United States Government Shutdown

[WinePusher]

1) Who is to blame for the government shutdown?

2) How should the government shutdown be resolved?

[Nickman]

For us non-americans this image is useful to understand what happened:

http://www.nytimes.com/interactive/2013 ... .html?_r=0

This is a nice article thanks for showing. I think if we go to the beginning we can see where the problem starts and by whom.

The Republicans wanted to defund the Affordable Care Act. They claimed that the Americans don't want it, yet they provided no figures to support such a claim. The truth is that big corporations don't want TACA. The politicians against TACA are receiving contributions to vote in favor of these large corporations. Corporations are currently seen as people in the American Government. Democrats are not willing to negotiate the TACA, because the bill has been voted on 40 times and everytime it has passed, plus, it is Obama's contribution to his administration, just like killing Osama Bin Laden.

[Nickman]

To add, this is analogous to a chess game. TACA is the king and the Dems are protecting it. They are giving up pawns, and an occaisional bishop, but unwilling to give sacrifice the king. The Reps are only after the king (TACA), but also willing to take away the queen (Medicare and/or Social Security).

[WinePusher]

For us non-americans this image is useful to understand what happened:

http://www.nytimes.com/interactive/2013 ... .html?_r=0

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

[nursebenjamin]

For us non-americans this image is useful to understand what happened:

http://www.nytimes.com/interactive/2013 ... .html?_r=0

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

The government would default if the debt ceiling wasn’t raised.

OK, perhaps default would not happen exactly on October 17. It is possible that the Treasury has enough “petty cash� laying around to pay obligations for another week. However, going past the October 17 deadline would cause creditors’ to lose faith that the U.S. Government would always pay its bills on time. This would most definitely cause interest rates on the national dept (and everything else) to increase, which would severely harm the nation’s economic recovery.

The debt ceiling represents debt: items already purchased but not yet paid for. You know things like: the wars in Iraq and Afghanistan; the Bush tax cuts for the rich; the trillion dollars giveaway to Big Pharm that was Bush’s Medicare Part D program.

My point of contention with this NY Times timeline is that it makes it appear as if the government shutdown was the result political breakdown occurring in late September. In reality, government shutdown and brinkmanship over the debt ceiling was planned by Republicans a half year ago.[1] Republicans, and their billionaire financial backers, have long wished to use the threat of a government shutdown or a default on our debts to extort concessions on Obamacare.

[micatala]

For us non-americans this image is useful to understand what happened:

http://www.nytimes.com/interactive/2013 ... .html?_r=0

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

I think the issue is how you define default. You are using the term in the very narrowest sense, to refer to defaulting on a debt obligation. However, the term can apply to other obligations as well.

Default: 1. failure to fulfill an obligation, esp. to repay a loan or appear in a court of law.

So, using your definition, you are right. Using the wider connotation you are wrong.

Now, I don't care about parsing definitions; to me the issue is the effect of either kind of default. I will grant you that defaulting on the debt would have more severe implications than not meeting other spending commitments. However, not meeting those other commitments, and pretending that as long as we pay our bond-holders we will be OK is not a tenable position. There will be severe and bad economic consequences. They may not be as bad as defaulting on the debt, but they would be bad. Whether you call it default or not will not really make those bad consequences any different.

[bluethread]

and crackers.

You're obviously right, but the country is going to go broke much sooner regardless of anything Congress or the President does.

Yes, we may just be rearranging the deckchairs on the Titanic so everyone is forced to purchase first class tickets. Those in steerage will of course get their tickets at little or no cost, while those in second class might get a discount. However, what good is it to have access to the first class dining room, when we are under water.

You are correct, we should be focused on plugging the leaks and bailing the ballast instead of arguing about how unfair it is that those in first class might get caviar, while those in steerage might have to get by with cheese and crackers.

[Darias]

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

Calling it a falsehood is a kind understatement at the very least. When the White House claims that there would have been a default... well it's political misinformation to put it mildly.

As for the numbers you're talking about, perhaps this can help illustrate your point?

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[nursebenjamin]

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

Calling it a falsehood is a kind understatement at the very least. When the White House claims that there would have been a default... well it's political misinformation to put it mildly. ...

The debt ceiling is not about occurring new debt. It is about paying bills already incurred. Some of those bills are interest payments on the national debt, but most “bills� are payment on non-debt obligations. All payments are spending already approved by both Houses of Congress.

When people talk about the U.S. government defaulting, they are not referring only to defaulting on debt obligations. They are talking about the U.S. government defaulting on any and all obligations. Default is defined as “the failure to make a payment when due.� If the debt ceiling is ever reached, then the U.S. Government would not be able to make all its payments on time. i.e. The government would default on its obligations.

[Nickman]

The New York Times article repeats the falsehood that the government would default if the debt ceiling wasn't raised. This is not true. Anybody who says otherwise simply hasn't looked at the numbers.

Calling it a falsehood is a kind understatement at the very least. When the White House claims that there would have been a default... well it's political misinformation to put it mildly. ...

The debt ceiling is not about occurring new debt. It is about paying bills already incurred. Some of those bills are interest payments on the national debt, but most “bills� are payment on non-debt obligations. All payments are spending already approved by both Houses of Congress.

When people talk about the U.S. government defaulting, they are not referring only to defaulting on debt obligations. They are talking about the U.S. government defaulting on any and all obligations. Default is defined as “the failure to make a payment when due.� If the debt ceiling is ever reached, then the U.S. Government would not be able to make all its payments on time. i.e. The government would default on its obligations.

The debt ceiling is synonymous to credit limit. Default is synonymous to spending more than the credit limit. Currently, the amount of money that the Government receives from taxes is less than the amount they budget for. They then have to borrow from the Fed Reserve to make ends meet. We have exceeded our credit limit and our credit is shot. We can only pay the interest, not the principle. As we pay the interest only, our principle continues to get larger. So does our interest because it is based on a percentage of our principle.

[WinePusher]

The government would default if the debt ceiling wasn’t raised.

No it wouldn't. The government takes in 2.3 trillion dollars of revenue every month, the debt payments the government has to make is only 420 billion every month. There is not reason why the government needs to raise the debt ceiling because the government has more than enough money to make its payments. If the government only took in 410 billion dollars then yes, the ceiling could be raised because the debt obligations would exceed the government's monthly revenue. But guess what, the government takes in 2.3 trillion, not 410 billion.

OK, perhaps default would not happen exactly on October 17. It is possible that the Treasury has enough “petty cash� laying around to pay obligations for another week. However, going past the October 17 deadline would cause creditors’ to lose faith that the U.S. Government would always pay its bills on time. This would most definitely cause interest rates on the national dept (and everything else) to increase, which would severely harm the nation’s economic recovery.

Interest rates are going to increase regardless. The only reason why interest rates are so low is because the federal reserve is using monetary policy to keep them low. Eventually, the federal reserve is going to be forced to stop it's quantitative easing policy and then interest will skyrocket.