown has relatively mild impact, however it should be noted this shutdown will be bigger per day than the Gringrich/Clinton shutdowns. Those shutdowns were “partial” shutdowns, and in the case of the 1996 shutdowns a good portion of the government was actually already funded by separate CRs (the initial 1995 shutdown was also a partial because some government departments had already been funded by separate CRs, but not nearly as m any as in 1996.) This current situation, basically nothing is funded at all. So it’s going to be a true shutdown of basically every non-essential agency and service. Essential functions would keep running but the individuals performing the work will not receive a paycheck as normal (they’ll almost certainly receive back pay after the shutdown is over.)
