There is much debate right now as to whether or not the debt ceiling should be raised this summer. The debt ceiling is basically the limit that the federal government is legally able to borrow to pay its expenses. Proponents say that if it is not raised it will be disastrous to our economy while opponents say that if it is raised without spending limitations it will be disastrous to our economy. The current debt ceiling is set at $ 14.294 trillion. The ceiling was reached last month.
This issue has become a political football. The Republicans in Congress have vowed not to agree to raise the debt ceiling unless the increase is accompanied by a 
significant spending reduction. Speaker Boehner has said the decrease must be in the trillions of dollars. Since the Republicans control the House of Representatives, Obama and the Democrats must deal with them. They are no longer able to ram legislation through like they did with Obamacare.
Article comments
— go to most recent comments1 - Tommy Mack
Since March 1962 the debt ceiling has been raised 74 times, of which 10 of those times have occurred since 2001. Theoretically, the debt ceiling limit is supposed to help Congress control spending. However, in reality, the debt limit is ineffective in controlling spending and deficits.
Although I suspect they will be forced to go along with it by the business community that got them elected, a failure to raise the debt ceiling will confirm that Congress really doesn’t understand the financial markets.
Tommy
2 - Tom Shelton
I agree that the debt ceiling is an ineffective way of controlling spending. It might be effective if the ones doing the spending were not also the ones who get to raise the ceiling. There is not real accountability for our elected officials. We can vote out one or two but then others step up and continue the status quo. Our only real hope is a paradigm shift that affects both the elected officials and the expectations of the voters.
Maybe some sort of balanced budget requirement for our federal government would work. I have not thought that through yet though.
Does anyone else have a suggestion as to how we can force a change in thinking on our elected officials?
3 - Leroy
This is a very bad article because it encourages political blackmail instead of real statsesmanship, and statesmansip is what we need now, not more political posturing.
The debt ceiling as a blunt instrument is NOT proposed here for the noble purpose of actually reducing excess and misbegotten spending, but rather for frustrating the Executive branch of government and the party that holds it. The very same congressmen who are shreiking for budget cuts now were most adamant about expenditures 8 years ago when another administration was in power (their favorite) and there were big-ticket defense contracts to be let for a trumped up war.
Their sin is not simple hypocrisy, the common coin of politics, but that during that reckless era the American Right simply exhausted Americas resourcs and left an empty purse behind! They squandered the national treasury, which had mended through two administrations and was on an even keel. They recklessly indebted the republic to the very nation they described as our future rival, thus weakening our independence as well as our pocket,
No good result can come from this. Any attempt at reconciliation and the-middle-way is taken as a sign of weakness and a signal to renew the attack from the other side.
The fact is that the American Right is as responsible for the fix we are in as any Left measure (which is ironic since Obamacare is predicted to reduce our financial problems) so they finally have to put their shoulder to the wheel and aid real solutions.
Otherwise it just looks like the excesses of the Bush years were intentionally timed to drive the republic into extreme distress so that it could be destroyed and rebuilt along lines more friendly to the Right, possibly by an authoritarian coup which may promise to 'end all this bickering' (in just that way that coups know how to do best). That's a pretty damn cynical manipulation of events for anyone who bears loyalty to the USA and it's constitution.
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4 - Tom Shelton
Leroy,
Are you really going to say that all this is Bush's fault? Really?
Have you forgotten who controlled the purse strings the last two years of Bush's administration? Have you forgotten Obama's implementation of Keynesian principals which have skyrocketed our national debt in his first two years in office and only made things worse? Have you forgotten that Obama has spent more in two years than Bush did in eight?
I agree that we need statesmanship. That is at the core of my call for a paradigm shift in Washington. But you must remember that the aggressor sets the rules in any conflict. How did the leftists run things when they were in control? How did Pelosi, Reid, & Obama rule when they had control of both houses and the executive branch? Do you remember Obama telling the Republicans that they had to sit in the back of the bus?
The left's attempt to socialize our country will not fix our current situation. The left's attempt ignore and make irrelevant the Constitution have not worked. The people have started to call the elected officials back to their constitutionally mandated role. If using the debt ceiling as a blunt instrument is necessary to accomplish this then so be it.
5 - Glenn Contrarian
Shelton -
If you did some research, you'd find that most of our debt today is from three things: the Bush tax cuts for the wealthy, Medicare Part D (which prevents Medicare from negotiating for cheaper drugs, among other things), and a little something called the Iraq war, which was knowingly started on false pretenses.
