With the Right denying even the existence of a debt-ceiling drop-dead date, how can anyone expect compromise?
The closer we get to August 2, the more I think that the voluntary crisis called the “debt ceiling debate” will end badly. That’s something I would not have considered last week, believing, naively perhaps, that even the Tea Party intransigents would compromise enough to rescue the U.S. from potential economic disaster.…
Article comments
— go to most recent comments26 - Baronius
Table 1.2 - Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930-2015:
YR GDP %in %out sur/def
1980 2,724.2 19.0 21.7 -2.7
1981 3,057.0 19.6 22.2 -2.6
1982 3,223.7 19.2 23.1 -4.0
1983 3,440.7 17.5 23.5 -6.0
1984 3,844.4 17.3 22.2 -4.8
1985 4,146.3 17.7 22.8 -5.1
1986 4,403.9 17.5 22.5 -5.0
1987 4,651.4 18.4 21.6 -3.2
1988 5,008.5 18.2 21.3 -3.1
1989 5,399.5 18.4 21.2 -2.8
2008 14,439.0 17.5 20.7 -3.2
2009 14,237.2 14.8 24.7 -9.9
2010est 14,623.9 14.8 25.4 -10.6
2011est 15,299.0 16.8 25.1 -8.3
2012est 16,203.3 18.1 23.2 -5.1
I hate the way tables come out on BC, but here's the gist. We've got a 2011 projection of an 8.3% deficit-to-GDP ratio, and that's assuming a 5% growth GDP in the past year. Assuming a 6% growth rate for 2012, the deficit-to-GDP ratio will be 5.1%. Reagan had one year of 6.0%, one of 5.1%, and one of 5.0%.
27 - handyguy
You conveniently fail to include projections for FY13 and following, in which the percentage drops very significantly.
28 - Baronius
No bias intended. I was addressing Glenn's stat, and the chart was verging on (or careening past) the unreadable.
29 - handyguy
Fine, but agree with them or not, TARP, the stimulus, etc, were temporary, not permanent, additions to the budget.
30 - Baronius
"Baronius, no one, not the most liberal House Democrat or anyone else, is suggesting we should spend more or increase the debt."
The deal on the table, last I heard, involved an increase of $2.4T to the debt limit. I don't know who proposed that number, or what period it's anticipated to cover, just that that's the only number I've heard. We might need $300B to finish out the fiscal year. The remainder allows for a potential increase to the debt beyond current obligations.
I'm trying to phrase things exactly right so that you won't accuse me of playing word games.
You've said that the debt limit isn't about future debt, only about paying past commitments. But an increase beyond what we'd need to pay past commitments can only serve the purpose of allowing us to make more commitments, ie increase the debt.
31 - Glenn Contrarian
Baronius -
I got it from a USA Today article from last year:
Federal, state and local income taxes consumed 9.2 percent of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12 percent for the last half-century. The overall tax burden hit bottom in December at 8.8 percent of income before rising slightly in the first three months of 2010.
And for handy, you're wrong.
Why? The statistic is NOT a matter of the total amount of revenue as a percentage of GDP, but of taxes being a lower percentage of all personal income.
Right now, the total tax burden - taxes as a percentage of income (and not GDP), remember - is about twenty-four percent less than its historical average.
32 - Baronius
Glenn, I was asking about the deficit-to-GDP ratio.
33 - Glenn Contrarian
Baronius -
Okay, I checked out your reference, and apparently my reference screwed things up somewhat. Here's the short skinny on what your reference shows:
Reagan's deficit-to-GDP ratio 1981-1989:
1981 -2.6
1982 -4.0
1983 -6.0
1984 -4.8
1985 -5.1
1986 -5.0
1987 -3.2
1988 -3.1
1989 -2.8
And Obama's deficit-to-GDP ratio, 2009-2015 (est.):
2009 -9.9
2010 -10.6
2011 -8.3
2012 -5.1
2013 -4.2
2014 -3.9
2015 -3.9
My reference was wrong...but does the degree of their error disprove my overall point? No. Why? Because if you'll look, beginning in 2012, Obama's ratios are not significantly worse than Reagans...especially considering that the crap sandwich that Obama inherited in 2009 was orders of magnitude worse than what Reagan got when he took over. Furthermore, Reagan did NOT have to deal with the most obstructive Congress since the Civil War.
