Vote on Debt Limit increase?

[Riot]

Originally Posted by dellinger63

If the average tax-paying American family (not the 40% of households who pay no income tax) largest problem in the household was their budget; do they go out and seek more credit cards and financing or do they make do with what they have and try and get back on their feet?

That's not a very accurate analogy. A more accurate analogy goes to liquidity.

Our number one problem is the debt and now we NEED to increase it?

Yes, we NEED to increase our debt ceiling, or we will harm our rating for decades into the future, and likely force the world into a recession.

Not raising the debt ceiling - defaulting on our obligations - does nothing to change the amount of our debt - it only makes it far more expensive and harder to get in the future. It will hugely increase the cost of the debt we already owe. Yeah, that's smart?

[dellinger63]

Originally Posted by Riot

Not raising the debt ceiling does nothing to change the amount of our debt - it only makes it far more expensive and harder to get in the future.

Give me a break. We may need to put in a stipulation regarding unforeseen national defense or disasters but we don't need to raise the limit for more useless cash for clunker like programs. We need to trim down as a nation both in weight and debt. We need to accept the private sector and what it can do. No Federal worker should be mowing grass, cleaning toilets or anything else than can be contracted out at a lower price with no pension obligations. Look out for the taxpayer above the government worker. Start there and the rest will fall in place.

[Riot]

Originally Posted by dellinger63

Give me a break. We may need to put in a stipulation regarding unforeseen national defense or disasters but we don't need to raise the limit for more useless cash for clunker like programs. We need to trim down as a nation both in weight and debt. We need to accept the private sector and what it can do. No Federal worker should be mowing grass, cleaning toilets or anything else than can be contracted out at a lower price with no pension obligations. Look out for the taxpayer above the government worker. Start there and the rest will fall in place.

You clearly misunderstand what the debt ceiling is used for, and how it's used on a daily basis.

Yes, we need to markedly trim our expenses (getting rid of two unfunded wars, and finding a way to fund the unfunded huge Medicare giveaway is a start, and letting the Bush tax cuts expire will help immensely), and increase our income (taxes) to help pay for both our expenses and our debt.

That has nothing to do with the necessity to immediately raise the debt ceiling.

[Riot]

Here is a good Ezra Klein (Wash Post) article excerpt - from January - on voting no to raising the debt ceiling, and links to Tim Geithner's letter.

The letter Treasury Secretary Tim Geithner sent to Congress on the debt ceiling [ http://www.treasury.gov/connect/blog/Pages/letter.aspx ] is worth reading in full, as it does a nice job describing a danger that I'm not sure most people fully appreciate. My sense is that the mental model most people have of defaulting on the debt ceiling looks something like shutting down the government. But that's not it at all. It's more like shutting down the economy.

Think back to the financial crisis. The underlying cause was that various financial entities stopped believing that their loans would be repaid, and so they stopped making loans, or began demanding such high prices for making loans that credit became unaffordable. The result was economic catastrophe.

If the federal government defaults on its debt, the same thing will happen. But in this case, it will happen to the full faith and credit of the United States, not just to Wall Street.

The basic unit of borrowing in America is the debt that the Treasury sells to finance the government. Much of the rest of the debt in the country -- even when it has no direct connection to the government -- is benchmarked against Treasurys. Treasury debt normally goes for very good prices because it's considered a virtually riskless investment: Modern America has never defaulted on its debt. If that changes, then so too will the prices the market charges to loan the government money.

What happens then? As Geithner explains, "because Treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale."

And the damage done by a debt default won't be temporary. Instead, it will permanently introduce a new variable into the market's calculation of America's risk: Right now, the market doesn't believe that our political system would ever allow a debt default. The morning after a default happens, the market will have been proven wrong, and it will have been proven wrong permanently: If it can happen once, it can happen again in 20 years. In that world, the cheap debt that America enjoys and relies on is gone forever, and our economy is likely to be permanently worse off for it.

The good news is that many political players appreciate these dangers. Speaker John Boehner is trying to demand spending cuts as part of a deal, but he's been very careful to say that "America cannot default on its debt." Charles Krauthammer has been similarly declarative. “The Republicans have to be careful here," he told Fox News. "In the end the debt limit will be raised. You can't not pass it. It is catastrophic. It means American debt is in question. It can't happen.”

But these things can take on a life of their own. A revolt among backbench members of Congress killed the first iteration of TARP, which delivered a shock to the market that many economists think intensified the severity of the financial crisis. The immigration bill that George W. Bush sought was also killed by opposition that emerged from the grass-roots and talk radio even as the leaders of the two parties were pushing for a deal.

And you could imagine the same thing happening here: Sen. Jim DeMint, who's often ahead of the curve on where the conservative movement will go next, is fighting an increase in the debt limit, and targeting his message at the GOP's freshmen class. As of yet, we really don't know how much power Boehner has over his members, nor how willing he'll be to fight for things that are necessary for the government but unpopular among his base. So I'm not ready to relax about this yet.

[dellinger63]

We need to lower our debt period. To do so there is no need to raise the debt ceiling. Spending our way out of this got us nowhere but deeper. Time to button up the purse and track every nickel and dime. The party is over and the freeloaders need to go home.

And not speculation but we're already f'd and will suffer a hit on our credit rating. Question is whether it's better to have 1 trillion in debt at 10% or 3 trillion? We need to first turn the money faucet off and then figure out a payment plan for all the money that was allowed to leak out.

Interesting what the 'market' said today, "Gold futures rose to a record $1,500.50 an ounce as U.S. debt concerns weighed on the dollar, boosting demand for the precious metal as an alternative investment.

The greenback dropped against the euro on speculation that the European Central Bank will continue to raise borrowing costs as some nations struggle to contain sovereign debt. Standard & Poor’s yesterday revised its long-term outlook on U.S. debt to negative from stable. Gold has climbed 32 percent in the past year, and silver prices have more than doubled.

“The U.S. credit rating will undoubtedly be lowered in the next few years,” said Michael Pento, a senior economist at Euro Pacific Capital in New York. “This will mean much higher borrowing costs and a much lower currency. International investors have been using gold and silver as an alternative currency and an alternative to the dollar, and this will only exacerbate and accelerate that process.”