Topic: US with problems to raise the debt ceiling... again (Read 456 times)

^It is obvious that republicans are worse when it comes to deficit, they had the biggest increases during their time, each time they were in charge for the past 30+ years, they have always done worse financially, and the moment a democrat becomes a president they start to care about fiscal responsibility, this has been a tactic for over 4 decades now and never changed. However as democrat people (I am not from usa, but if I was I would be a progressive democrat) we have to realize that we are closer to middle more than we are to left.

It means that when you have people like Sinema who end up getting more donations from republicans than democrats, do we really call the senate as house majority for democrats? It is obvious that we still have 2 democrats with sinema and manchin who are republicans, they have a (D) side of their name, but they are obvious republicans.

Biden was literally asking for war just 20 years ago, he now bombed Syria I believe a few times (you can google where he bombed) and got out of Afghanistan as well with absolutely no change at all, 20 years, nearly 20 trillion dollars, over 3 billion dollars spent per day, and they got absolutely nothing to show for, the same people they fought against are now in charge once again, if nothing was changing then why did they even got in? All in all yes Republicans are worse if you ask me, but that doesn't mean democrats are good, it just beats they are less shit.

I wouldn't say every politician in every political party, but certainly the vast majority in the two major parties, yes.

And Obama had to deal with the largest financial crisis since the Great Depression, and Trump's deficit was growing exponentially long before COVID hit.

That will be the same Republican congress which voted unanimously against the 1993 budget reconciliation bill which was largely responsible for achieving a surplus?

As I said above, both sides have to take responsibility here, and efforts by some to try to pin all this on Biden or the Dems are hilariously wrong.

You can say that about every politician, and every political party.
There are obviously external circumstances that do not necessarily reflect if one party cares about the deficit more than the other party. A recession for example usually means it is appropriate to have temporarily increased deficits in order to attempt to overcome the recession and get the economy growing again. Similarly, the country being at war means that it must spend a lot more money on said war than it otherwise would. Reagan for example had to overcome the economic mess left by Carter and spent heavily to win the Cold War. HW Bush had to protect American interests in the Middle East. W Bush had the war on terror and the economic mess caused by 9/11. Trump had to deal with the economic mess left by Obama, and had to deal with Covid.

Clinton saw budget surpluses due to the Republican congress, and because demographics meant social security saw huge surpluses. Obama gave money to politically favored groups and made attempts to get people to rely on government welfare.

The uber-rich generally will not benefit from lower tax rates because they are able to delay realizing income, possibly forever. They can also more easily take advantage of tax loopholes that are more politically feasible to exist when there are higher tax breaks, and are politically easy to close when tax rates are lower.

No they aren't. They don't actually care about the debt ceiling or the deficit (which explains why the Republican presidents have racked up higher deficits and more debt over the past 40 years than Democratic presidents). They care about scoring political points and winning elections, that's all.

The uber rich are insulated from tax increases because of Trumps tax cuts, which overwhelmingly benefited the uber rich, and which will run until at least 2025.

By no means are the Dems blameless here, but painting this entirely as the fault of the Dems and suggesting the Republicans are the party of "fiscal responsibility" is incorrect at best and outright laughable at worst.

Another $5-$6 trillion to the US federal debt will destroy the economy in the long term. Republicans are worried about the default, but they should have been more aggressive. Anyway, the American people opted for this, when they gave the Democrats (+Murkowski) a majority in the senate. The uber rich will be insulated from any tax increase, as they have infinite number of loopholes available at their disposal. On the other hand, the middle class will witness the erosion in their wealth and a higher tax cut from their salaries.

Now Biden just wants to borrow trillions of dollars and then spend a large portion of that on the least productive sectors of the American economy. It's like putting all that money in a black hole. Unless Democrats come up with a more unbiased plan. I think this is going to be a dangerous event that has a dangerous impact on developing economies around the world that will also be affected if the US government doesn't act on interest rates that will boost confidence. This is what they did, which is taxing the rich people in their country and big companies.

Democrats have the ability to raise the debt ceiling via reconciliation with a simple majority vote. Senate rules limit the number of times reconciliation can be used, and Democrats want to use it for their $5.5 trillion spending bill. The senate rules can be changed with a majority vote, but doing so would be more difficult than getting the votes to vote for the crazy reconciliation bill currently being proposed. Raising the debt ceiling via reconciliation would also mean the bill would need to raise the ceiling to a certain limit rather than the debt incurred prior to a date, and would also mean that Republicans would be able to force Democrats to vote on amendments that take stances on things they don’t want to take stances on.

McConnell got the messaging wrong on the debt ceiling this time around. He has since made it clear that he will not deliver any votes to raise the debt ceiling in the future (he had trouble getting 10 votes to vote this time around). It is, or should be clear that Democrats need to raise the debt ceiling via reconciliation as a longer term solution.