My overall point stands. Our overall tax burden under Obama is less than under Eisenhower, Reagan, Nixon, Bush 41, or Bush 43, and our effective corporate tax rate is the second-lowest in the developed world.
And here's a really interesting USA Today site that tells you where your money's going...and how little your overall tax burden has significantly lessened over the years in comparison to your overall paycheck.
34 - Clavos
If we're always going to raise the debt ceiling when we approach it (and we always have), why even have a debt ceiling, for a ceiling it is not under those circumstances.
Why have any limits on government spending, they're ignored anyway? Let the congressshits spend all they want; they do it anyway.
We can always keep borrowing money from the Chinese; they're surpassing us already and will one day own us altogether -- they already have a better handle on capitalism than we do.
35 - Glenn Contrarian
I should have mentioned that the 1981 deficit was from Carter, and that the 2009 deficit was from Bush 43. That changes the picture somewhat.
36 - handyguy
The debt limit has been routinely raised dozens of times in the past. It's not just that "handy says" it's only about money already spent; that is the objective truth.
The argument in Washington [now and seemingly forevermore] is over how much [and when] to cut spending/raise revenue. Not how much to raise spending.
If failing to raise the limit does cause bond market chaos, will that finally convince you that you're focusing on the wrong argument? Jeez.
37 - Glenn Contrarian
Clavos -
A strong argument can be made that under the fourteenth amendment, a debt ceiling might well be considered unconstitutional. I'm sure you've already heard that argument...and I'm hoping that Obama will use exactly that.
But the whole argument on the debt ceiling is a strawman that has been used by both sides including by Obama himself as a senator...but never have we been so close to having our national credit rating slashed because of such obstructionism. If we default, Clavos, it's going to hurt your business significantly too, since the interest rates of the banks will jump in response.
That will really hurt the economy as a whole...and some influential Republicans know this...and relish the thought since a bad economy might mean a Republican victory in 2012.
38 - John Lake
I still cling to the knowledge (perhaps hope) that at the last moment, at or near the beginning of "overtime play", our esteemed representatives will pass the plan that has been secretly harbored in the depths of their back pockets all along.
Incidentally I might take this opportunity to mention that China, and several other of those to whom we are hopelessly indebted, will no longer take gold in lieu of more (less?) tangible currency. So, gold buyers beware.
The glass darkens.
39 - Baronius
Glenn, it's not right to compare the data from 2012 forward, because that data is a projection. As I pointed out, the projections are based on 5-6% growth over the next two years, higher than the growth projections that Tim Pawlenty was laughed off the stage for suggesting. As for your particular point, Glenn, you didn't seem to have one. You just cited some statistics and made some partisan non sequiturs. I pointed out that the first statistic was wrong; Handy pointed out that the second one was misleading; I don't know what the third one was supposed to address, but it wasn't anything in the article or thread that I can figure.
40 - Baronius
Handy, I haven't heard if anyone's talking about raising the debt limit to cover current commitments. Like I said, the only number I've heard would allow for more than $2T of increased debt over and above current commitments.
41 - Baronius
Handy, just for the record, I'm not trying to exasperate you, and I'm not trying to dodge anything. It's just that passion is not a substitute for accuracy, and we need accuracy if we're going to talk about effective solutions. I have no doubt that your heart is in the right place. Ditto with Barbara. But she cites the two stupidest people I've ever heard of, mischaracterizes the both the default and the August 2nd deadline, and concludes that Republicans are to blame. If we're to have an honest discussion about the issues, we should at least note that some of her facts are wrong and some of her opinions do not follow from the facts.
42 - Glenn Contrarian
Baronius -
You just cited some statistics and made some partisan non sequiturs. I pointed out that the first statistic was wrong; Handy pointed out that the second one was misleading; I don't know what the third one was supposed to address, but it wasn't anything in the article or thread that I can figure.
1 - Where did you read that those particular estimates are based on a 5-6% growth rate? I see nothing indicating such an assumption.
