this isnt so much a financial thing as it is political. the whole debt limit thing existing is an artifact and should be removed from the process.
but its too valuable as a political tool now so conservatives love to beat everyone over the head with it. assholes.
Wasn’t it the Dems that held it over this time? Wasn’t the last political news that DT wanted to blow up the debt limit and congress basically said F-off that’s our power?
I mean, I’m all for giving a middle finger to the GOP, but let’s not put blinders on here, Congress has ceded so much of their power to the presidency (or deferred to judges) that the debt thing is one of the few tools they still have.
No, he only wanted it suspended while he's in power, but not repealed. Then do the usual repugnican thing of spending like crazy on tax breaks for the rich and force cuts to public services when the dems are back in power.
only one party has actively caused the government to literally shut down over this instead of cooperating. guess which one.
but i agree, both parties are complicit to some degree. when i say conservatives, that includes the majority of the democratic party.
Step 1: Pass a budget
Step 2: Refuse to fund said budget
Step 3: ???
Step 4: Profit?
Step 3 is “successfully blame democrats for turmoil”
Step 3 includes the qons holding a gun to the head of the American people. Because only the Democrats care about any of that, the qons know this will work to get what they want.
On one hand, I would like the first thing Trump does when he gets back into office to be to default and lead America into years of economic downturn.
On the other hand, I don't want to live through YET another economic downturn.
On the practical side of things, their is enough Democrats and a handful of Republicans in the house and senate that will vote for anything that raises the debt limit to get it passed - the only barrier is scheduling a vote in the house. When democrats only will vote for a democratic speaker and republicans can only loose 3 votes off of a majority and recall with 1 vote, the needed vote to pass the house becomes 436-2.
Going backwards. House rules have been changed and it takes more than one member to bring a motion to Vacate.
Trump is today supporting Johnson so maybe he'll be reelected speaker.
I don't know what Democrats will do, but they won't open the debt limit to unlimit debt as Trump wants.
We’re going into an economic downturn regardless of who holds the political football
How so?
Just observations based on everyday life. I work in an industry that IMO acts as a canary in the coal mine for all sorts of broader societal issues. People aren’t spending money like they did even last year. And these are people with money.
I do wonder if we are not in a stock and crypto bubble right now, at least.
If donvict does end up taxing everyone via regressive taxes, I could see a gigantic pullback on consumer spending. I would not be surprised if donvict throws tantrums/makes threats (with his followers actually making them literal death threats) against the Fed until they lower rates so that another sugar high starts, at least for the "right" people.
Yeah idk. I work in tourism (skiing) that’s mainly for wealthy people who don’t blink at paying $8.50USD for a fucking Gatorade. That same Gatorade at the store would cost ~$2-3 as a single, or even less as part of a pack.
And yeah, it’s a captive audience like a baseball game, but even still, $8.50 for a fucking gatorade?! I think even the well off are tired of being fleeced.
Business is way down. Occupancy at my workplace is like 60% rn when it should be 90+ as all the school kids are out this week. The ski trails aren’t crowded, normally the beginner slopes are a zoo but it just looks like a mild Saturday rather than a holiday week. It’s unsettling since my job depends on tips if we don’t have business I don’t have $. Some of the pass products are blacked out for this week because of overcrowding but it doesn’t seem necessary.
I wonder if rich people are taking their money elsewhere (a ski vacation, with everything included even airfare, is way cheaper in Europe than the US without airfare and the quality is way better). Or if they’re nervous and just not spending it. Is it the administration change? Are they going to the beach instead? Idk. I’m nervous though. I have a lot of expenses coming up and I’m counting on my $ coming in after having a very difficult year in my personal life caring for a parent and taking a massive financial and mental health hit.
I wish this stupid farce could just be done away with entirely. It's just so stupid and just a mechanism for the qons to hold a gun to the head of the American people.
The Debt Limit is placed on the Treasury to allow them to pay for money already spent by the government. Essentially, it limits the amount of debt the Treasury can draw down on. Without it, the bills aren't paid.