Let's pretend for a moment that the stimulus didn't work (although most economists agree that it not only helped, but it was too SMALL). The cost of the stimulus package was smaller than ANY of the Bush-era "changes" I listed above. And if you'll recall, if we'd maintained the surplus that Clinton handed over to Bush, we would have paid off the ENTIRE national debt by 2012.
NOW, as to the the trillion-dollar-plus cuts the suddenly-thrifty Republicans want, have you noticed there's a certain section of the government they're not even suggesting? DEFENSE. We spend as much on 'defense' as the rest of the planet put together...but the Republicans, in their 'patriotic' determination to 'support the troops', are not even willing to make a penny in cuts to defense! There's a few who are starting to support bringing the troops home (finally!), but has there been even ONE serious proposal from the Right on making defense cuts? No...and we can always point out to GOP Sen. Shelby (AL) who was trying to force the Air Force to spend tens of billions to buy an aircraft engine it didn't want.
No, Shelton - the Republicans aren't threatening to refuse to raise the debt ceiling because they're concerned about the economy - their stubbornness on defense spending proves that! The ONLY reason they are willing to hold our economy hostage (for this WOULD crush the power of the dollar and ruin our economy) is that if Obama doesn't do what they want (support the troops and screw the poor), then the resulting economic crash will be seen as his fault...and they would actually stand a chance of winning in 2012.
To the Republicans, it's all about power. They do NOT care about the economy (defense, remember). They just want to get Obama out of the White House...because they remember what happened the last time a Democrat (FDR) pulled America out of a major economic crisis - the Democrats held Congress for forty years!
P.S. You do know, of course, that we're paying less in taxes as a percentage of our income than we have since 1950. But be sure to ignore that, 'cause the Tea Partiers will tell you that we're all being taxed waaaaaay too much!
6 - Baronius
I think the Republicans are in a strong negotiating position with the Democrats because they're in such a weak negotiating position with the voters. The tea partiers have told the Republican candidates to bring them everything or pack their bags. If the Dems think the current GOP legislators will be replaced by Democrats, it's in their interest to stand firm, but if they're worried about the potential chaos of a "throw all the bums out" election, they've got to give up more than they normally would. That makes this the most likely time for systemic change.
7 - Tom Shelton
Glenn,
A couple things: first FDR and policies did not pull the country out of the depression. It was World War II that did that. In fact, FDR's policies probably prolonged the depression by delaying the free market corrections that were necessary. In the same way, Obama's Keynesian policies have and will prolong the current recession. There is talk now of a double dip...which I think we are probably already in.
Now, lets talk about power. It was Rahm Emanuel who said something along the lines of "never waste a good crisis." Obama and the leftists are great at creating a crisis and then using it to implement their agenda. They always have been. It is their main method of accomplishing what they want to do.
One last point: I don't think you realize it so I will share it with you. Lower tax rates actually stimulate economic activity which increases the revenue to the federal government. Let me explain. When people are allowed to keep more of the money they earn they use it in a way to earn more. The more they earn the more they send to Uncle Sam. Everybody wins. More jobs are created. The economy is expanded.
8 - Glenn Contrarian
Shelton -
1. Wrong. The Depression was almost OVER by 1936...but FDR made a mistake and listened to those who were supporting austerity measures (Republicans, of course), and when he did what they wanted, we went back into the Depression.
Which WWII DID bring us out of. Absolutely! No argument there. In fact, I clearly remember back in the early 80's when we were having what was then the worst economy since the Depression, people were saying, "What we need is a war." They were only half joking, because most people remembered how WWII finally pulled us out of the Depression.
Now, Shelton - exactly HOW did WWII bring us out of the Depression? Before I continue about that particular subject, I'd like to hear your answer to that.
2. If low taxes are so good, then why isn't our economy booming since we've a lower overall tax burden now than at any time since 1950? And why aren't heavily-socialized nations like Germany and Sweden in a deep depression instead of having been two of the nations that came out of the Great Recession in the best shape?
You see, Shelton, the RHETORIC about how wonderful low taxes are...is wonderful rhetoric! But that's all it is - rhetoric. Look at all the first-world democracies - is there a single one that actually has a low tax burden? Other than America, that is - we've got the lowest among all the first-world democracies.