2 - Handy misread it, and it was not at all misleading. As I pointed out in comment #31, the statistic is NOT a matter of the total amount of revenue as a percentage of GDP, but of taxes being a lower percentage of all personal income.
3 - I included the third statistic with the first two to strengthen my argument that the conservative anti-tax claims are, frankly, false...and if you'll check, the protection of corporate welfare and corporate tax loopholes is most of what the Republicans are trying to do in their proposals to raise the debt ceiling.
My point stands. The Republican anti-tax arguments are false.
43 - Baronius
Speaking of Glenn and errors, Glenn made the following statement: “That will really hurt the economy as a whole...and some influential Republicans know this...and relish the thought since a bad economy might mean a Republican victory in 2012.” I assume that Glenn meant that the article supported the idea that the economy would be hurt by a default, and that Republicans would benefit from the economic hurt. The article says the opposite.
Point One: “Do not believe the doom and gloom. Wise decisions are never made when premised on fear.”
Point Two: “Are you willing to lose to advance freedom?”
Read the article’s second-last paragraph:
House Republicans, this is a time for choosing: Do you choose to be more courageous than the Democrats who were willing to risk defeat to advance socialism? Is keeping your job more important to you than saving the country? If so, the odds are you will both lose your job and lose your country.
(The comment about losing their jobs, by the way, refers not to the economy but to political failure.)
44 - Baronius
YR GDP %in %out sur/def
2010est 14,623.9 14.8 25.4 -10.6
2011est 15,299.0 16.8 25.1 -8.3
2012est 16,203.3 18.1 23.2 -5.1
15299.0/14623.9=1.046
16203.3/15299.0=1.059
45 - handyguy
#40 - Ridiculous. Do you ever read a newspaper?
Take a look at this CNN Money article, which explains it better than I can.
Because the government takes in $118 billion less than it spends every month, the debt goes steadily up, with or without additional new spending. The $2.4 trillion is what Treasury estimates is needed to get past the election next year. [That would be 20 months @ $118 billion per month; I don't know for sure if that was the calculation used.]
It's not based on new spending plans! And you know it! Or you should know it.
I agree -- almost everyone agrees! -- that we need to reverse the deficit spending trend. But if you shift a car going 50 mph into reverse suddenly, you could cause considerable damage.
46 - Baronius
Handy - Thank you for admitting that what you said was wrong.
47 - handyguy
Glenn, I wasn't really trying to prove you wrong. It's just that some of our current problems will be automatically eased when the economy finally begins growing at a normal rate. Tax revenues will go up, the deficit will go down. This is part of what happened in the mid to late 90s.
48 - Christopher Rose
According to this article on one of my favourite sites, Business Insider, it is actually a myth that China owns a huge amount of American debt. It is actually only 8% and the USA isn't anywhere near being one of the most indebted countries, not even making the Top 15, as the link at the bottom of this article will show.
49 - Baronius
Christopher - In terms of debt-to-GDP, yes. In terms of total debt, the US is #1.
50 - handyguy
And the main reason the world buys so much of our debt, and on such favorable terms, is that we are so far considered a good risk. That could go out the window in a hurry, just because of this stupid pointless fight in DC.
51 - handyguy
#46: If you are really not trying to exasperate me, your attempts are failing. You in fact repeatedly go out of your way with the sole aim of being exasperating toward anyone/everyone you argue with. It's a bad habit.
52 - Christopher Rose
Baronius, that isn't significant, it is the debt to gdp that matters. It's like being overweight, it isn't who weighs the most, it is who is the most obese.
53 - Baronius
Oh, comment #46 was totally meant to be exasperating. No denying that. But if I'd said "that's not what you said the first time" it would have been just as irritating. I could spend a month trying to find a way to say it that wouldn't have come off obnoxious. "I told you so" is always obnoxious. But your statement that we're not increasing our debt was just so totally misleading that I had to say something.
Of course we're going to be increasing our debt load. You know that; we all know that. Republicans are willing to do so, in exchange for some institutional reforms that will prevent us from running up even more debt than that.
