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Thread: The U.S. Debt Ceiling and the Possible Financial Cliff

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    Default The U.S. Debt Ceiling and the Possible Financial Cliff

    https://www.reuters.com/world/us/us-...ts-2023-01-19/

    The U.S. government hit its $31.4 trillion borrowing limit on Thursday, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the ceiling, which could lead to a fiscal crisis in a few months.

    Treasury Secretary Janet Yellen informed congressional leaders including House Speaker Kevin McCarthy that her department had begun using extraordinary cash management measures that could stave off default until June 5.
    Perhaps unsurprisingly, the GOP run House is using the debt ceiling as a political cudgel to get concessions out of the Democrats within the politically mixed legislature. If protracted too long, the harms to financial stability to all Americans is quite real. Personally, I don't know if there is much else I can add to this potentially severe event.

    My prediction is that the GOP is fully willing to drive off the cliff of debt default in a game of chicken with Democrats. As made clear by events earlier in the year, the hardcore, anti-government fringe of the Republican party is willing to tear down whatever parts of the government they can with contempt and they have McCarthy's balls in a vice. I am less certain as to what the Democrats are willing to do in this chicken game, they essentially have two options: 1) Offer whatever concessions are viable and hope the GOP demands won't be too severe (doubtful), or 2) Let the GOP drive the nation off the cliff and hope they get burned for it. Defaulting on the national debt would be quite damaging to the financial wellness to the US, but I doubt the GOP care. The latter option may even be politically preferable to Democrats as I feel the GOP's extreme rhetoric and motives underserved them in the 2022 midterm elections and there would be no way to divorce themselves from the political fallout of something like debt default. Let them crash themselves, in another sense. However, that would be quite damaging to Americans all over the nation, but there may be no other viable political path for Democrats. Caving to large demands from the GOP would just encourage a repeat of this stunt in the future.

    Any other opinions on this matter?
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    Vanoi's Avatar Dux Limitis
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Republicans sure love to spend money when they're in office. They only ever seem to care about the debt ceiling when it's not their turn. Not one single spending cut proposed by the Republicans is supported by the majority of Americans. I don't want the US to default by Republicans are intent on crashing the US economy and shooting themselves in the foot as long as they don't get their way.

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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Unfortunately I doubt Democrats have the spine to defy these lunatics. They'll get everything they want, then default on the debt anyway so Putin will smile upon them.

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    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    We've been here before. It all comes out in the wash.
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by antaeus View Post
    We've been here before. It all comes out in the wash.
    There have been debt ceiling arguments before, but the Republican party seems to be uniquely capable of actually going through with default this time around, at least in my opinion. They feel incredibly aggrieved and very anti-establishment to the point that they may be willing to wreck the US economy to make their point. From what I have seen in right-wing media spheres so far, and who knows how well that maps on to irl Republican sentiments, opinions seem very supportive of defaulting on the US debt. Not even that they should use it as leverage to get things out of Democrats, just straight up defaulting on the debt. Their reasons seem to range from mistakenly thinking that debt default is akin to a government shutdown to straight up "we have to destroy this system that has gotten out of control". I think they really do want to "burn it down".
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    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    They went through with it last time. Some federal employees went on leave. Services suffered. Then the GOP realised everyone was blaming them for it... negotiations moved forward and they kicked the can.

    Let's see if it ends up different this time.
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  7. #7

