Can someone please explain? - Debt Ceiling

[FJismyheadship]

Can someone please explain this debt raise thing to me please?

I made a remark to my dad about paying him back the money I owe him when I get my check on the first. He said that if they don't raise the debt limit, I might not get that check.

I didn't understand it, and didn't think to ask (really because I might wind up confused, especially with my know it all brother there to contradict everything). I've been trying to figure it out, but I need someone to explain it on terms I can understand... I usually dont pay much attention to politics, so please forgive me if I ask another question, or if it takes me a while to get it.

I guess what I want to know is what is this thing, and why would it affect my disability money?

[demgirl]

There are probably others who can explain it better, but I will try. Think of the government as spending money and putting everything they want to buy on a credit card. So one month you charge 10 billion dollars, right? But you have to pay the interest due on that credit card the next month, which is maybe 2 billion dollars. But then you also still have to spend 10 billion dollars again the next month. So you keep charging things, rather than paying cash, because not only do you have spend the 10 billion dollars you are committed to spending, but you also have to pay the interest due.

Okay, then Dad (Congress) comes along and takes away your credit card, but your expenses are the same. You owe your interest due on past credit card charges and you owe that 10 billion dollars. But all you have coming in, your income, is about 8 billion dollars. So you're about four billion dollars short but now that your credit card is gone, you can't charge that four billion dollars, so you have to decide what you're going to pay. If you don't pay the interest, the credit card company is going to tank your credit rating, which, as disasterous as that is for a person, is nuclear meltdown like for an entire country. So you have to take your 8 billion dollars in income and pay the 4 billion dollars you owe in interest, to save your credit rating. Then you only have 4 billion dollars left, and you have expenses of 10 billion dollars and so, some of your expenses have to go. Those expenses include agency funding and funding of things like social security, disability payments, veterans benefits, etc. Especially since a huge chunk of the 8 billion in income is pledged to two wars.

So that's essentially it -- if Congress doesn't raise the debt ceiling, the credit card is shut off. We have to live on what is coming in through taxes and other government money raising activities, which is far less than our expenses, not to mention how much less it is once you pay the interest due and owing from last month's charges, which HAS to be paid or else, essentially, America's economy collapses.

Does that help at all? It's super complicated... I don't totally understand it myself, but that's the basic idea. So then you have to figure out what has to be cut. And the first thing to be cut in these types of situations are social benefit programs. Which has the Tea Party licking its chops, but I digress...

[Beeks]

demgirl, thanks for that explanation. I don't fully understand the situation at ALL, but it sounds like raising the debt ceiling is a necessary short-term solution.

[PBrooke]

The other thing that makes this so frustrating is that there is NO reason not to raise the debt ceiling. We've incurred a ton of expenses what with the wars, etc; we need the leeway. Usually the debt ceiling is raised without complaint or even discussion, because it's so logical. The REAL argument is over the budget, whether to just cut or raise taxes or whatever else. And because some people in Congress don't like the current proposals, so rather than compromise they're just threatening to not allow the debt ceiling to be raised, if things aren't done their way - which in turn would royally screw the government, the country. It's like saying, I don't like the way this game is being played, so I'm going to take my ball and go home - only really in this case it's more akin to setting the whole ball court on fire.

[roddma]

I hope it doesnt effect unemployment. I guess the easiest way of putting it is they need their credit limit raised.

[FJismyheadship]

That makes a little bit more sense... thanks :) It does seem like thats what you would want to do.

I saw this one guy on tv saying that we should raise the debt ceiling, and then start budget cuts. It was a republican who was going to vote no, and then chanced his mind.

Also, I saw Ben Stein talking, but honestly I couldn't understand what he was trying to say.

[Alecto]

Slate Magazine has an excellent Debt Ceiling 101 page:

http://www.slate.com/id/2300080/

In spite of what everyone is saying, from everything I have read, we won't default. The most likely outcome will be an governmental shutdown so that that money can be diverted to pay our debts. Of course, the senate and house are exempt from such shutdowns... so they will still get paid.

[xDreamerx]

The thing that makes me so mad watching is that it's such a non issue. It's been raised multiple times since Truman by Democrats and Republicans alike. Even the beloved G.W. raised it (more than once). The Republicans are just dragging it out and making it into ridiculous theatre day after day. I don't understand it. It seems to me, they are doing it for one reason, to drag down Obama and make him a one term President. They don't seem to care what the effects are, as long as he fails. I don't know if there's a racist element, or if they genuinely view him as some "leftist extremist" or some other nonsense. Republicanism has been hijacked by Tea Partyers. They make Regan and hell even Nixon look like kitty cats.

[Alecto]

The Republicans have publicly admitted they are trying to force an "Obama Recession"

[xDreamerx]

Oh well that's just fucking great. They really annoy me. I mean, I would respect them if they could say "I don't like the way Obama does ____. I would do _____ instead". But none of them have real plans. If they could admit that Obama is a real American and a generally decent person, but that they disagree with him. I would be fine with that. But it seems like a vendetta, regardless of fact.

As a Canadian, I probably shouldn't care but if your economy tanks it won't be good for us either.

[latraviata]

Oh well that's just fucking great. They really annoy me. I mean, I would respect them if they could say "I don't like the way Obama does ____. I would do _____ instead". But none of them have real plans. If they could admit that Obama is a real American and a generally decent person, but that they disagree with him. I would be fine with that. But it seems like a vendetta, regardless of fact.