Why is that? If low taxes are SO much better, why is it that the democratic nations with the higher tax rates are doing so much better than, say, third-world countries where the effective tax rates are much lower?
Why is that? Why isn't that wonderful tax-cuts-are-the-cure-for-all-that-ails-us rhetoric working as advertised all over the world...but instead it's working, um, pretty much nowhere? Why is that?
9 - Tommy Mack
The Republicans are bankrupt when it comes to fiscal policy. Grandstanding is not policy making. There is nothing to negotiate. The debt ceiling gets raised because it gets raised, as it has been raised because it has to be raised. That is the country's business, like it or not.
The very business community that bankrolls the GOP is not going to let these posturing politicians put the country into default. As I said, Congress does not understand financial markets and this whole argument proves just how little they know.
By the way, junk politics like this fake debate is going to get alienate the center-right independents who voted Republican in the last election to get something for their vote. So far, the House has demonstrated clearly that they haven’t met a losing proposition they don’t like.
Tommy
10 - Leroy
4-Tom Shelton: yes, I'm saying that a large part of this mess is Bush's fault. He gave out big tax cuts at the wrong time, when he SHOULD have been paying off national debt instead of wild spending, and anyway he should have given the money to the people with the highest Marginal Propensity To Spend, i.e., the least paid people in America. Instead he gave the money to rich people whose savings render money dormant.
11 - Tom Shelton
Glenn,
You said:
JOBS! WWII pulled the economy out of the depression by putting people to work.
To break out of the current recession we need JOBS. Obama's current economic policies will not produce jobs. No true and real recovery will happen until people can earn a living and can stop being dependent on the government. Obama needs to shift to supply side (trickle down) policies. The first step would be to cut corporate tax rates. The next step is to provide other incentives for business. Look at Texas. Their economy is booming while the rest of the country is sinking....Why? Because they have been proactive in making the business environment more stable businesses have responded in a big way.
You mentioned Germany also. Their economy appears to be well on the road to recovery. Why? Because they instituted conservative policies that resulted in JOBS! (follow this link for some discussions on the topic. The other "heavily-socialized" are all struggling. What is interesting is that many are now planning to follow Germany's model for recovery which is a return to supply-side economic theory. INTERESTING, don't you think. But here we seem intent on continuing down the road that Europe has proven to be a dead end.
Fundamentally, our problem is not with tax rates it is with the tax base. We have almost 50% of our people that don't pay taxes. We need to expand the base not raise the rate. The best way to do that is to scrap the income tax in favor of the FairTax. That would broaden the tax base to everyone and shift the basis of taxation from income to consumption.
12 - Tom Shelton
Tommy,
How are the Republicans bankrupt on fiscal policy? They have been proposing solutions. It is the leftists who are not fulfilling their responsibilities (no budget for two years now).
I don't consider it grandstanding to stand on your principles. There are finally a few true conservatives in office now and they are finally willing to fight the leftists instead of always compromising. I welcome the change.
13 - Tom Shelton
Leroy,
You said:
"4-Tom Shelton: yes, I'm saying that a large part of this mess is Bush's fault. He gave out big tax cuts at the wrong time, when he SHOULD have been paying off national debt instead of wild spending, and anyway he should have given the money to the people with the highest Marginal Propensity To Spend, i.e., the least paid people in America. Instead he gave the money to rich people whose savings render money dormant."
I would not have had a problem with Bush paying off the national debt. The problem is the leftists that controlled Congress wanted to spend like there was no tomorrow. Bush was wrong for not fighting harder to stop them.
I also disagree with your comment that the savings of the rich people make money dormant. That may be true for a small percentage but not as a whole. Rich people use their money to make more money. It stimulates the economy and creates jobs. When was the last time you, or anyone you know, got a job from a poor person?
14 - zingzing
"I would not have had a problem with Bush paying off the national debt. The problem is the leftists that controlled Congress wanted to spend like there was no tomorrow. Bush was wrong for not fighting harder to stop them."
my god.
15 - Glenn Contrarian
Um, Tom -
What are the three most expensive things that our government has done since the turn of the century? They are, in order of cost:
1. Bush tax cuts
2. Iraq war
3. Medicare Part D
The Dems strongly opposed Nos. 1 and 3. Some opposed #2...but most supported it. That is, until we found out that we were LIED into that war.
So how, exactly, is it the Dems fault that we don't have a balanced budget? Remember, Clinton handed a surplus over to Bush...and last I recall, Clinton is a Democrat.