    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Are you talking about a previous government shutdown? This isn't a yearly budget that's being fought over where a government shutdown is impending and Federal employees skip pay and go on leave, this is the debt ceiling where, if not addressed (raised), would result in the Federal government defaulting on debts it owes.
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    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by The spartan View Post
    Are you talking about a previous government shutdown? This isn't a yearly budget that's being fought over where a government shutdown is impending and Federal employees skip pay and go on leave, this is the debt ceiling where, if not addressed (raised), would result in the Federal government defaulting on debts it owes.
    It's no different for the GOP. We have to play this game. They have to learn that they are in fact the unpopular ones first by showing people their disregard for normal folk's wellbeing, before they relent.
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    conon394's Avatar hoi polloi
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by antaeus View Post
    It's no different for the GOP. We have to play this game. They have to learn that they are in fact the unpopular ones first by showing people their disregard for normal folk's wellbeing, before they relent.
    Too paraphrase Vardar I find you apathy disturbing... Setting aside a debt celling default. The fact of continuing resolutions and shutdowns is not really some laughing matter that they have become normal. From the Pentagon to Government backed or direct science they make actually operating efficiently, hiring, doing work, completing projects enormously more difficult and costly than it needs to be. I assume the Republicans enjoy this result but it hurts their votes as well.
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by conon394 View Post
    Too paraphrase Vardar I find you apathy disturbing... Setting aside a debt celling default. The fact of continuing resolutions and shutdowns is not really some laughing matter that they have become normal. From the Pentagon to Government backed or direct science they make actually operating efficiently, hiring, doing work, completing projects enormously more difficult and costly than it needs to be. I assume the Republicans enjoy this result but it hurts their votes as well.
    It isn't my government to do anything about. If I could wave a wand and make the GOP better I would. So I'm along for the ride.
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by antaeus View Post
    It isn't my government to do anything about. If I could wave a wand and make the GOP better I would. So I'm along for the ride.
    Fair enough but you might not like the ride. When the funding for my wife's research gets messed up due to republicans it impacts Researchers in Finland, Poland, Argentina, Chile Brazil, Mexico, Taiwan, Japan, Germany, Scotland and Wales, Canada, Ethiopia and Kenya and that is just her fellow PI level collaborators not sure how far the the follow on effects land.
    IN PATROCINIVM SVB Dromikaites

    'One day when I fly with my hands - up down the sky, like a bird'

    But if the cause be not good, the king himself hath a heavy reckoning to make, when all those legs and arms and heads, chopped off in battle, shall join together at the latter day and cry all 'We died at such a place; some swearing, some crying for surgeon, some upon their wives left poor behind them, some upon the debts they owe, some upon their children rawly left.

    Hyperides of Athens: We know, replied he, that Antipater is good, but we (the Demos of Athens) have no need of a master at present, even a good one.

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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    The last time (2013) this went to the edge the US nearly had it's international credit rating downgraded - upon which all other nations rating is based I think. Bit like the exchange rate mechanism.

    From a PDF document issued by moodys 3 days ago:
    Quote Originally Posted by Moody's Analytics
    Debt Limit Brinkmanship (Again)
    The Treasury debt limit suddenly has come to the fore as a serious threat to optimism the economy can skirt recession this year. Unless lawmakers increase, suspend or eliminate the limit, Treasury will not have the cash to pay all its bills on time later this year. Financial markets and the economy would be hit hard. There is a temptation to brush off the developing debt limit drama, thinking it will end as the others have with lawmakers coming to terms and signing legislation just in time. That would be a mistake given the heightened dysfunction in Congress and the large political differences gripping the nation. Odds that lawmakers blunder either out of intent or ineptness are uncomfortably high.
    Last edited by Gigantus; January 27, 2023 at 01:22 AM.










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    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by conon394 View Post
    Fair enough but you might not like the ride. When the funding for my wife's research gets messed up due to republicans it impacts Researchers in Finland, Poland, Argentina, Chile Brazil, Mexico, Taiwan, Japan, Germany, Scotland and Wales, Canada, Ethiopia and Kenya and that is just her fellow PI level collaborators not sure how far the the follow on effects land.
    Yeah and all the people in those places are also along for the ride and have zero ability to influence the GOP. So like me, the best they can do is also foster a healthy trust that the GOP are power hungry sociopaths who will back down to stay in office once it becomes apparent that voters are blaming them.
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Democrats: we need to raise the debt ceiling so we donít go broke
    Republicans: ok but we should probably at least cut spending too so this doesnít keep happening
    Democrats: No
    Republicans: Ok well we wonít vote for an increase without spending cuts
    Democrats: See gais Republicans wonít negotiate. They want America to fail.
    Also Democrats: Biden is right to refuse to negotiate. Republicans must learn to bend the knee to our will.

    And the sad part is, Republicans will probably bend over in the end and get nothing for it, like they did in 2013. They rewarded Democrat thug tactics the first time around, and so should not expect anything different now. As usual the accusations from the Democrats are pure projection.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

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    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by Lord Thesaurian View Post
    Democrats: we need to raise the debt ceiling so we don’t go broke
    Republicans: ok but we should probably at least cut spending too so this doesn’t keep happening
    Democrats: No
    Republicans: Ok well we won’t vote for an increase without spending cuts
    Democrats: See gais Republicans won’t negotiate. They want America to fail.
    Also Democrats: Biden is right to refuse to negotiate. Republicans must learn to bend the knee to our will.