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Once the US defaults on its debt, meaning it doesn’t pay interest and/or principal of treasury securities on time, it cannot be reversed. In theory, the treasury could issue securities late at night in order to pay for interest and principal of bonds it needs to redeem that day. So a “default” of 4 hours would not actually be a default.   

This is not unique to the US by any means.

Where did you read this? The Fed's balance sheet is continuing to increase at record pace.

The US government will never consider cryptocurrency as a viable option to replace fiat, pretty much ever. Everything they do regarding debt ceilings and printing more dollars and issuing fake credit would all be impossible with bitcoin. They are not about to give away the only thing that props the entire government up.

Debt held by foreign governments, businesses and investors accounts for only around 25% of the debt. The majority is held by various pension and mutual funds and by social security.

Such a decision is more like sabotage than a search for a solution to a difficult situation. Throwing money into ineffective areas is not a good idea, but to be honest, disgusting. It's like putting out a fire by throwing coal at it ...
Given the growing crisis in China, it would be more correct for the United States to think about transferring production from China to the United States. organization of workplaces, etc. Moreover, now, when there is an understanding that any crisis in China has an extremely negative impact on a large number of American companies. Well, for the growing confrontation between the United States and China, this will play into the hands of the United States, and a new problem for China

I do not know very well the economic policy of the USA, but from the little that I have heard they are having serious problems, I have read comments from people who affirm that 10 years ago with 100 USD you could buy many more things than now, and this is a total consequence of inflation, I have seen how some news indicates that the FED is unable to give more makeup to the country's accounts and they have also taken into account that the crypto economy is an option that if or if they should take it, all this speaks that it is a country that despite the fact that its main currency is the dollar and the dollar has a global hegemony, the debt is increasing, but as the USA also has debtors, when collecting from other countries, that internal debt is much easier to driving, until now is what I have interpreted from the USA, although I know that internally the problems have not diminished, quite the opposite.

It's pretty much no leverage at all. Each side is only interested in delaying while they can plausibly blame it on the other side. As long as the Dems can continue to blame the GOP for threatening to filibuster, then they will do so to score political points. As long as the GOP can continue to blame the Dems for not using budget reconciliation, then they will do so to score political points. The GOP say the Dems are reckless for spending trillions in these bills. The Dems say the GOP are reckless for spending trillions during Trump's presidency.

The media are as much to blame for this, instead of just reporting "Both sides as bad as each other".

Anyway, we've passed legislation to raise the ceiling by $480 billion, which will last us less than 2 months, thanks to 61-38 vote and 11 Republicans allowing it pass. So check back in again at the end of November, when we get to do all this nonsense again.

Seems like indeed, both bills come with nothing good for crypto in the current format.

Not even going to pretend I completely understand the taxation on the second, the construction sale rule, but for the wash sales rule I don't think the impact will be that big, I'm a bit surprised poeple quote it as something happening on a large scale. You need to sell now at a loss to offset future gains but in this crypto market, I see this strategy backfiring at you easily, one pump in the few seconds you need to sell and then rebuy and you've ended with a bigger loss than you could gain from tax avoidance, and even then future gains caused by a bull run might totally offset it.

Anyhow, even if it's a common strategy or not terminating the exemption isn't for sure a good thing, let's wait and see, I have a feeling they have a lot of stupid ideas on the sidelines, far worse.

As for the debt, is anyone genuinely surprised by what seems to be the outcome now?

I was hoping for some serious fireworks, but I expected that they'd reach some sort of deal before the deadline, and it looks like they will, at least for the next 2 months.

The game theory of the situation prohibits a default of more than a couple of weeks at the absolute most, and any default at all is always unlikely. If a default happened, very quickly the "bodies would start to pile up", so to speak, and the pressure would just continually build for the ceiling to be raised. Everybody would be running around with their hair on fire, with the temperature going up and up and the fire spreading more and more, and there'd really be no way to end it except for raising the debt ceiling. In this sort of situation, it's certain that either 10 Republicans would flip or all 50 Democrats would kill the filibuster: raising the ceiling is a foregone conclusion, one way or another. And everybody knows all of this, so the threat of default just isn't very good leverage.

Maybe McConnell would've allowed a default to last a few hours -- just long enough to create a loud but ultimately meaningless crisis and blame it on the Democrats --, but I actually think that he would've been the one to flinch first if the Democrats had been willing to call his bluff, and he wouldn't have allowed even a brief default. This being the case, it was skillful for him to get even the minor concessions he got.


They both have crypto-related stuff. The bipartisan bill adds ridiculous reporting requirements. The $3.5T bill isn't finalized yet, but last I heard it removes crypto's exemption from the wash sale and constructive sale rules, at least.

