Debt Ceiling

[chris_gerrib]

I suppose I should say something profound about the debt ceiling crisis, so here are my profound thoughts, in stream-of-consciousness order:

1) Yes, this was a manufactured crisis, and Republican hostage-taking on a grand scale. It was the equivalent of buying a ton of stuff on a credit card and then refusing to pay the bill.

2) No, this is not the first nor the last hostage to be taken.

3) As somebody said, "hostage crises aren't won, they are resolved."

4) If your dealing with a hostage-taker that's willing to commit suicide (and we are), if you can't get them into an position where they can safely self-destruct, sometimes you give them what they want.

5) Yes, the deal is somewhat of a shit sandwich. See all the points above.

6) Although we can all whine about how "Obama got rolled" the simple fact of the matter is that raising the debt ceiling requires an act of Congress (literally). Obama, Reid, Pelosi and even Mister Orange himself John Boehner can only do so much. All the talk of a "14th Amendment option" was BS. Congress authorizes the budget, and there is nothing in the Constitution preventing Congress from being stupid.

ETA 7) Obama won the PR battle. That was not the critical battle. As I said earlier, people were (and are) pressuring Congress for a more balanced approach. But in the end, see point #4, above.

The bottom line is that if you don't like the deal, put somebody else in Congress.

Comments

[daveon.livejournal.com]

More or less this. It's abad deal, done badly. But it ended up the only option. As I mentioned at the weekend, I would mind less it the people who turned this into a crisis actually had a clue about anything.

[daveon.livejournal.com]

As you say in point (4), if somebody is prepared to cut the baby in half, it doesn't really matter how wise you are. The Tea Party Caucus actually does think that the government shouldn't have debt and that a default wouldn't matter.

Chuck Todd, finally, made the correct point this morning. Government is just like a business, in that there probably isn't a business in the country that doesn't run an ongoing revolving line of credit which represents a non-trivial part of their annual GDP. They might do it to help with payroll, or buying equipment, or dealing with expansion but they have them. And startups, quick frequently take in "debt" equal to enormous multiples of their "GDP" - calling it Venture Capital or Angel funding just disguises what it really is. It's debt secured against equity. There's a reason why it's regulated as a security...

I keep hearing from the Tea Party types that they run their own businesses, I can only imagine that they are in partnerships and personal consulting business, not actually running businesses that employ people and do stuff.

[jordan179.livejournal.com]

The bottom line is that if you don't like the deal, put somebody else in Congress.

We will. We'll put more Republicans in Congress in the 2012 elections, so that next time we'll get an even tighter budget with less taxes and spending.

[daveon.livejournal.com]

Excellent, and we can watch the GDP go negative.

I actually think that, based on the polls that's an extremely unlikely outcome. But that people like you actually think this makes sense is deeply disturbing.

[jordan179.livejournal.com]

But that people like you actually think this makes sense is deeply disturbing.

People like me actually want to shrink the total size of the Federal Government by reducing both taxes and spending. How "disturbing." Might get in the way of your socialist utopia, eh?

[daveon.livejournal.com]

Well, it might get in the way of economic activity mostly in my capitalist Utopia where I and many others can drive economic activity by having customers who can afford to pay for shit.

When households can't spend, there's little demand, when there's little demand, economic activity goes down. Hmmm... I wonder if we could look for evidence of that. Say, if the woefully inadequate stimulus bill (which was mostly tax cuts) were to end, what would happen to the GDP numbers.... oh... looky here, the number crashed.

If households can't spend and the if the government can't spend, then the economy will contract. It's not all that complex.

If I'm running a business.... oh, and I am. I borrow money to expand - in fact the deal I'm doing at the moment is many many many many many MANY multiples of the current income of the business. And, believe me, the terms on the table are not as attractive as those available to the US government. Without debt and without expanding that debt, I can't get new product developed.

The US government is, in that regard, JUST like a business, and a business dealing with a really really bad economic condition but who, fortunately for the shareholders (us) has bankers who understand what a great credit risk it is.

Oh, and getting rid of the tax cuts that represent 40% of the current debt would be a good start too.

[daveon.livejournal.com]

Or shorter form: I am disturbed that there are people who know so little about economics or business that they think the prescription of lower taxes and smaller government will do anything except make the current economy crisis into a catastrophe.

Socialism has nothing to do with it.

I'm actually astounded that the radicals who are suggesting this are being allowed to call themselves conservatives.

[daveon.livejournal.com]

http://www.cnn.com/2011/OPINION/08/01/frum.debt.republicans/index.html

Yea Gods. When David Frum and I agree, then there's something badly wrong in the world.