    And the sad part is, Republicans will probably bend over in the end and get nothing for it, like they did in 2013. They rewarded Democrat thug tactics the first time around, and so should not expect anything different now. As usual the accusations from the Democrats are pure projection.
    As is this post.

    What exactly do the GOP want to cut as a policy position? I'm not certain they are in agreement at the moment. That's hardly a position from which negotiations can be made.

    GOP middle - "We need to cut spending"
    GOP fringe - "Don't touch defence, medicare, social security... and definitely don't raise taxes to cover the cuts"
    GOP middle - "Then we'd have to cut 85% of funding to everything else"
    GOP fringe - "So?"
    Democrats - "er..."
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by Lord Thesaurian View Post
    And the sad part is, Republicans will probably bend over in the end and get nothing for it, like they did in 2013. They rewarded Democrat thug tactics the first time around, and so should not expect anything different now. As usual the accusations from the Democrats are pure projection.
    ...Yeah, the debt ceiling isn't where Congress negotiates spending cuts, that's during a Budget Resolution. The debt ceiling has nothing to do with increases or decreases to spending or revenue, it's just a (somewhat arbitrary) cap to Federal borrowing. Most other nations do not even have such a cap. If the GOP wants to cut spending, they can bring it up during the next Budget Resolution, but should probably keep in mind that they don't control the Senate. Trying to hold the debt ceiling, and thereby the US Government's credit rating, hostage to force the changes they want despite their lack of political capital is insane and goes completely reverse to your "thug tactics" narrative you are trying to spin.

    The GOP had it's chance to cut spending when they controlled the entire government through 2018, big surprise, they didn't. They only cut revenue and ballooned the deficit. No one genuinely buys the GOP suddenly decided to reign in spending, they are just anti-current administration and want to throw a monkey wrench into government operations.

    But I am super curious about your "Democrat thug tactics" line; what exactly do you think Democrats owe the GOP? There is no requirement for the Dems to negotiate with the GOP, they are willing to increase the debt ceiling. Republicans are the ones refusing to do it and want to force demands but lack the political capital to do so. If the debt ceiling doesn't get raised and the US defaults on debts, who do you think gets the blame: the party that was willing to increase the debt ceiling or the party that wasn't?
    They give birth astride of a grave, the light gleams an instant, then it's night once more.

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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by The spartan View Post
    ...Yeah, the debt ceiling isn't where Congress negotiates spending cuts, that's during a Budget Resolution. The debt ceiling has nothing to do with increases or decreases to spending or revenue, it's just a (somewhat arbitrary) cap to Federal borrowing. Most other nations do not even have such a cap. If the GOP wants to cut spending, they can bring it up during the next Budget Resolution, but should probably keep in mind that they don't control the Senate. Trying to hold the debt ceiling, and thereby the US Government's credit rating, hostage to force the changes they want despite their lack of political capital is insane and goes completely reverse to your "thug tactics" narrative you are trying to spin.
    I’m sure you’ve already read the GOP’s rationale for their demands according to House Republicans. Given you don’t have a counter apart from generic allegations of bad faith, I see no reason to delve into it.
    The GOP had it's chance to cut spending when they controlled the entire government through 2018, big surprise, they didn't. They only cut revenue and ballooned the deficit.
    You’ve just summarized the Heritage Foundation’s critique of the 115th Congress.

    The debt ceiling has been around for decades. In the 1950s, Congress refused to increase the debt ceiling to force Eisenhower to agree to spending cuts. It worked, but not before the Treasury was forced to do stuff like liquidate gold and cash reserves worth billions of today’s dollars and the federal government had to cut spending anyway to avoid disaster. There’s not even a lack of precedent to work off of here, just more allegations of bad faith.
    But I am super curious about your "Democrat thug tactics" line; what exactly do you think Democrats owe the GOP? There is no requirement for the Dems to negotiate with the GOP, they are willing to increase the debt ceiling. Republicans are the ones refusing to do it and want to force demands but lack the political capital to do so. If the debt ceiling doesn't get raised and the US defaults on debts, who do you think gets the blame: the party that was willing to increase the debt ceiling or the party that wasn't?
    They evidently do have the political capital or people wouldn’t be complaining about it. Republicans want to negotiate, Democrats don’t.
    Spoiler Alert, click show to read: 