You want so badly to believe that the Dems were the ones who busted the budget...and that's probably what you get fed of Fox News. But if you will research the facts, you'll find something completely different.
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When it comes to WWII pulling us out of the Depression - YES! It was jobs, jobs, jobs that pulled us out of the Depression. Jobs that were necessary for the war effort...jobs that were nearly ALL directly or indirectly funded by the government!
Do you know what a war is in economic terms, Tom? It's a government-funded stimulus and jobs program. All of a sudden, the government put us deeper in debt than we've ever been before OR since...and that money was used to boost our industries, and with it came jobs, jobs, jobs.
And I think you must agree with that.
So what happened with the stimulus? It was too small. It kept us from spiraling down into a new Depression, but it was too small. The economic stimulus that was America's war machine in WWII was vastly larger (relatively speaking, of course) than Obama's economic stimulus package that the Republicans hated so much.
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I read your reference on Germany...and what it was, was nothing more than a list of opinions. Here's what the conservative Wall Street Journal said:
Germany's experience bucks the stereotype that the country's heavily regulated labor market entrenches high unemployment and struggles to create jobs, especially after a recession. This time, it is the more-flexible U.S. labor market that is lagging, exhibiting both higher unemployment and a slower revival in hiring.
The truth, economists say, is that Germany is benefiting from a mixture of circumstances and good policy, and that the U.S. model remains better at moving labor from declining industries to new ones.
Germany has limited job losses in part because of a popular subsidy program for short-hours work, known as Kurzarbeit. Under the plan, companies reduce workers' hours but keep them on staff, with the government kicking in for some of their lost wages and social-security contributions.
At the peak last May, as many as 1.5 million workers were in the program. That has been cut to about half a million, as companies move workers back to full-time shifts to meet rising demand, particularly in the export sector. German unions also have made wage concessions to preserve jobs.
The point is, Tom, that Germany's economy is far more regulated than our own, is FAR more unionized than our own, and they have single-payer health care...which we don't. AND they had the government directly involved in essentially paying companies to hire people. All of these - according to Republican dogma - are a bad, bad thing and would ruin our economy. But did they ruin Germany's?
No. And Germany is doing quite well economically, thank you very much.
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Tom, I used to be a conservative like you. Then I started seeing how conservative rhetoric often didn't match up with reality. Hopefully the above will help you come to understand what I mean.
16 - Leroy
Tom Shelton isn't even close to reality. Perhaps he just invents things as he goes along.
17 - Cannonshop
Missed one glenn-the Stimulus package Obama signed early in his term (think of it as "Bush's Bailout part two, cranked to ELEVEN") spent more money than the entire Bush Administration spent in eight years, including the Iraq war, and the "Tax cuts" (How in hell is cutting taxes spending money? that money wasn't in-hand to begin with!)
18 - Glenn Contrarian
Cannonshop -
That is a patently false statement.
The stimulus did NOT cost more than what the Bush administration spent in eight years. In fact, the stimulus cost barely more than the Iraq war...
...if and ONLY if you do not take into account "costs such as higher combat pay and recruiting costs, Social Security disability payments for veterans who can no longer work, the cost of restoring the military to its pre-war strength (replacing the bullets and bombs that have been used)."
Furthermore, the stated cost of the Iraq war does not include the continuing costs of disability compensation and medical care for Iraqi war veterans.
The reference for the above observations can be found here at Politifact.com.
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So let's take a look at those costs:
The cost of the stimulus package was $814B dollars...includes $70 billion to fix a problem with the Alternative Minimum Tax, which is designed to target the wealthiest taxpayers but is gradually affecting more people in the middle class. In other words, that's $70B of stimulus that wasn't really taxpayer dollars spent, but taxpayer dollars saved.
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The cost of the Iraq war as of July 2010: $709B...but that does NOT include the continuing costs that I listed above...costs that will continue to drain the federal budget for DECADES to come.
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Medicare Part D - the Republican blunderbuss legislation that gave us the infamous "doughnut hole" and restricted Medicare from negotiating for less expensive drugs. From The Fiscal Times: According to the latest actuaries’ report, Medicare Part D will cost taxpayers - beneficiaries pay virtually nothing - $62 billion [in 2010 alone]. This figure is expected to rise sharply in coming years to $150 billion in 2019. By 2030, Part D alone will cost taxpayers 1 percent of GDP. In present value terms, Medicare Part D adds almost $16 trillion to our national indebtedness. (That’s how much would need to be in a trust fund today to pay all the benefits that have been promised over and above the trivial premiums paid by beneficiaries.)
