Government shut down and Debt Ceiling

so, because you don't like the way the state of NY spends your tax dollars supporting the undeserving white working poor, you think its okay for the US government to default on its obligations, drive future debt service costs into the stratosphere, tank the global economy and basically fuck everybody? Good to know.

 

This is the way most of the Republican party thinks at this point.

That's why we're about to discover what happens when government shirks it's responsibilities instead of dealing with them.

That Grand Bargain last year was the way out. Obama knew that. Boehner knew that. Reid knew that. It was going to get done.

But the Republicans were more interested in winning an election and protecting all of the Bush tax cuts than in governing responsibly and so instead we have gotten the sequester, the shutdown and strike three on the way to the plate.

 

This is a really good point that gets missed all the time in the debate over government. Government is not supposed to be run for profit like a business. It's supposed to do the hard things that you can't get a business to do because there's no real profit in them.

Providing clean water and electricity to mountain communities that otherwise would not get services because not enough people live in them to make it profitable to do so.

Providing food assistance to young families, the elderly and disabled because there's no profit in doing that for a business.

Creating a stable monetary system so that people can exchange goods and services without having a for-profit middleman taking a bite out of every transaction.

Does anybody think Goldman Sachs could do what the Fed does? When JP Morgan (the man) tried to fill that role we had busts and booms every 20 years or so that shook the nation too it's very core.

Seriously, the idea that the US government should be run for profit is just asking for the special interests to really start raking the taxpayers over the coals.

You think the Fed is dominated by Goldman Sachs? Just wait until Goldman Sachs is the Fed. People will be begging for an independent government agency to fulfill that role by then.

 

With it looking more and more like the Senate will get a deal done (unless they're slowed by GOPers refusing to grant unanimous consent to move to a vote or delayed by theatrics like those Ted Cruz put on a few weeks ago), this is all going to come squarely on the shoulders of the most unfortunate man in the world: John Boehner.

He's got what many are saying is the Sophie's choice of a) sending his country's and the world's economy into catastrophe, or b) swallowing a huge loss, pissing off the majority of his rank and file, and possibly losing the Speaker's gavel.

Personally I don't see the rock and a hard place. I see the threat of unimaginable chaos against the potential loss of power. I can't see how the Speaker doesn't choose the latter, not in good conscience, not if he has anything near the country's best interests at heart.

The bitterest irony? The hardliners in the GOP would go down for this, and down hard (polls showing 75% disapproval?!?! and still going up) but the national vote count in House elections doesn't matter a bit. You might say that's good, and in theory it absolutely is, but Democrats received 1.4 million more votes total in 2012 and Republicans won 19 more seats. This isn't anomaly or statistical magic causing this, go look at the data if you're curious. It's gerrymandering, and it makes politicians on both sides (but especially the GOP) responsible not to the middle, but the extremists. A lot of the Tea Partiers are looking at the electorate in their home district and saying: "Debt ceiling? If I ever vote to raise it I'll get primaried. Compromise? If I so much as utter the word, let alone try to do it, I'll get primaried. Fail to defund the ACA? Primaried. Open the government unless I get everything I want? Primaried." It's disastrous for America.

 

Biggs,

I would love for that to happen, then I could get out of the reserves and return to my life as a civilian police officer instead of being in this heal hole again.

I pointed out my aunt due to my opinion that at a certain point enough is enough you have to make people stand up on there own two feet, stop having babies and taking all these hand outs. Four kids, didn't raise one of them, no job in her lifetime and state aide for the last 30+ years and that is one prime example new york has high taxes and is in debt.

 

First of all I am a Nevada resident, second my aunt hasnt had a job her entire adult life unless you cou nt being a hooker. I never once talked about the U.S. government or debt so please dont put words in my mouth. What I stated was at a certain point you have to make people stand on there own two feet.

 

You said it in the context of a discussion regarding the federal government defaulting on its debt obligations. Kind of hard not to connect the dots.

 

Assets that the US government has that could be sold during a period in which no debt was issued to cover debt being redeemed or spending above tax revenues:

1. The Strategic Petroleum Reserve has about 700 million barrels of oil in it at this point. The US could sell some portion of that to fund some of the expenditures above revenues. At $100 a barrel the US could make plans to sell a small percentage of the reserve each day to cover required spending.

The reserve is capable of being drawn down at up to 4 million barrels a day, however the US would probably want to draw down much less than that. At 750 thousand barrels a day the US would recoup $75 million dollars a day, a handy chunk of cash to pay critical bills, albeit nowhere near enough to cover everything that needs to be done.

The upside of this policy would be to drive the price of crude oil down, helping the economy in many different ways.

The downside is that the price of crude oil would be driven down making the US investment in the reserve less valuable each day that oil was released into the market.

The overall effect would be a profit for the government as the average barrel of crude in the reserve today was purchased at $28 a barrel. The profit isn't as large as it seems though because the purchases have been done over time from 1975 to the present day.

2. The US could begin the process of closing the military bases scattered over the interior of the country, many of which were built during the expansion westward and which were frontier forts but are no longer. The Canadian border is littered with forts, particularly in the northeast and mid-west, dating back to the time when Canada was a British possession and the British were our enemies.

The selling of the real estate involved would generate some cash, although not as much as you'd think, given the nature of distress sales. The closing of the bases themselves would hurt local economies across the country but would dramatically lessen the amount of cash the US needed on a daily basis to pay to keep them open.