As for the timing of the confrontation, Boehner and the gang have been in charge for about half a year, and have been trying to get some kind of budget deal from the get-go. You can't blame them for not doing it sooner, because they were trying to do it sooner. You can't blame them for putting it off until the election, because there's always a House and Senate election within two years, and they weren't in power in 2009-2010. As for blaming them for not putting it off beyond 2012, how would that count as *not* playing politics? You never explain that. Putting off reform because it's politically awkward is a political play, but it's what you repeatedly champion.
54 - Glenn Contrarian
Handy -
I agree strongly with your #47. It's just that - no offense - you read my statistic wrong. It wasn't taxes v. GDP, but taxes v. total taxpayer income.
55 - Baronius
Chris - I mention it only because I made the point earlier (#20) about how the US debt is crowding out the debt market. Yes, we're a good solid investment, so it's not like people would be gambling all their money on Greece if we weren't issuing debt, but we are tying up money that would be invested elsewhere.
56 - Glenn Contrarian
Baronius #53 -
Have you seen any of the BC liberals decry the cuts proposed? Perhaps, but not to any great extent. I know I haven't, because I readily acknowledge that because of the end of the baby boom, the number of people supporting the number of retirees may not be sustainable.
Is that not a Republican talking point? I don't disagree with it! I think the point is blown way out of proportion...but enough of it is based on fact and obvious trends that we would be foolish to ignore. The major problem with the Republican efforts in the cuts is that they're wanting to slash funding to our science and R&D infrastructure, and that is foolish in the extreme.
But what I DO disagree with is the Republican intransigence when Obama proposes to close some corporate loopholes and end some corporate welfare. The ratio was something like 83% spending cuts compared to 17% increased revenue. Why should we continue to give Exxon billions while at the same time we're slashing Medicaid for the disabled?
That makes no sense whatsoever...but that's what the Republicans want, and are willing to drag us into default in order to have it their way.
That's not right, Baronius.
57 - Tommy Mack
Christopher is spot on with his analogy. I would add that argument for the sake of argument here and in Congress does not advance a solution. The GO6 plan does.
Clavos’ questioning the debt ceiling is a position that FDR took in 1940. Having not been challenged in court and being of arguable utilitarian value leads me to conclude that the debate is contrived. Moody’s agrees. However, Moody’s also rates our bonds. So contrived as it may be, default is not an option.
The President, the country and world business know that. Argument about it is futile.
Tommy
58 - Glenn Contrarian
Tommy -
"Default is not an option"
That is, unless you bear in mind that if the economy takes a real nosedive, the Republicans might actually stand a chance of winning the White House in 2012. That might sound too cynical by half...but I also remember a certain "Southern Strategy" in which the Republicans were willing to welcome the Southern white racists in order to stay in power.
59 - Tommy Mack
In which case, Glenn, the GOP objective would be to tank the economy on purpose because it is the only thing they have.
Tommy
60 - Glenn Contrarian
And who is it that refuses to raise the debt ceiling unless they have everything their way? The Republicans.
61 - Clavos
I still say we should just abolish the "debt ceiling." It's meaningless.
62 - Glenn Contrarian
Clavos -
I agree.
63 - Tommy Mack
I Concur.
64 - Baronius
Tommy and Glenn, did you ever think that if the Republicans are really fish, they'd be secretly trying to destroy the government to inaugurate a new Empire of the Fish?
The thing is, they're not fish. They're also not evil conspiracists trying to destroy the economy. Just because you disagree with them doesn't make them evil.
65 - Tommy Mack
You're right, my dear Cardinal Baronius. Neither did we say Republicans are evil. They may hate the truth and take delusional stands, but they are not evil. However, their congressional actions are reprehensible at best and just plain phony at worst.
Tommy
66 - Tommy Mack
The phony part, incidentally, is their bogus budget which would necessitate raising the debt ceiling.
Tommy
67 - Glenn Contrarian
Baronius -
Would the Republicans do their utmost to help the economy recover even with the full knowledge that said recovery would ensure the reelection of Obama? Would they? Really? Remember how the mid-term elections were all about jobs? How many jobs bills has the Republican House submitted since they took power early this year? Zero.
