U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.
“It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations,” Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.
A Treasury spokeswoman declined to comment on the letter.
Please dear, let me go deeper in debt. Trust me, it will be good for our marriage…
Just one more line and I’ll quit. Really.
These guys are money junkies.
I hate to tell you this, but the debt ceiling is quite regularly increased by both Democrats and Republicans. This is nothing new.
A trillion here, a trillion there, pretty soon, you’re talking real worthless money. (Apologies to Sen. Everett Dirksen, whose political career started just across the Illinois River from me.)
[url=http://pastorzip.blogspot.com]The Rev. Steven P. Tibbetts, STS[/url]
Peoria, Illinois, USA
Remember the good old days when a certain senator use to mock this kind of crap with his Golden Fleece Award?
#3Ken Peck………….so, I guess that makes it right then?
#6Capt
It means that it is silly to make a partisan issue out of it. Throughout the history of this country, from its very founding, administrations have gone to Congress for authority to issue government bonds. Around 1940 this has become very time consuming for Congress, so they adopted a debt ceiling so that the treasury could issue bonds up to a certain amount. This ceiling has been raised repeatedly. Democratic administrations have asked for the ceiling to be raised. Republican administrations have asked for the ceiling to be raised. Democrat controlled Congresses have raised the ceiling; Republican controlled Congresses have raised the ceiling.
It was raised many times during the administration of G.W. Bush. It was raised during the administration of G.H.W. Bush. It was raised during the administration of Reagan. It was raised during the administration of Ford. It was raised during the administration of Nixon. It was raised during the administration of Eisenhower. It’s not a partisan thing as Jefferson suggested. Republicans are every bit “money junkies” as Democrats.
Is it right? Well, it is the only way that government can operate. It is a consequence of government “faithfully executing” the laws which the representatives we, the people, have elected have passed. Since the founding of the Republic, the federal government has never been totally out of debt.
You see the same thing in the states. Texas, which is supposedly a balanced budget state, which cannot borrow money to operate, still has billions of dollars in bonded debt to pay for all sorts of things from roads to state universities. And Texas has been dominated by conservative Republicans for decades; and before that it was dominated by conservative Democrats.
Counties issue revenue bonds for roads and other facilities. Cities issue revenue bonds for water and sewage treatment, parks, recreational centers and so on. School districts issue revenue bonds for classrooms.
The United States government issued bonds to defeat Japan after Pearl Harbor. The United States government issued bonds to defeat Nazi Germany. The United States government issued bonds to pay for defense against the threat of Communist Russia.
Is it right? Damned right it is right!
#7. And we end up with a country that is bankrupt at the federal, state, county and city level. Yes, it’s a wonderful thing.
#8, the country isn’t bankrupt.
No more than someone who has a home mortgage is thereby bankrupt.
The conservative example I gave in Texas, where there are billions in bonded debt is hardly bankrupt and isn’t likely to go bankrupt.
And I find it curious that you seem to think that because the Continental Congress borrowed money to gain independence from England, that the U.S. Congress borrowed money to fight Japan and Germany in WWII, the country was thereby bankrupted. Better we had remained a colony than to have borrowed money; better to have let Japan and Germany win than to have borrowed money; better to have let the U.S.S.R. dominate the world than to have borrowed money.
And in the present circumstance–better to let the banks fail and the economy collapse than to borrow money; better to have 25% unemployment than to borrow money; better to let the national infrastructure to collapse than to borrow money; better to remain dependent on foreign oil than to borrow money to develop domestic alternatives; better to let the schools fail than to borrow money; better to leave the water and sewage to go untreated than to borrow money; better to have millions go bankrupt because of a catastrophic illness than to borrow money. Good grief! It is better for a business to use obsolete machinery and plants than to borrow money.
Or are you prepared to pay for the national defense, highways, bridges, streets, water and sewage treatment plants, schools, hospitals, prisons and jails, fire and police stations, etc. with cash up front from taxes in advance?
#9KenPeck. Is there any problem the state cannot cure by borrowing more money? According to you, obviously not. And, when you over borrow you do become bankrupt which is the condition our country is in now. For a prime example, witness the State of California.
RE: “And in the present circumstance—better to let the banks fail . . . [delete irrelevant catastrophizing] than to borrow money . . ”
Yep — had we done that we’d have had a six month issue, while the bad banks failed.