As a Canadian, I probably shouldn't care but if your economy tanks it won't be good for us either.

I don't know about Obama in his presidential capacity let alone his economic policy, but I have seen him in an interview with Saint Oprah last week, yes we are a bit behind in the Netherlands. I think he is a very decent, intelligent and civilised man and in Europe we were genuinely delighted when he got elected.

Never mind me.

[Deleted03]

Oh well that's just fucking great. They really annoy me. I mean, I would respect them if they could say "I don't like the way Obama does ____. I would do _____ instead". But none of them have real plans. If they could admit that Obama is a real American and a generally decent person, but that they disagree with him. I would be fine with that. But it seems like a vendetta, regardless of fact.

As a Canadian, I probably shouldn't care but if your economy tanks it won't be good for us either.

That's why I can't bear to hear comments from Republicans like oh seems like Obama is incompetent and all, since he can't get his thing past the congress.

If you're a republican and say that well I'm sorry but I'm gonna have a strong impulse to strangle you but I'll just become very frustrated and may leave one or two the nation magazine around, coz seriously you should start reading the articles rather than stopping at the titles... (wink wink roomate)

[notsocommon]

there is NO reason not to raise the debt ceiling

~~~~~~~~~~~~~~~~~~~~~

Of course there is! So the tea baggers can tank the economy- on purpose- then blame Obama for it all....and people will be stupid enough to buy it.

[Beeks]

I know we have some more conservative/republican posters here....is there anyone here who could give the argument for the other side (I mean somebody who actually believes in it)?

[xDreamerx]

I know we have some more conservative/republican posters here....is there anyone here who could give the argument for the other side (I mean somebody who actually believes in it)?

I would like to hear this too.

[nutella addict]

I'm not a republican, and I really hate what's going on in my home country right now, I think that the republicans are acting like bratty little kids who never learned how to share or compromise, and I definitely think they just want to make a mess to blame Obama for...

...however, my parents are (moderate) Republicans, because they're *just* above the income cut-off and they don't want their taxes raised. We are not remotely "rich" we just live in a high income/high cost of living area (thank you, east coast) and my dad has a great job. They don't want their taxes raised anymore because they know they're already paying more (a greater percentage) in taxes than everyone who makes less than they do. So I get that argument from them. The other part I hear from my parents is that if we tax the corporations too much, they won't be able to create jobs because of a lack of income, and also they may have to cut more jobs.

The problem with the Republican reasoning, which even my parents will admit to, is that not all of these people are "job-creators" - think of all the celebrities and their millions. And some of these "job-creators" are greedy bastards who just give themselves atrocious bonuses and buy private jets and islands and things. And the problem with the Democratic reasoning that ties into this is that there is a huge difference between someone who makes $200,000 a year and someone who makes millions or billions in a year, but that's just one tax bracket.

The Republican congress, as I understand it, wants to give these "job-creators" (aka, rich people) a tax-break right when we really need the money, and continue the Bush tax-breaks, and would rather blame the poor for being poor and insist that that's the risk of capitalism, and that social programs are socialist (which they view in a McCarthyist light) or some other equally stupid viewpoint. They're stubbornly sticking to party lines instead of using their brains.

The Democrats, on the other hand, want to raise taxes for the whole top bracket, and in some ways increase spending on social programs, which Republicans want to cut spending on.

Neither side seems particularly willing to compromise.

Disclaimer: Mind you, I've never had a politics course in my life, and a lot of it goes over my head too, but I do try to get everyone I know to explain stuff to me, I read up on everything online, and I listen to NPR when I can. This is how I see it, and if any of this is inaccurate please correct me, I'd like to know and learn this stuff better.

[lisespieces]

Hi! Republican here! :)

But I can't answer your question. Because while as much as I hate the idea of raising the debt limit, we need to. The only argument I can put forward is we need to cut back our spending and debt in the future (haha good luck with that) but at this point in time we can't let our government go bankrupt. Not only does our country depend on it, too much of the world's economy and affairs do also. Shit happens. And that's my take.

Please don't associate the tea party republicans with all of us. I do not care for Obama and his agenda but I do not hate him as a person or hope he falls flat on his face. It makes me sick to thick that some people want that. Right now he is running our country and the only thing I want to say at the end of his term is that I was wrong and he did do a good job. Those that hope he crashes and burns don't care about the country they just care about power and being right. Argh.

And now I retreat back into my corner. :)

[Alecto]

Let's not forget the GOP was (is? I haven't seen the latest draft fully) trying to force the repeal of the healthcare reform laws as a condition of raising the debt ceiling, in spite of the fact the reform would billions over a 10 year period.

I heard an economist speak last night on Coast to Coast AM, and while I didn't agree with all his ideas since he was a true free market libertarian, he made a very valid point - we didn't get ourselves into this mess overnight, and we won't get out of it overnight. We need to make small, consistent corrections over the next decade or even longer to not only preserve our economy, but also our quality of life as a nation while getting our debt under control. Did you know we actually have debt on the books from the 1790's? Granted, most of this extremely old debt is from unclaimed bonds, but the fact is we do have real debt on the books from 1920. It took us 100 years to get to where we are, and no one should expect us to get out immediately.

[gustava]

I certainly don't want them ebil dems to take away my tax credit for my personal, private jet.