The debt limit was an invention in WW2 to allow the executive branch to change spending priorities for the war without needing to push a new budget through Congress each time. The intent was to give the executive branch more flexibility, within limits, NOT to hold the entire government hostage.
The limit literally prevents US paying its debts, not enforce paying them.
Fact check : True
Without it, the bills aren’t paid.
How does limiting the amount of debts the Treasury can accrue on money already earmarked for spending pay anyone's bills?
Imagine your spouse hands you a grocery list, you fill up your shopping cart, run it through the cash register, and get a total of $100.
Then you pull out your credit card, only to discover your spouse has also limited how much you can spend to $70.
How are you helped by this system?
How does limiting the amount of debts the Treasury can accrue on money already earmarked for spending pay anyone's bills?
The simplest answer is to say that the money is earmarked for spending, but not payment. Think that Congress spends the money and Treasury pays for it. Some bills are due and payable this year, a year from now, 5 years from now, etc. Plus, income, or taxes raised, are also veriable.
In any case, the debt limit has to be raised in January and Trump is none too happy about it.
Why even have a debt limit to begin with? It's a wholely artificial constraint?
You've earmarked $100 for spending, you don't need a send legislative gate on the Treasury to spend it.
That's a good question. I suppose it has something to do with Congress neededing to pass a budget for each spending bill.
The Debt Ceiling isn't a budget, its a cap on borrowing. The only thing it constrains is the Treasury's authority to issue new outstanding treasury notes.
That's what makes it such a mess. This isn't Congress retroactively saying "Yes, I told you to buy items 1 thru 10, but if you run out of money drop them in reverse order." They're just saying "Hey, if it's over $70, just don't buy anything after all."
There needs to be a budget passed by Congress to allocate money to be spent. It hasn't been done in some time as Congress can only agree on continuous resolutions. The majority of the budget can't be changed, things like interest on debt, mandatory programs, etc. That's why Musk's BS is simply that.
Next is allocation, or spending. Congress has a pool of money for a division of the government through the budget and now allocates for a particular program or need. It then allocated this money and Treasury is given the responsibility to pay for it. When revenues don't match expenditure we borrow money from ourselves to take care of the shortfall.
There needs to be a budget passed by Congress to allocate money to be spent. It hasn’t been done in some time as Congress can only agree on continuous resolutions.
CRs simply adopt the budget of the prior Congress, adjusted by some inflation value designated in the CR. They are budgets in every way that matters.
The majority of the budget can’t be changed, things like interest on debt, mandatory programs, etc.
The majority of Congress can't agree on changes, so they adopt the last consensus in order to continue the operations of the federal bureaucracy. The budget can be changed with a majority vote in two chambers. These chambers refuse to find a consensus on what those changes should be.
Congress has a pool of money for a division of the government through the budget and now allocates for a particular program or need.
Congress has no limit on the amount of dollars it can spend, as the US Government originates its own currency. The only real limit on Congressional spending is the strength of the US dollar on the secondary exchange markets. And right now, the US Dollar is - if anything - too strong for its own good, encouraging an excess of cheap imports at the expense of domestic capital development.
When revenues don’t match expenditure we borrow money from ourselves
We don't "borrow money from ourselves". We issue debt that pays an interest rate over time to investors and they lend back cash that they aren't using. This recirculates the existing stock of cash without inflating the general supply of notes in circulation.
The Debt Ceiling limits how much new debt we can issue, which means driving down the interest rates on existing treasury notes and allowing existing cash stockpiles to languish.
If you knew all that, why would you question the need for a budget. Feel like I'm spinning wheels.
The Budget is the CR. I'm not questioning the need for it. I'm questioning the arbitrary limit on the payment scheme for money you've already allocated as needing to be spent.
A continuous resolution is for the budget, not the debt limit.
Its a holdover from when the executive branch made the budgets so that congress still had some control. Long ago congress took back doing the budget with the congressional budget office and the debt limit makes no sense now as congress votes on the budget and then later votes on allowing bills they authorized to be paid with debt because they did not raise taxes to cover budget costs.
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