Former U.S. Comptroller General David Walker has called the unfunded prescription drug benefit “the most fiscally irresponsible piece of legislation since the 1960s.”
======================
And THEN we have the Bush tax cuts for the wealthy! Remember how cutting taxes for the wealthy is supposed to be GOOD for the economy, how it's supposed to lead us into an economic boom?
From Politifact.com:
Back in 2001, [the Congressional Research Service] CRS said, the Congressional Budget Office projected gradually rising federal budget surpluses for the next decade. The tax cuts helped alter the outlook "dramatically," and the budget in 2002 recorded a deficit for the first time since 1997.
"The Bush tax cuts, with a $1 trillion 10-year price tag, contributed to this shift from budget surpluses to deficits," CRS said. Other contributors included the 2001 recession, the increase in defense spending for the wars in Iraq and Afghanistan and the Medicare prescription drug benefit.
But the tax cuts "generated the largest 10-year increases in budget deficits," CRS said...
The CBO [in 2010] projected a decrease in deficits if the tax cuts expired, and said extending all of them permanently would cost $3.3 trillion over 10 years and increase deficits.
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LIKE I SAID, Cannonshop - the most expensive legislation so far this century are Medicare Part D, the Bush tax cuts, and the Iraq war. The only thing I got wrong was the order!
19 - Glenn Contrarian
And Cannonshop -
How in hell is cutting taxes spending money? that money wasn't in-hand to begin with!
It's spending money on the interest America owes on our debts because A Certain Segment of the Population (read: Republicans) thinks that if we pay less taxes, the deficit will magically go away!
For your information:
Budgeted net interest on the public debt was approximately $240 billion in fiscal years 2007 and 2008. This represented approximately 9.5% of government spending. Interest was the fourth largest single budgeted disbursement category, after defense, Social Security, and Medicare. Despite higher debt levels, this declined to $189 billion in 2009 or approximately 5% of spending, due to lower interest rates. Average interest rates declined due to the crisis from 1.6% in 2008 to 0.3% in 2009.
During FY2008, the government also accrued a non-cash interest expense of $212 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $454 billion. This accrued interest is added to the Social Security Trust Fund and therefore the national debt each year and will be paid to Social Security recipients in the future.
Public debt owned by foreigners has increased to approximately 50% of the total or approximately $3.4 trillion. As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels. CBO estimates that nearly half of the debt increases over the 2009-2019 period will be due to interest.
TWO HUNDRED BILLION DOLLARS IN INTEREST PAYMENTS ALONE...per year! THIS, sir, is precisely how cutting taxes costs us money!
Remember, Cannonshop, before Bush decided to lie us into an illegal war AND pushed through Medicare Part D AND slashed the tax rates for the wealthy, we were on track to have ZERO national debt in 2012!
In other words, we wouldn't be spending two hundred billion dollars per year in interest payments alone...half of which is going overseas!!!!!
Okay? Your Republicans really screwed the economic pooch, Cannonshop...and they're refusing to take responsibility for having done so.
20 - tro ll
(time for a plug for Stiglitz and Blimes' work on the cost of Iraq)
21 - Glenn Contrarian
And Cannonshop -
The stimulus was spent on America. The Iraq war wasn't.
22 - Tom Shelton
The Iraq war was to defend the United States. Would you rather fight the terrorists where they are or on American soil?
23 - Christopher Rose
There were no terrorists in Iraq at that time...
24 - zingzing
only total delusion or a guinness-worthy ability to swallow junk could explain #22 (and #13 for that matter).
25 - Glenn Contrarian
Mr. Shelton -
Even BUSH has admitted Iraq didn't have any WMD's (and Rumsfeld has admitted that torture did NOT lead to the finding and killing of bin Laden). Iraq had no real contact with al-Qaeda. They were NO clear and present danger to America.
And you can continue trying to defend the indefensible by explaining why Obama is so bad when the Iraq war, Medicare part D, and his tax cuts ALL cost the American taxpayer FAR more than the stimulus...as I illustrated in comments #18 and 19 above.
Like I said, I used to be like you. I used to be one of you...but I saw that the Republican rhetoric was not matching up with reality. Again, see comments 18 and 19 above.