RE: “. . . better to have 25% unemployment than to borrow money . . . ”
Heh — no, better to have a much lower unemployment than we now have and lower the corporate tax rate — but oh no! That might take away some power from the State and give decision making about the use of money back to organizations and individuals and we can’t have that!
RE: “. . . .better to let the national infrastructure to collapse than to borrow money . . . . ”
More catastrophizing because that’s what’s needed in order to expand the State’s coffers.
RE: . . . better to remain dependent on foreign oil than to borrow money to develop domestic alternatives . . . ”
oh no not at all — better to decrease the regulations on coal and oil drilling . . .
RE: ” . . . better to let the schools fail than to borrow money” . . .
Uh — they already *have* failed so let’s try something different other than throwing more pointless Federal dollars at it.
RE: “. . . better to leave the water and sewage to go untreated than to borrow money . . . ”
no — how about better allocation of funds.
RE: ” . . . better to have millions go bankrupt because of a catastrophic illness than to borrow money . . . ”
Er, right. How about deregulating the state-run hospitals and other state healthcare [sic] offerings, plus institute tort reform, plus reform the FDA, plus . .. but no, that wouldn’t give money and more power to the State would it?
In short, all of Ken Peck’s “solutions” have to do with expanding the power and the gluttony of the State and decreasing individual and personal choice and freedom, which after all is his worldview.
10. tgs wrote:
[blockquote]#9KenPeck. Is there any problem the state cannot cure by borrowing more money? According to you, obviously not. And, when you over borrow you do become bankrupt which is the condition our country is in now. For a prime example, witness the State of California.[/blockquote]
What you obviously choose to ignore is that government cannot provide even essential services without borrowing against future revenue. (Actually the same is pretty much true of business as well.)
Define “over borrow”. One measure of government borrowing is the ratio between debt and gross domestic product. I’m not sure what it is right now, or what it will be if the requested ceiling is adopted. I do know that it has exceeded 100%–during the Reagan administration, to which Republicans point as the golden years of fiscal responsibility on the part of the federal government.
(I would point out that one of the problems created by the financial collapse in 2008 was that businesses could not borrow against future income for essentials of operation such as payroll, inventory and current operating expense. It wasn’t so much “bankruptcy”, but simply a matter of not having the cash to operate. And that, of course, results in reduced government revenues, which in turn requires government borrowing to continue operation. Of course, we can, I guess, shut the government down and live in anarchy.)
I am not an expert on California’s situation, which is as much a problem of political will and the inability of the governor and state legislature to work out a budget solution. They are, incidentally, borrowing money–in the form of vouchers (IOUs)–to meet current expenses. (I recall that in the Great Depression, my parents, who were school teachers in Ohio, were paid with vouchers (IOUs) instead of cash–and that the vouchers were as good as gold.)
Incidentally, one of the things that state and local governments (including California) are doing to deal with the recession is laying off government employees, which only compounds the problem of revenues. Unemployed people don’t pay anywhere near the taxes that employed people do.
Now if you really want to see the U.S. collapse into utter chaos and become a fourth rate country, require that government operate on a cash only basis with no borrowing. Reagan required heavy borrowing to finance his tax cuts for the wealthy and Star Wars. Bush doubled the national debt in eight years to finance his program–much of the time with a Republican controlled House and Senate. Texas constitutionally has to have a balanced budget–and has billions of debt secured by revenue bonds. And it has been governed for at least a couple of decades by “no new taxes” Republicans in the governor’s mansion (which burned down last year and will be rebuilt partly with bonds) and legislature.
It’s not a partisan thing. It is the way governments operate. It is the way the U.S. government has operated beginning with the Revolutionary War.
11. Sarah1 wrote:
[blockquote]RE: “And in the present circumstance—better to let the banks fail . . . [delete irrelevant catastrophizing[i][sic][/i]] than to borrow money . . “
Yep—had we done that we’d have had a six month issue, while the bad banks failed.[/blockquote]
And what pray tell would be the consequence of “the bad banks” failure? Well, for one thing even more businesses would be unable to obtain credit to meet payroll and more people unemployed.
[blockquote]RE: “. . . better to have 25% unemployment than to borrow money . . . “
Heh—no, better to have a much lower unemployment than we now have and lower the corporate tax rate—but oh no! That might take away some power from the State and give decision making about the use of money back to organizations and individuals and we can’t have that![/blockquote]
If the credit markets are dried up and people unemployed because of it, corporations are going to cut back (lay even more folks off). If you are operating at a loss because people aren’t buying, a zero corporate tax rate isn’t going to help.