    The majority of the public agrees Democrats spend too much and should avoid default by negotiating spending cuts with Republicans, because the debt limit should not be raised without restrictions.
    Quote Originally Posted by antaeus
    What exactly do the GOP want to cut as a policy position? I'm not certain they are in agreement at the moment. That's hardly a position from which negotiations can be made.
    Irrelevant since the White House has already bragged about Biden’s refusal to negotiate. If Republicans cave, Democrats win without having to trade anything for it. If Republicans don’t cave, Democrats can double down on the narrative and spin it as a political win. They are making Republicans an offer they can’t refuse and daring them to refuse it.
    Last edited by Lord Thesaurian; January 30, 2023 at 10:02 PM.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

  18. #18
    antaeus's Avatar Cool and normal
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    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by Lord Thesaurian View Post
    Irrelevant since the White House has already bragged about Biden’s refusal to negotiate. If Republicans cave, Democrats win without having to trade anything for it. If Republicans don’t cave, Democrats can double down on the narrative and spin it as a political win. They are making Republicans an offer they can’t refuse and daring them to refuse it.
    Two things:
    1. Saying you won't negotiate, is part of the negotiation. It frames following negotiations as magnanimity and is a device used all the time. Just like red lines. It doesn't mean there wont be negotiations.
    2. you just described all of politics.
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  19. #19

    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by Lord Thesaurian View Post
    I’m sure you’ve already read the GOP’s rationale for their demands according to House Republicans. Given you don’t have a counter apart from generic allegations of bad faith, I see no reason to delve into it.
    Again, why would I or the Democrats care? No favors are owed to the GOP. If they want to commit suicide, that's on them.
    Quote Originally Posted by Lord Thesaurian View Post
    You’ve just summarized the Heritage Foundation’s critique of the 115th Congress.
    Then I guess they missed their shot.
    Quote Originally Posted by Lord Thesaurian View Post
    The debt ceiling has been around for decades. In the 1950s, Congress refused to increase the debt ceiling to force Eisenhower to agree to spending cuts. It worked, but not before the Treasury was forced to do stuff like liquidate gold and cash reserves worth billions of today’s dollars and the federal government had to cut spending anyway to avoid disaster. There’s not even a lack of precedent to work off of here, just more allegations of bad faith.
    If the shoe fits, yeah. The GOP are definitely working in bad faith and are trying to hold the US economy hostage to make up for their lack of wins in the Senate.
    Quote Originally Posted by Lord Thesaurian View Post
    They evidently do have the political capital or people wouldn’t be complaining about it. Republicans want to negotiate, Democrats don’t.

    The majority of the public agrees Democrats spend too much and should avoid default by negotiating spending cuts with Republicans, because the debt limit should not be raised without restrictions.
    What negotiations are the Republicans owed? They are welcome to destroy themselves and, apparently, the US economy if they are psycho enough to do it. Their "leverage" is that they will blow up the nation, not just Democrats. If Democrats cede to Republican demands under these circumstances, it would just encourage further debt-ceiling-hostage-taking in the future.

    If the majority agreed you'd think we would have seen that in the elections, but we didn't. The GOP didn't get the wins they needed to call the shots, and they really need to comes to grip with that. I just find it funny that your take on this is that Democrats are the aggressors when it is the GOP threatening to destroy the US economy if their demands aren't met.
    Last edited by The spartan; January 30, 2023 at 11:29 PM.
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  20. #20

    Default Re: The U.S. Debt Ceiling and the Possible Financial Cliff

    Quote Originally Posted by antaeus View Post
    Two things:
    1. Saying you won't negotiate, is part of the negotiation. It frames following negotiations as magnanimity and is a device used all the time. Just like red lines. It doesn't mean there wont be negotiations.
    That’s a neat idea except this has happened before.
    2. you just described all of politics.
    So this thread is pointless then?
    Quote Originally Posted by spartan
    Again, why would I or the Democrats care? No favors are owed to the GOP. If they want to commit suicide, that's on them.
    Well this is your thread so I just figured you had a point. But if it’s just to ignore the fact 60% of the public doesn’t want to raise the debt ceiling without spending cuts and thinks the Democrats spend too much and should negotiate, then we can conclude this is just a rant thread with no real basis for discussion.
    Last edited by Lord Thesaurian; January 31, 2023 at 06:33 AM.
    Of these facts there cannot be any shadow of doubt: for instance, that civil society was renovated in every part by Christian institutions; that in the strength of that renewal the human race was lifted up to better things-nay, that it was brought back from death to life, and to so excellent a life that nothing more perfect had been known before, or will come to be known in the ages that have yet to be. - Pope Leo XIII

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