This is a right and a "feature" of the US budget - in fact, there is no limited opportunity to expand its "financial abyss" without harming its economy. Firstly, there is a need, and secondly, there is most likely an understanding of the global, systemic, and, which is very important, protracted crisis in China, which means the return of the "scales" of the US position in the world market, to its previous positions. You can count and shout for a long time about the US national debt, but the funny thing is that, in general, the US economy "contains" the whole world, and not the "culprits" of printing money ...

The ingredients in the big mac haven't changed in price that much compared to the final price tag, what has changed is the other costs involved and most importantly their share in the final price. I can tell you this from my actual experience when it comes to meat production, although the price of the food for the animals has constantly gone down, so has the mortality rate, their place has been taken by the number of permits and authorizations controls, inspections, and new regulations that come with a lot of costs, not going into details but when you're arriving at a point where vaccinations costs are 1/10 of the entertainment costs for piglets, somebody has to pay.

For any fast food business, the costs have shifted too, the actual costs of the fries and the mac are probably not even 20%, you need to pay workers, you need to have always full staff as a client will start yelling if he waits more than 30 seconds, you have to give far more importance to hygiene, to preparing food, to clean bathrooms and more important rent which back in the past didn't matter that much, now it's one of the main cause killing business after business.

Let's compare what was need to open a franchise and run a fast food in the '70s and what's required of you now.
Every single thing has changed its cost structure if we would still make everything as we did in the past we would be seeing totally different price to wage ratios.

A two party system has its own advantages and disadvantages. I would still say that multi-party democracy is much worse. On paper, they claim that it takes everyone in to account and is the most representative system. But look at countries like Israel and Germany. They have a proportional system in place and this means that it is extremely difficult for a single party to get outright majority (unlike those countries with the FPTP system). And as a result they have a ruling coalition comprised of extreme-right, right, center, left and extreme-left in Israel. I would be surprised if this coalition survives for even a single year.

But as you suggested, there is a way to challenge the two party system. The best example is Donald Trump winning the GOP primaries in 2016. He was a complete outsider and he defeated the establishment wing of the GOP.

That could be to do with the multiple parties, as you point out. If there are 20 different parties, and you find that the one you are in is making you vote for or against things you don't agree with, then surely you can just up and leave and join one of the multiple other parties which are more closely aligned with your views. In the US that can't happen. If you are not part of the Democratic or Republican party, then realistically you have almost no chance of being elected. If you disagree with the party leadership on an issue, then your only option is to fight against them, since you can't leave the party without "defecting" to the complete opposite side.

A piece of technology like a car or a phone where you are getting much more than you did 50 years ago, sure, but a Big Mac hasn't changed since the 70s. Actually, that's not quite true - it has got significantly smaller, despite the price continuing to increase.

The process is not different from what's happening here, trust me.
We also have amendments, which are added on the day of the vote and which are voted on the spot, it's not that different.

What I find really confusing is that most in European parties decided on a vote on pro or against and then the who party or alliance proceed to vote like that, exceptions are rare and usually in the 1-2%, but on how it's looking now the entire democratic party seems like being both rulings, opposition, minority, acting as a whole parliament on its own, fragmented as I've rarely seen in my life.
If we compare it with the Netherlands which has about 20 parties and has gone +200 days without a government yet the country's economy was still unaffected, what's happening right now in the US is not even a joke, right out depressing.


I'm willing to bet you can get those still cheaper than in the EU  , the exchange rate tells me 4.30$ for the only size that is deliverable.
But I've always argued that it's really not fair to compare things like this, the pressure from a higher population, higher demand for commercial space, increased minimum wages, increased taxes, and regulations are putting a lot of extra costs on some items.

Here is a good example why the numbers might not really show the full true picture, we have milk prices who are on a decline because there is nothing else to be added here, efficiency in production does its job and we have others where demand in housing is putting pressure on the market, you have 80 millions more poeple in 30 years, or with cars, you really can't compare a car from the 70 with nothing extra on it with all the tech even a 10k VW up or I10 has on it.
Not even mentioning oil, let's drop the consumption back to the '90s, where do you think the price would drop?

It's questionable, but there's also a reason the US does it. It's something that wouldn't work for any other country in the world, but the US might get away with it. The reason for that is that the dollar is very popular and always in demand, with the US is the #1 economy in the world. So they can borrow too much, but other countries won't pressure them to give away their debts. The can overprint fiat because people all over the world will still believe in the USD and this will protect it against hyperinflation. I think there's still a limit to all this, and if they're not careful (and they're clearly not over the last couple of years), it will backfire hard, but they can allow to do more than anyone else.

Yes,,, I have seen all the memes about Boomers who had jobs as waitress and station attendants able to buy nice houses and finish paying them off by the nineties.

It is completely the same here. You could work for the government on very low salary but you would own a house, car, even send kids to uni and finish paying everything off in 30 years and retire on good pension

Now, even with 40 year loans you would need 10% downpayment which is in any case 20 years salary to collect. I know only one or two people in my school who have houses and even that is far away from the city. Us we are all renting until we retire