[blockquote]RE: “. . . .better to let the national infrastructure to collapse than to borrow money . . . . “
More catastrophizing[i][sic][/i] because that’s what’s needed in order to expand the State’s coffers.[/blockquote]
Tell that to the folks and their families who died when that Interstate bridge collapsed.
[blockquote]RE: . . . better to remain dependent on foreign oil than to borrow money to develop domestic alternatives . . . “
oh no not at all—better to decrease the regulations on coal and oil drilling . . .[/blockquote]
That will not solve our energy problems in the short term and definitely not in the long term.
[blockquote]RE: †. . . better to let the schools fail than to borrow money†. . .
Uh—they already *have* failed so let’s try something different other than throwing more pointless Federal dollars at it.[/blockquote]
Actually, the public schools are educating far more children and a much more diverse population than they did when I was in school over 50 years ago.
[blockquote]RE: “. . . better to leave the water and sewage to go untreated than to borrow money . . . “
no—how about better allocation of funds.[/blockquote]
The fact remains that no amount of “better allocation of funds” will meet the needs of growing communities or a growing nation. The same thing is true of business: you borrow money against future revenues to expand production and increase productivity.
[blockquote]RE: †. . . better to have millions go bankrupt because of a catastrophic illness than to borrow money . . . “
Er, right. How about deregulating the state-run hospitals and other state healthcare [sic] offerings, plus institute tort reform, plus reform the FDA, plus . .. but no, that wouldn’t give money and more power to the State would it?[/blockquote]
Well, actually, that would simply leave power in the hands of the insurance, drug and hospital companies that have created the mess we are in in the first place. That is why they are spending billions to defeat healthcare reform.
[blockquote]In short, all of Ken Peck’s “solutions†have to do with expanding the power and the gluttony of the State and decreasing individual and personal choice and freedom, which after all is his worldview.[/blockquote]
Actually they have to do with keeping the United States a great country rather than letting to collapse into obsolescence, chaos and anarchy which would ultimately result in tyranny.
KenPeck. I really find your argument so specious that it’s hardly worth a reply, but here goes. First, I am not nor is anyone on this thread, arguing against borrowing per se. What I am saying is that foolish over borrowing by the state is wrong, immoral and the death knell for a free society. If you want to argue that bankrupting a nation with over spending and over borrowing is a wonderful thing and the way to go that’s fine, but don’t expect reasonable people to go along with you.
14. tgs wrote:
[blockquote]First, I am not nor is anyone on this thread, arguing against borrowing per se. What I am saying is that foolish over borrowing by the state is wrong, immoral and the death knell for a free society.[/blockquote]
Define “over borrowing”.
The ratio of national debt to the gross domestic product is around half what it was under Reagan when debt was well over 100% of GDP. Are you arguing that Reagan was the “death knell for a free society”?
RE: “Well, actually, that would simply leave power in the hands of the insurance, drug and hospital companies that have created the mess we are in in the first place.”
Nonsense — the State’s intrusion into this industry has been the cause of the mess we are in. Further intrusion will create a larger mess.
RE: “If the credit markets are dried up and people unemployed because of it, corporations are going to cut back (lay even more folks off). If you are operating at a loss because people aren’t buying, a zero corporate tax rate isn’t going to help.”
Nein — the credit markets already did dry up, and we survived just fine, and in the meantime the State gave literally BILLIONS of dollars in a failed “bailout” scheme while instituting further regulations which served to exacerbate the problem and keep bad banks that made bad decisions on life support.
RE: “That will not solve our energy problems in the short term and definitely not in the long term.”
Nothing will solve our “energy problems [sic]” in the long term if you mean infinity. Otherwise, it would solve our “energy problems [sic]” just fine.
RE: “Actually, the public schools are educating far more children and a much more diverse population than they did when I was in school over 50 years ago.”
Nice red herring — and they’re radically failing at it too, to the production of a 1/3 functional illiteracy rate. Which of course, collectivists advocate as a solution throwing yet more money at it.
RE: “The fact remains that no amount of “better allocation of funds†will meet the needs of growing communities or a growing nation.”
Sure it would. We’re wasting tens of millions per state per year on dreadful allocation of moneys from the sewer and infrastructure problems to the education monopoly.
RE: “Actually they have to do with keeping the United States a great country rather than letting to collapse into obsolescence, chaos and anarchy which would ultimately result in tyranny.”
Lol.
As I said . . . spoken like a good collectivist who sees the solution as expanding the State. Perfectly in line with your worldview, so understandable.
We simply do not share the same foundational worldviews on the government enough to be able to discuss these issues. Your “solutions” will always be of course polar opposite from mine. It’s like a socialist and a libertarian trying to “discuss” solutions to “private property issues.”
KenPeck. If you do not understand that over borrowing means borrowing beyond your means to pay back, then I fear that nothing I say will dissuade you from your continuing foolish comments. Have fun.
17. tgs wrote:
[blockquote]KenPeck. If you do not understand that over borrowing means borrowing beyond your means to pay back[/blockquote]
And what, exactly is the United States’ “means to pay back”?
If I go to the bank to borrow money, they usually will look at my income, both present and projected. And that will, to a large degree, determine whether or not I get the loan and the terms of the loan. It may even be in terms of the percentage of my income.
Now, when a government offers bonds, the buyers of those bonds will look at the ability of the government to (1) pay the interest on those bonds and (2) pay the principal on those bonds at maturity. If the markets determine that the government cannot fulfill those two conditions, the bonds will not sell. Period. End of discussion. That is why U.S. bonds do, in point of fact sell. That is why Texas bonds sell. That is why Dallas county bonds sell. That is why Dallas city bonds sell. That is why Dallas ISD bonds sell.
Now, at the federal level, what is usually considered is the ratio between the debt and the gross domestic product–which is about the only way we have of knowing what the country’s ability to pay the interest and principal when due. And, as a matter of historical record–you can check it out at the U.S. Treasury’s web site–the ratio of debt to GDP has been much higher in the past–in excess of 100% during WWII and the Reagan administration’s recession in the 1980s.
It was, of course, the Republican administration, with its spiraling recession that went to Congress and pleaded for a huge bailout of major financial institutions–predicting catastrophe if the bailout didn’t happen. It was also the Republican administration that insisted that the bailout be passed without any significant controls or accountability.
And, Sarah, I would point out that the economic meltdown, with its soaring unemployment rates (and consequent falling revenues) was largely due to the frozen credit markets. Oddly enough, for your argument, as the credit markets begin to thaw and stimulus money begins to flow, we are seeing the numbers of people losing their jobs decline, production increasing, the stock markets rallying, people buying houses, etc.
Let’s not forget two things about governement debt:
1. Why do you incur it? For a standing army, for roads, for bridges: these are investments much like that home mortgage the Ken Peck spoke about. Or, do you incur it to run entitlement programs that keep growing bigger because the flow of dollars never stops. No tangible investment value there (to use Ken’s analogy, like using debt to go to Disney World).
2. Who is buying all that debt? If it’s China then we eventually may have a problem when they can’t absorb any more. Far Far Far worse is when we monetize our own debt by letting one department of government print money to buy our own bonds. That could lead to a complete collapse of the currency. Can we say, Germany?
KenPeck. As I said before, have fun.
19. Capt. Deacon Warren wrote:
[blockquote]Let’s not forget two things about governement debt:
1. Why do you incur it? For a standing army, for roads, for bridges: these are investments much like that home mortgage the Ken Peck spoke about. Or, do you incur it to run entitlement programs that keep growing bigger because the flow of dollars never stops. No tangible investment value there (to use Ken’s analogy, like using debt to go to Disney World).[/blockquote]
Which entitlement programs do you have in mind?
Social Security? Do you really want to do away with Social Security and leave millions of elderly citizens destitute?
Veterans benefits? Do you really want to do away with veterans benefits?
Unemployment Compensation? Do you really want to do away with that too?
Medicare? Do you want millions of senior citizens to be without medical care?
It’s sort of like talking about “flat tax”, until you realize that you would lose your mortgage interest, property tax, medical expense, charitable contribution deductions. Then we hear a different song. Oh, [b]that[/b] is different.
And there is this about entitlement programs: that money ends up in the economy. My social security check gets spent at the grocery store, utility company, filling station, theater, rent and other places that hire workers, buy inventory which employs truckers, warehouses, factory workers farm workers, etc.
I don’t think I said anything about going to Disneyland–but even that helps the California economy!