The Republicans remember very well what happened to their political fortunes after FDR took over from Hoover. They don't want to be minimized again. And let's not forget that the Republicans DID welcome the racist whites of the South as part of their very successful Southern Strategy. That, sir, was NOT a decision of "right or wrong", but of "what keeps us in power".
So, um, YES, Baronius, the Republicans WOULD refrain from helping America to recover economically, if they felt that such was the best way back to the White House. Why do you think they voted down health care coverage for 9/11 responders that would have been paid for by taking away the tax loopholes that benefited corporations that were outsourcing jobs overseas?
"It's all about power", my neo-con friend said...and he was right. At least for the Republicans, he was right. And I suggest you apply as much cynicism against your own fellow conservatives as you do against the Democrats.
68 - Glenn Contrarian
And Baronius -
To be sure, the Republicans aren't always this way. In retrospect, Bush 41 wasn't that bad - and he did go against dogma and raise taxes and slash defense spending. He had courage...as did Eisenhower. There's been quite a few Republicans over the years who've shown courage and even humility.
But today's Republicans have neither. That's why they will NOT do what is necessary to fix the economy, for to do so would cause real harm to the future of their party.
69 - Arch Conservative
"That is, unless you bear in mind that if the economy takes a real nosedive, the Republicans might actually stand a chance of winning the White House in 2012."
Unemployment is at 9.2% now. It was when 7.6% Obama was elected. Despite the proclomation from Obama's court jester, "Nobody messes with Joe" Biden, that the rate wouldn't exceed 8%, it has and then some.
I know. It's all Bush's fault. Nothing negative that's happened since 2000 is Obama's fault or since 2006 when the Dems controlled congress is the Dem's fault.
That extremely insightful analysis aside, I'd say that if things are as they are now on election day in 2012, the GOP have a very good chance of beating the Obamessiah.
70 - Baronius
Tommy - I'm not seeing a big difference between "evil" and "haters of truth who do reprehensible things". Either way, it's a caricature and contributes nothing to the political discussion. It reduces your credibility and inhibits your ability to understand your opponents.
71 - Baronius
Arch, did you see the MSNBC interview with Mo Brooks? Contessa Brewer recites the liberal talking points, and gets quite passionate when Brooks questions the wisdom of the stimulus - and Brooks slams the door on her (not rudely, either).
I'm listening to this interview again, and while I haven't been reciting "talking points" the last few days, I realize that what this guy said has been bouncing around in my brain. He's so right on the money.
72 - handyguy
I don't know if others on here are watching the additional drama going on in Washington this afternoon/evening. I despise Boehner and Cantor and their disrespect for the president. They can go to hell. They are worthless villains and cowardly assholes. They deserve to lose this fight, and the next several elections for their irresponsibility.
73 - barbara barnett
I've just posted about the President's dramatic press conference:
President Obama: "The American People are Fed Up" on Blogcritics.
74 - RJ Miller
Hence the reason I think it might actually be a good idea to default after all.
"Except that it puts out of work thousands of people all at once."
So does selling the parks and letting private employees do the same thing.
"...who really cares if the EPA is no longer protecting the environment..."
What incentive do they have to protect anything they themselves do not already own?
"...FDA is no longer protecting our food, right?"
Because food and drug companies would totally profit from killing their own customers. That sounds likely.
"And the banks. They don't need regulators either, they have our best interests at heart, don't they?"
Under a market-based set up they would. Under the system we have now in which the FDIC writes a blank check to banks for making bad loans and the Federal Reserve is permitted to engage in the equivalent of legal counterfeit, the situation is VERY different indeed.
"Next time a Red state is devastated by a hurricane or fire or tornados, maybe I'll withhold that part of my taxes earmarked to help out."
By all means, if you can get away with not being forced to assist people you think are unworthy of that help then do so when you get the chance.
"Because, you know, government? Who needs it."
Indeed, when non-coercive alternatives exist, why support it?
75 - Arch Conservative
I saw that interview Baronius. Contessa Brewer is nothing but a Kool AId drinking bobblehead spouting left wing talking points.
If I was Mel Brooks I would have asked her if she had a degree in economics and when she said no I would have said "well then you have something in common with Barack Obama."