McConnell Proposes giving authority to Obama

[stormwarden]

to raise the debt ceiling, but with a huge catch.

tpmdc.talkingpointsmemo.com/2011/07/the-big-blink-mcconnell-proposes-giving-obama-authority-to-raise-debt-limit-alone.php?ref=fpa

In a nutshell: He wants to give authority to raise the debt ceiling to Obama, but on the condition that he has to do a vote to raise it by increments, and that he has to put cuts in to get the vote.

Some say the GOP is giving up. I say they are trying to lay a political mine with this. Essentially, they want to use it to as an issue for 2012. Of course, if they fail to reach a compromise, everyone is screwed no matter what party they are in.

I am irritated that they are still trying to lay a political trap in spite of the implications. It is ridiculous that they fail to realize the elections will be the least of their worries if something isn't done.

[Vene]

At a glance, it appears as though they are starting to actually look at compromising. It's an... interesting deal. I'm not quite sure what to think of it yet.

I'd want to know how this works.

The plan would require Congress to pass a bill allowing Obama to raise the debt limit on his own, contingent on a series of steps: Obama would have to notify Congress of his intent tor raise the debt limit -- a high-sign to Congress that would be subject to an official censure known as a "resolution of disapproval," and which Obama could veto. If he vetoed the resolution, and if Congress sustained the veto, then Obama would also have to outline a series of hypothetical spending cuts he'd make, equal to the amount of new debt authority he'd give himself. Only then would the Treasury be allowed to issue new debt.

If Obama vetos the "resolution of disapproval" what would congress need to do to sustain it? Is it the 2/3 majority? I have a hard time believing the Republicans would accept that. Although, it would allow them to blame any problems with the economy directly on Obama if he does veto anything. And, as the article indicates, it keeps the political atmosphere focused on the debt. Right now, I don't feel like party games, I just want the country to function.

ETA: It is with the 2/3 majority, that is interesting. The GOP are playing games with Obama. Not unexpected, but this sounds like a punt.

[Dragon Zachski]

So, wait a minute. They hand debt ceiling raises to G.W. Bush on a silver platter, but are now stringent when it comes to Obama, making him leap through hoops like a show dog.

...Wait, why am I surprised again?

[Vene]

[kzn02]

Welp, that's just politics, whatever that is.

[sylvana]

I am not an economist, but isn't raising the debt ceiling a bad thing to do anyway? Does the American government really need more debt? I wonder what percentage of the total tax revenue goes to paying it off.

[Napoleon the Clown]

More debt is certainly not a good thing, but failing to raise the debt ceiling when you've reached it is... moronic at best. You wouldn't like the things a government that doesn't pay people for services and products would do elsewhere...

[ltfred]

Jul 13, 2011 1:22:21 GMT -5 sylvana said:

I am not an economist, but isn't raising the debt ceiling a bad thing to do anyway?

There is no way for the US government to immediately reduce the gross debt amount and make a real surplus that is so large as to reduce the deficit below inflation. In order not to meet the debt ceiling, this would have to be done, literally, this week. Something like 2 trillion dollars in tax increases would have to go through the partly Republican-controlled Congress, since there are no efficient spending cuts of that amount. Obviously, that can't happen.

Even if the government could achieve cuts or tax increases of that magnitude, there's no guarantee that the austerity wouldn't, firstly drag the economy into recession and, therefore, into a worse government finance situation. There's no evidence that austerity works even at reducing the deficit. We simply have to face it- the deficit is a long-term problem, and immediate solutions are not going to be enough.

The other two options are increasing the ceiling, or defaulting on the debt. Increasing the ceiling doesn't damage the government or the economy. Bush increased the debt ceiling six times without fuss or damage. But the US government defaulting on the debt is like refusing to pay every mortgage in the world all at once. The world's financial systems are based on US treasury bonds, which are regarded as the most reliable investment in the world. Not paying America's debtors would throw the world economy into chaos, force America to pay much higher interest on it's debt forevermore and for no good reason.

[/quote] I wonder what percentage of the total tax revenue goes to paying it off.[/quote]

9.5%. Not excessive. Sure, in the long-run the debt position is problematc. But, right now, the unemployment rate matters more.

[Haseen]

Jul 13, 2011 1:22:21 GMT -5 sylvana said:

I am not an economist, but isn't raising the debt ceiling a bad thing to do anyway? Does the American government really need more debt? I wonder what percentage of the total tax revenue goes to paying it off.

The way things work is that the debt goes up in a bad economy. This happens automatically, because less income means less tax revenue, and the government pays out more in benefits for the poor (because more people are poor). That stimulation brings the economy back much faster than if the budget stays balanced (which could only happen with massive cuts or tax increases).

All those things are paid off in a good economy, where the costs can be absorbed really easily. Or at least that's what's supposed to happen. Under W, the government ran a huge deficit when it should have still been paying off all the previous debt, so when the economy really *did* go bad, we were stuck with enough debt that deficit spending became a problem.

So both choices are shitty, but raising the debt limit is a necessary evil. Without it, the government would have to either default (hello, higher interest* on the debt!) or cut even more from the budget, and/or raise taxes(hello, full blown depression!).

*In this case, a higher % interest on the debt will mean it costs a lot more to service the debt than if we just raised the limit.

[the sandman]

LtF gave a better explanation that I could; he was spot-on. The real problem here is that we have a disturbing number of Republicans in Congress who are either A) massively inexperienced because they were swept into office by the rage-motivated "Tea Partiers," B) experienced but terrified of provoking the "Tea Partiers" back in their home disctricts, or C) both.

These people seem to be willing to drive the country off of a cliff to make an ideological point. They seem to think that it is better to risk the almost-certain collapse of the global financial networks, the destruction of US influence in global finances, and the disintegration of the US into a near post-WWI German level. To them that is better than compromising a "principle."

[Paradox]

Maybe if they keep playing chicken with the global bond markets people will realize that they don't actually give a shit about anyone who makes less than seven figures a year and stop voting for the bastards.

[Napoleon the Clown]

Jul 13, 2011 17:09:06 GMT -5 Paradox said:

Maybe if they keep playing chicken with the global bond markets people will realize that they don't actually give a shit about anyone who makes less than seven figures a year and stop voting for the bastards.

And maybe pigs will fly.

[Rat Of Steel]

Don't laugh too hard, Napoleon. After all, this year did see the release of Duke Nukem Forever.

[caseagainstfaith]

Jul 12, 2011 22:25:37 GMT -5 Vene said:

At a glance, it appears as though they are starting to actually look at compromising. It's an... interesting deal. I'm not quite sure what to think of it yet.

I'd want to know how this works.

The plan would require Congress to pass a bill allowing Obama to raise the debt limit on his own, contingent on a series of steps: Obama would have to notify Congress of his intent tor raise the debt limit -- a high-sign to Congress that would be subject to an official censure known as a "resolution of disapproval," and which Obama could veto. If he vetoed the resolution, and if Congress sustained the veto, then Obama would also have to outline a series of hypothetical spending cuts he'd make, equal to the amount of new debt authority he'd give himself. Only then would the Treasury be allowed to issue new debt.

If Obama vetos the "resolution of disapproval" what would congress need to do to sustain it? Is it the 2/3 majority? I have a hard time believing the Republicans would accept that. Although, it would allow them to blame any problems with the economy directly on Obama if he does veto anything. And, as the article indicates, it keeps the political atmosphere focused on the debt. Right now, I don't feel like party games, I just want the country to function.

ETA: It is with the 2/3 majority, that is interesting. The GOP are playing games with Obama. Not unexpected, but this sounds like a punt.

Not 100% true Vene. David Dayen has pointed out on the American Prospect website(prospect.org/cs/articles?article=and_for_his_next_trick), Democrats could conceivably finagle things such that nobody has to vote for it at all. “Under the right circumstances,” he writes, “Obama could let Congress go into recess while the resolution of disapproval is at his desk and not sign it, a maneuver known as a pocket veto. A pocket veto cannot be overridden.” Which is to say, there need be no vote, period. Which then would really screw over the GOP in the end.

[RavynousHunter]

Shooting themselves in the foot? That's out of character for the GOP.

*busts out laughing*

Sorry, couldn't keep a straight face on that one...