[blockquote]2. Who is buying all that debt? If it’s China then we eventually may have a problem when they can’t absorb any more. Far Far Far worse is when we monetize our own debt by letting one department of government print money to buy our own bonds.[/blockquote]
A significant part of the debt is held by, ahem, the Social Security and Medicare trust funds. Of course, when unemployment falls and the payroll tax revenue can’t cover the expenses, then the government will have to pay back the loans.
Also American citizens hold a significant part of the debt. It’s part of my money market account and treasuries are still considered to be one of the best and safest investments.
We also hold a significant part of that debt indirectly. It is part of the reserves held by banks, insurance companies and pension plans.[blockquote]Can we say, Germany?[/blockquote]
Can we say “Hitler rule”?
16. Sarah1 wrote:
[blockquote]RE: “If the credit markets are dried up and people unemployed because of it, corporations are going to cut back (lay even more folks off). If you are operating at a loss because people aren’t buying, a zero corporate tax rate isn’t going to help.â€
Nein—the credit markets already did dry up, and we survived just fine,[/blockquote]
Maybe you didn’t lose your job when the credit markets dried up; but millions did lose their jobs and aren’t “surviving just fine.”
[blockquote]RE: “Actually, the public schools are educating far more children and a much more diverse population than they did when I was in school over 50 years ago.â€
Nice red herring—and they’re radically failing at it too, to the production of a 1/3 functional illiteracy rate. Which of course, collectivists advocate as a solution throwing yet more money at it.[/blockquote]
Literacy rates in the U.S. rose from 89% to 99% between 1900 and 1970, a rate which is apparently still achieved. Of course, it does depend on how you define “literacy”.
But as for public schools, I attended public elementary and secondary schools from 1943-1955. In 1st-4th grade it was in Ohio. (A public elementary school which, like Western Reserve, was a result of a federal land grant program in the early 19th century.) I do not recall any Black or Hispanic students–probably because there were none in that town. We moved to Texas and I attended Texas public schools from 5th-12th grade. There were no Blacks in any of the schools; they went to separate and inferior schools. There were no Hispanics in the elementary and junior high schools, because “Little Mexico” was not in their attendance zones. There were a handful of Hispanics in the large (roughly 1000 student) 10th-12th grade high school. I have no idea what happened to the 15+ year old Hispanics–but they were not going to school. I can count on one hand the number of my graduating class with Hispanic names.
There were, of course, no mentally retarded students. There were no acting out emotionally disturbed or sociopathic students. There were no blind students. There were no deaf students. There were no paraplegics. Etc.
Many students dropped out. No one particularly worried about it. Some showed up filling our cars with gasoline, checking our oil, water, batteries and tire pressure–a job which no longer exists. Some went to work in the oil fields. Some worked on highway crews. Some joined the military services. (Those who made a career of it got the opportunity to get shot at in Vietnam.) Some became apprentice plumbers, electricians, carpenters, bricklayers, etc. And ended up making more money than some of us foolish folks who went to college and became public school teachers. Girls may have had a harder time of it. Waitresses, cleaning ladies or wives of some of the boys.
Of those of us who graduated, some went to college. Those who did were not Black, were non-Hispanic white middle-class, mostly boys. Half of those who went to college flunked out their freshmen year. (There was an article in today’s Dallas Morning News complaining that half of the graduating seniors were flunking out of college their freshman year. Of course there are a lot more high school graduates going to college now, and a lot more Blacks, Hispanic and handicapped students too.)
Is reading comprehension a problem in the schools today? Yes, indeed. Is it worse now than 50 years ago? No, not really. We now retain students who dropped out 50 years ago. The first year I taught (1958-9) I had three high school history classes and two 7th grade Texas history classes. There were 5 sections of the 7th grade, divided by reading ability. I had the top section (no reading problems) and the bottom section (unable to read the textbook, or a written test or to write answer to a quiz). The real interesting thing? By the 9th grade that “bottom section” has virtually disappeared. There were only a couple of students who had reading or writing problems. Had the school “cured” those illiterate 7th graders? No way; they had simply disappeared. They were smart enough to know that continuing in school was for them. They dropped out. They got jobs at filling stations, as apprentice laborers, in the oil fields, as janitors, etc. Incidentally, did the school in 1958-9 try to remediate those students? No way. I was strictly forbidden to do so; I was told to teach the bottom 20% in exactly the same way I taught the top 20%. Make sense? No way.