3. The US could begin selling off parts of the national park system to interested investors. The parks themselves are a national treasure but if the nation has decided to downsize it's hard to see how they will remain public assets.

The problem is figuring out how to sell them and to who. The Chinese will line up very quickly with their enormous hoard of US securities and do their best to turn those into real estate instead. Similarly the Gulf States will be looking for ways to get out of the declining US public debt market and into safer investments. One of the realities of the US treasury sales of the last generation is that sovereign debt funds hold far more in assets than the private consortiums in the US who would try to bid against them.

4. The US could begin to dramatically downsize the US military and security infrastructure. This would start with things like the base closures and sales above but sacred cows like the Joint Strike Fighter would very quickly join the parade. Built and contracted to be too expensive to cancel the program nonetheless would likely be too expensive to continue in a significant downsizing of the government. There are other programs that would likely go away as well.

The military has been looking at streamlining operations for several years now. Look for the Marines to go away in that situation as special forces take over the role that they used to have as readily deployable shock troops operating out of a highly mobile posture.

There are a lot of options out there that would improve the cash flow of the government pretty dramatically over the short term if we really decided not to borrow any more money at this point. Ideally we'd find a responsible way to cut down spending and increase revenues as in the Grand Bargain last year but if we just can't do that, well we've got assets and many of them could be sold without creating a fire sale.

 

This is just wrong.

The reason we're in the predicament we're in is that we're spending too much and taxing too little. We're in the predicament because the two parties both believe in fairy tales, but those fairy tales don't even abut the same logical universe.

The Democrats believe that the solution to every problem is to have the government step in and solve the problem. They've had this basic belief since the early 30's. The fairy tale is that the government can do this without becoming big and bloated and ultimately incapable of solving many problems.

We've got farm subsidy programs that were designed to keep desperate farmers on their land during the Great Depression so that the economy of the rural northeast, south and mid-west did not collapse entirely.

Those programs should have been cut off by the early 50's at the latest but instead they endure to the present day, not in the hands of the people who originally had them but in the hands of the few who prospered and bought everybody around them out and eventually sold to a big corporation.

Those programs were not designed as corporate welfare. They were designed to keep family farmers on their land with stable markets to sell into.

The Democrats created a welfare system in the 30's to help families whose father had perished to continue to stay under a roof and with food on the table instead of wandering the streets hungry.

By 1970 those programs were driving families apart as a government check created a family with no man in the house and children routinely raised in that environment.

The welfare program was not designed to drive families apart. It was designed at a time of enormous economic dislocation when starvation was a very real specter on the land.

Again, those programs should have been phased out in the 50's a time of unprecedented prosperity in the US when the job market really would have handled many of the people who had required assistance before then.

It's no accident that welfare was phased out in the mid 90's just as a time of prosperity was beginning. Bill Clinton had a second shot at the early 50's and he grabbed it with both hands.

The Republicans believe that if the government just leaves everything alone things will get better. They see the government as a heavy-handed bureaucracy that meddles in everything it can get it's hands on, usually for the worse.

They believe that if you just let nature run it's course that you'll get altruistic billionaires trickling down over everybody and making everybody's life better in the process. They think we've somehow evolved in a way that this won't lead right back to Lords and Ladys and the trampled who scurry out from under their hooves of their horses.

The belief that if you let the wealthy keep their money they'll just redistribute it is insane. The way people become wealthy is by being very good at obtaining money and exceedingly parsimonious in giving it out. That doesn't mean that some people won't be extraordinarily altruistic but the notion that the class of people who are good at amassing wealth are going to be altruistic with it on balance is just nuts.

So the Republican fairy tale is that you can have money channeled upwards in society and not have the vast majority of it stay in the stratosphere with the average person having less and less as wealth accumulate above their station.

The two fairy tales are not congruent. They don't join at any point and that's why we're where we are right now. In 1950 the Democrats and Republicans differed on policy but agreed on the general proposition. Now the two parties don't even share the same view of reality.

 

Br4dw4y...

What are you going to do with all the pollution at the military bases that you close? It is going to cost a fortune to clean up as they are finding out in Germany as we speak.

Why I agree with you on stream lining the military the bigger issue is military contracts in all reality, stop paying $1000 for a freakin toilet seat. Stop paying for a building in the middle of Afghanistan that all your top Generals said we don't need or want. Its things like this that are all a waste.

 

at some point you have to make defense contractors stand on there own two feet

 

They're not going to do anything ameliorative as they shut down what they shut down. It costs money to do things in an orderly fashion and right now government is being denied the funds to do that.

The bases that close will just close the gates with a notice that they're closed until further notice.

Look at what the Soviets did as they lost coherency for a good guide in how the US is going to go out of business.

The Romans didn't realize the empire was falling at the time it fell. They lived lives much like their predecessors, just a little bit less secure and less Roman every day until a few generations had passed and everybody looked back at the Roman Empire and suddenly realized it no longer existed in the west. Historians have arbitrarily picked a date for when the empire fell but it's just a date, the process actually took centuries and began decades before the date.

 

lets make a deal.....

oh they did.

now for all the grandstanding and back slapping - led by the WH.

really a disgrace on both sides of the fence.

 

Lol at the Teabaggers.

Threw a hissy fit...wasted everyone's time.

 

Someone's mad. :rofl: