Post by the Scribe on Sept 29, 2021 13:20:28 GMT
Republicans want voters to blame the national debt on Joe Biden and the Democrats. The truth is they own it too.
www.yahoo.com/news/republicans-want-voters-blame-national-013924195.html
Charles Davis
Tue, September 28, 2021, 6:39 PM
Senate Minority Leader Mitch McConnell of Ky., center, accompanied by Senate Minority Whip Sen. John Thune of South Dakota, left, and Sen. John Barrasso, R-Wyo., speaks with reporters after a Republican caucus luncheon on Capitol Hill, Tuesday, June 8, 2021, in Washington. Alex Brandon/AP
In 2017, the US national debt surpassed $20 trillion for the first time.
Former President Donald Trump added about $7.8 trillion to the debt with spending and tax cuts.
The debt ceiling needs to be raised to cover past fiscal decisions.
See more stories on Insider's business page.
Not many people outside the Beltway truly understand what the US's debt ceiling is or how and when it needs to be raised. And Senate Republicans are banking on that.
Here's the link the GOP would like voters to make: that Congress is being asked to raise the debt ceiling - the legal limit on how much the US government can owe its creditors - because President Joe Biden and the Democrats want to spend $3.5 trillion on a plan to expand Medicare, eliminate tuition at community colleges, and provide universal childcare.
Senate Minority Leader Mitch McConnell has been explicit about this. He and his caucus have refused to support raising the debt ceiling at all, forcing Congress to miss a July 30 deadline, at the risk of a government shutdown and an economy-crashing default, insisting that Democrats do it alone as part of that multi-trillion spending plan.
www.businessinsider.com/janet-yellen-treasury-debt-ceiling-congress-republicans-extaordinary-measures-2021-8?utm_source=yahoo.com&utm_medium=referral
"Democrats won't get bipartisan help paving a path to partisan recklessness," the Republican from Kentucky posted on Twitter this week.
www.businessinsider.com/mcconnell-blocks-democrats-attempt-to-raise-debt-ceiling-2021-9?utm_source=yahoo.com&utm_medium=referral
It's not true, however, raising the debt ceiling relates to the US being able to borrow money to pay its current bills, not future debt. As Marketplace explains (emphasis ours), "The debt ceiling, or debt limit, is simply the amount of money that the government is allowed to borrow, which the government uses to meet existing obligations."
www.marketplace.org/2021/09/24/the-debt-ceiling-explained/
The Democrats' social welfare spending has not occurred yet; the legislation authorizing it has not passed Congress.
(Additionally, Democrats maintain that their spending proposal will not add to the national debt at all, arguing that it will be paid for over the next 10 years by increased taxes on corporations and Americans who make over $400,000. That may or may not prove true in the long run.)
The GOP's hope is that by linking the Democrats' future spending with raising the debt ceiling now - and relying on their branding as fiscal conservatives - they will be able to sell the debt they themselves incurred on partisan terms.
Leonard Burman, the co-founder of the Tax Policy Center, calls this "toddler fiscal policy."
"Legislators pass laws they know will increase the debt but postpone increasing the borrowing limit until the country is on the verge of a catastrophic default," he wrote in a recent commentary. And then the grandstanding begins, with raising the limit either a patriotic necessity or an undue burden on our grandchildren, depending on which party controls the White House and will bear the blame for any economic fallout.
www.taxpolicycenter.org/taxvox/congresss-debt-limit-problem-toddler-fiscal-policy
When Donald Trump was president, Republicans raised the debt ceiling multiple times. They had to: the debt ballooned under his watch just as it grew under his predecessors.
The national debt grew by some $1.2 trillion in Trump's first full fiscal year in office, according to the federal Office of Management and Budget. It grew $4.3 trillion in the next.
www.whitehouse.gov/omb/historical-tables/
All told, the debt expanded by nearly $7.8 trillion in the Trump years, as ProPublica reported, a product, in part, of emergency spending during the pandemic - money that kept the US economy from free-falling and, in more personal terms, kept people fed and in their homes. In fact, that spending spree nearly slashed the US poverty rate in half.
www.propublica.org/article/national-debt-trump
www.businessinsider.com/chart-us-government-pandemic-aid-cut-poverty-by-nearly-half-2021-7?utm_source=yahoo.com&utm_medium=referral
But the debt is also a product of Republicans' 2017 tax cut, which reduced federal revenues - corporate tax rates dropped from 35% to 21% - without a commensurate cut in federal spending.
Now that the bills are due, and the debt can be pinned on political opponents, the deficit matters, and Republicans are once again moralizing about fiscal responsibility. But don't be fooled: whether one supports corporate tax cuts or social spending or none of the above, the $28 trillion national debt is about as bipartisan as anythings gets in Washington.
Have a news tip? Email this reporter: cdavis@insider.com
Read the original article on Business Insider
www.businessinsider.com/debt-ceiling-gop-hopes-to-blame-democrats-for-bipartisan-spending-2021-9
visit site for hyperlinks:
The debt ceiling explained
www.marketplace.org/2021/09/24/the-debt-ceiling-explained/
Dylan Miettinen
Sep 24, 2021
Update: Sep. 28, 2021: On Tuesday, Treasury Secretary Janet Yellen told lawmakers in Congress that the U.S. government would run out of cash to pay its obligations by Oct. 18. Yellen told Congress in a letter that “it is uncertain whether we could continue to meet all the nation’s commitments after that date.”
Treasury Secretary Janet Yellen has issued warnings and the political drama on Capitol Hill is already unfolding. That’s right, it’s debt ceiling season.
If your eyes glazed over reading that, not to fear. Marketplace asked experts to break down what the debt ceiling is and why it does, in fact, matter to you.
So, what is the debt ceiling?
The debt ceiling, or debt limit, is simply the amount of money that the government is allowed to borrow, which the government uses to meet existing obligations — think things like military salaries, Social Security benefits, tax refunds or payments on national debts.
When the U.S. Treasury reaches the debt limit, then it has to start leveraging “extraordinary measures” to conserve money. Such measures can include suspending sales of securities and pausing investments or reinvestments in some funds.
“You could argue that the debt limit is a really misnamed piece of legislation because it is not a credit limit. It doesn’t control our debt, it controls paying the bills,” said Susan Irving, a senior adviser at the Government Accountability Office. “What creates that debt is a combination of law and the economy.”
What’s happening with the debt ceiling now?
On Sep. 21, the House of Representatives passed a bill along Democrat party lines that would extend existing spending levels through early December and suspend the debt ceiling through 2022.
Treasury bond yields are rising. Here’s what that tells us.
Climate change is going to make buying a home even more expensive
The bill, which also included disaster aid and funding for Afghan refugees, was blocked by Republicans. Now, to avoid a full-blown government shutdown, Democrats will have to scramble. An important note, however, is failure to raise or suspend the debt limit would not lead to a government shutdown. Shutdowns are caused by failures to fund the government.
What happens if we don’t raise the debt ceiling?
Defaulting on debts would be the name of the game. And the U.S. Treasury is inching closer to exhausting its “extraordinary measures,” meaning Congress has until the Oct. 18 deadline outlined by Yellen to raise or suspend the debt ceiling before the unthinkable becomes reality.
And if the U.S. defaulted on its debt, then what?
The four horsemen appear? Fire rains down? OK, it wouldn’t exactly be the end of the world. But it would hurt a lot of people financially.
The U.S. has never defaulted on its debt — at least not intentionally. There have been times where the government has waited until the last minute to raise or suspend its debt limit, then technical glitches caused bills to be paid late. Even those momentary blips required some time for full economic recovery, Irving said.
To default, however, would be “seriously damaging,” Irving said. The U.S. Treasury website prefers the term “catastrophic,” saying that if the U.S. did in fact default on its obligations, it would precipitate a financial crisis.
“In concrete terms, you could see the price or the valuation of U.S. Treasury debt going down, which is the same as saying interest rates are going to rise for U.S. government borrowing. What that’s going to do is it’s going to tend to blow up our deficit faster than it otherwise would,” said Menzie Chinn, a professor of public affairs and economics at the University of Wisconsin – Madison.
Its impact on everyday life would be felt immediately, Chinn said. For example, if the government is unable to pay its bills, that would mean it would be unable to make payments to those who work in the military, federal government workers or those who depend on Social Security. Food assistance benefits could be stopped for millions of Americans, too.
The phrase “financial armageddon” has been thrown around in this worst-case scenario. One recent study found that unemployment in the U.S. could skyrocket to nearly 9% (from the existing rate of 5.2%) with 6 million jobs potentially on the chopping block. In terms of household wealth, $15 trillion could be wiped out.
U.S. Treasury debt is also held by institutions around the world, meaning a default would have damaging international repercussions. The security of Treasury debt, typically seen as one of the safest assets in the world, would be called into question, Chinn said. A general sense of distrust could be tied to investments in anything American, so foreign investments in American companies could dip, too, as stocks tumble.
Why do we do it this way?
For the debt limit, we can thank the good ol’ U.S. Constitution, which gives Congress control of the purse.
Prior to 1917, Congress would approve every issuance of new bonds by the U.S. Treasury. Then, when attention shifted to the war effort during World War I, Congress did away with the old system of approval, instead opting to allow the Treasury to accrue debt and issue bonds as long as it fell under a certain amount — that is, the debt limit.
Another reason this system is in place? Appearances matter, Chinn said.
“I think it’s bad theater to say, ‘Hey, I want to have the ability to spend unlimited amounts.’ That doesn’t sound good to the general public. So there’s almost this false sense of fiscal discipline, saying, ‘Well, there’s this debt ceiling that we’ve got,’” he said.
Do other countries have something similar to a debt ceiling?
Call it the economic apple pie, the debt ceiling is pretty uniquely American.
“There is only one other developed country in the world with a nominal dollar debt limit. It is Denmark, and it’s set so high as to not be controlling,” Irving said. “There are countries that use debt as a control in advance, you know, debt breaks or things like that.”
So what is the magic number of the debt ceiling?
According to Irving, there’s no magic number or formula. “All we know is that you cannot forever go on having debt growing faster than the economy that supports it,” she said.
The current statutory debt limit sits at $28.5 trillion, per the Congressional Budget Office.
How many times has the debt ceiling been raised or suspended?
Many times. According to the Treasury’s website, “Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit” since 1960.
Why did the debt ceiling become so politicized?
Well … because it could be, Chinn said.
He added that, really, the debt limit is an odd thing to have in place. The Government Accountability Office has proposed several alternative ideas to rechoreographing the debt ceiling dance that would better couple debt ceiling decisions with decisions on revenue and spending — when those initial decisions are made.
But, there may not be political interests in getting rid of the debt ceiling debates, Chinn said, despite its very real impacts on everyday citizens.
“Whatever party’s got the upper hand in terms of legislation, the other party is going to have an interest in having the debt ceiling in place,” he said. “There’s always one side that’s got an interest in retaining the debt limit as a cudgel or a sort of lever because it would be nice to threaten to gum up things and get whatever compromises they can get.”
What’s the impact of waiting up until the very last minute?
A level of uncertainty, Chinn said. Raising the debt limit sooner rather than later is better.
“Once you make people a little bit worried about whether the U.S. government will pay interest on its debt on time, then they’ll demand a premium — a premium essentially means that interest rates will be higher than they otherwise would be — with that, the interest rate adds to your debt over time,” Chinn said. “So what it does is, paradoxically or ironically, depending on how you say it, you’re going to accumulate debt faster as a consequence of hitting the debt ceiling.”
So, ultimately, why should I care about the debt ceiling?
“I think you should care that your country pays its bills,” Irving said. Especially when those bills include salaries for federal workers and the military, food benefits and Social Security payments.
Plus, you know, after the year and a half we’ve had, the last thing we need is “catastrophic economic consequences.”
www.yahoo.com/news/republicans-want-voters-blame-national-013924195.html
Charles Davis
Tue, September 28, 2021, 6:39 PM
Senate Minority Leader Mitch McConnell of Ky., center, accompanied by Senate Minority Whip Sen. John Thune of South Dakota, left, and Sen. John Barrasso, R-Wyo., speaks with reporters after a Republican caucus luncheon on Capitol Hill, Tuesday, June 8, 2021, in Washington. Alex Brandon/AP
In 2017, the US national debt surpassed $20 trillion for the first time.
Former President Donald Trump added about $7.8 trillion to the debt with spending and tax cuts.
The debt ceiling needs to be raised to cover past fiscal decisions.
See more stories on Insider's business page.
Not many people outside the Beltway truly understand what the US's debt ceiling is or how and when it needs to be raised. And Senate Republicans are banking on that.
Here's the link the GOP would like voters to make: that Congress is being asked to raise the debt ceiling - the legal limit on how much the US government can owe its creditors - because President Joe Biden and the Democrats want to spend $3.5 trillion on a plan to expand Medicare, eliminate tuition at community colleges, and provide universal childcare.
Senate Minority Leader Mitch McConnell has been explicit about this. He and his caucus have refused to support raising the debt ceiling at all, forcing Congress to miss a July 30 deadline, at the risk of a government shutdown and an economy-crashing default, insisting that Democrats do it alone as part of that multi-trillion spending plan.
www.businessinsider.com/janet-yellen-treasury-debt-ceiling-congress-republicans-extaordinary-measures-2021-8?utm_source=yahoo.com&utm_medium=referral
"Democrats won't get bipartisan help paving a path to partisan recklessness," the Republican from Kentucky posted on Twitter this week.
www.businessinsider.com/mcconnell-blocks-democrats-attempt-to-raise-debt-ceiling-2021-9?utm_source=yahoo.com&utm_medium=referral
It's not true, however, raising the debt ceiling relates to the US being able to borrow money to pay its current bills, not future debt. As Marketplace explains (emphasis ours), "The debt ceiling, or debt limit, is simply the amount of money that the government is allowed to borrow, which the government uses to meet existing obligations."
www.marketplace.org/2021/09/24/the-debt-ceiling-explained/
The Democrats' social welfare spending has not occurred yet; the legislation authorizing it has not passed Congress.
(Additionally, Democrats maintain that their spending proposal will not add to the national debt at all, arguing that it will be paid for over the next 10 years by increased taxes on corporations and Americans who make over $400,000. That may or may not prove true in the long run.)
The GOP's hope is that by linking the Democrats' future spending with raising the debt ceiling now - and relying on their branding as fiscal conservatives - they will be able to sell the debt they themselves incurred on partisan terms.
Leonard Burman, the co-founder of the Tax Policy Center, calls this "toddler fiscal policy."
"Legislators pass laws they know will increase the debt but postpone increasing the borrowing limit until the country is on the verge of a catastrophic default," he wrote in a recent commentary. And then the grandstanding begins, with raising the limit either a patriotic necessity or an undue burden on our grandchildren, depending on which party controls the White House and will bear the blame for any economic fallout.
www.taxpolicycenter.org/taxvox/congresss-debt-limit-problem-toddler-fiscal-policy
When Donald Trump was president, Republicans raised the debt ceiling multiple times. They had to: the debt ballooned under his watch just as it grew under his predecessors.
The national debt grew by some $1.2 trillion in Trump's first full fiscal year in office, according to the federal Office of Management and Budget. It grew $4.3 trillion in the next.
www.whitehouse.gov/omb/historical-tables/
All told, the debt expanded by nearly $7.8 trillion in the Trump years, as ProPublica reported, a product, in part, of emergency spending during the pandemic - money that kept the US economy from free-falling and, in more personal terms, kept people fed and in their homes. In fact, that spending spree nearly slashed the US poverty rate in half.
www.propublica.org/article/national-debt-trump
www.businessinsider.com/chart-us-government-pandemic-aid-cut-poverty-by-nearly-half-2021-7?utm_source=yahoo.com&utm_medium=referral
But the debt is also a product of Republicans' 2017 tax cut, which reduced federal revenues - corporate tax rates dropped from 35% to 21% - without a commensurate cut in federal spending.
Now that the bills are due, and the debt can be pinned on political opponents, the deficit matters, and Republicans are once again moralizing about fiscal responsibility. But don't be fooled: whether one supports corporate tax cuts or social spending or none of the above, the $28 trillion national debt is about as bipartisan as anythings gets in Washington.
Have a news tip? Email this reporter: cdavis@insider.com
Read the original article on Business Insider
www.businessinsider.com/debt-ceiling-gop-hopes-to-blame-democrats-for-bipartisan-spending-2021-9
visit site for hyperlinks:
The debt ceiling explained
www.marketplace.org/2021/09/24/the-debt-ceiling-explained/
Dylan Miettinen
Sep 24, 2021
Update: Sep. 28, 2021: On Tuesday, Treasury Secretary Janet Yellen told lawmakers in Congress that the U.S. government would run out of cash to pay its obligations by Oct. 18. Yellen told Congress in a letter that “it is uncertain whether we could continue to meet all the nation’s commitments after that date.”
Treasury Secretary Janet Yellen has issued warnings and the political drama on Capitol Hill is already unfolding. That’s right, it’s debt ceiling season.
If your eyes glazed over reading that, not to fear. Marketplace asked experts to break down what the debt ceiling is and why it does, in fact, matter to you.
So, what is the debt ceiling?
The debt ceiling, or debt limit, is simply the amount of money that the government is allowed to borrow, which the government uses to meet existing obligations — think things like military salaries, Social Security benefits, tax refunds or payments on national debts.
When the U.S. Treasury reaches the debt limit, then it has to start leveraging “extraordinary measures” to conserve money. Such measures can include suspending sales of securities and pausing investments or reinvestments in some funds.
“You could argue that the debt limit is a really misnamed piece of legislation because it is not a credit limit. It doesn’t control our debt, it controls paying the bills,” said Susan Irving, a senior adviser at the Government Accountability Office. “What creates that debt is a combination of law and the economy.”
What’s happening with the debt ceiling now?
On Sep. 21, the House of Representatives passed a bill along Democrat party lines that would extend existing spending levels through early December and suspend the debt ceiling through 2022.
Treasury bond yields are rising. Here’s what that tells us.
Climate change is going to make buying a home even more expensive
The bill, which also included disaster aid and funding for Afghan refugees, was blocked by Republicans. Now, to avoid a full-blown government shutdown, Democrats will have to scramble. An important note, however, is failure to raise or suspend the debt limit would not lead to a government shutdown. Shutdowns are caused by failures to fund the government.
What happens if we don’t raise the debt ceiling?
Defaulting on debts would be the name of the game. And the U.S. Treasury is inching closer to exhausting its “extraordinary measures,” meaning Congress has until the Oct. 18 deadline outlined by Yellen to raise or suspend the debt ceiling before the unthinkable becomes reality.
And if the U.S. defaulted on its debt, then what?
The four horsemen appear? Fire rains down? OK, it wouldn’t exactly be the end of the world. But it would hurt a lot of people financially.
The U.S. has never defaulted on its debt — at least not intentionally. There have been times where the government has waited until the last minute to raise or suspend its debt limit, then technical glitches caused bills to be paid late. Even those momentary blips required some time for full economic recovery, Irving said.
To default, however, would be “seriously damaging,” Irving said. The U.S. Treasury website prefers the term “catastrophic,” saying that if the U.S. did in fact default on its obligations, it would precipitate a financial crisis.
“In concrete terms, you could see the price or the valuation of U.S. Treasury debt going down, which is the same as saying interest rates are going to rise for U.S. government borrowing. What that’s going to do is it’s going to tend to blow up our deficit faster than it otherwise would,” said Menzie Chinn, a professor of public affairs and economics at the University of Wisconsin – Madison.
Its impact on everyday life would be felt immediately, Chinn said. For example, if the government is unable to pay its bills, that would mean it would be unable to make payments to those who work in the military, federal government workers or those who depend on Social Security. Food assistance benefits could be stopped for millions of Americans, too.
The phrase “financial armageddon” has been thrown around in this worst-case scenario. One recent study found that unemployment in the U.S. could skyrocket to nearly 9% (from the existing rate of 5.2%) with 6 million jobs potentially on the chopping block. In terms of household wealth, $15 trillion could be wiped out.
U.S. Treasury debt is also held by institutions around the world, meaning a default would have damaging international repercussions. The security of Treasury debt, typically seen as one of the safest assets in the world, would be called into question, Chinn said. A general sense of distrust could be tied to investments in anything American, so foreign investments in American companies could dip, too, as stocks tumble.
Why do we do it this way?
For the debt limit, we can thank the good ol’ U.S. Constitution, which gives Congress control of the purse.
Prior to 1917, Congress would approve every issuance of new bonds by the U.S. Treasury. Then, when attention shifted to the war effort during World War I, Congress did away with the old system of approval, instead opting to allow the Treasury to accrue debt and issue bonds as long as it fell under a certain amount — that is, the debt limit.
Another reason this system is in place? Appearances matter, Chinn said.
“I think it’s bad theater to say, ‘Hey, I want to have the ability to spend unlimited amounts.’ That doesn’t sound good to the general public. So there’s almost this false sense of fiscal discipline, saying, ‘Well, there’s this debt ceiling that we’ve got,’” he said.
Do other countries have something similar to a debt ceiling?
Call it the economic apple pie, the debt ceiling is pretty uniquely American.
“There is only one other developed country in the world with a nominal dollar debt limit. It is Denmark, and it’s set so high as to not be controlling,” Irving said. “There are countries that use debt as a control in advance, you know, debt breaks or things like that.”
So what is the magic number of the debt ceiling?
According to Irving, there’s no magic number or formula. “All we know is that you cannot forever go on having debt growing faster than the economy that supports it,” she said.
The current statutory debt limit sits at $28.5 trillion, per the Congressional Budget Office.
How many times has the debt ceiling been raised or suspended?
Many times. According to the Treasury’s website, “Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit” since 1960.
Why did the debt ceiling become so politicized?
Well … because it could be, Chinn said.
He added that, really, the debt limit is an odd thing to have in place. The Government Accountability Office has proposed several alternative ideas to rechoreographing the debt ceiling dance that would better couple debt ceiling decisions with decisions on revenue and spending — when those initial decisions are made.
But, there may not be political interests in getting rid of the debt ceiling debates, Chinn said, despite its very real impacts on everyday citizens.
“Whatever party’s got the upper hand in terms of legislation, the other party is going to have an interest in having the debt ceiling in place,” he said. “There’s always one side that’s got an interest in retaining the debt limit as a cudgel or a sort of lever because it would be nice to threaten to gum up things and get whatever compromises they can get.”
What’s the impact of waiting up until the very last minute?
A level of uncertainty, Chinn said. Raising the debt limit sooner rather than later is better.
“Once you make people a little bit worried about whether the U.S. government will pay interest on its debt on time, then they’ll demand a premium — a premium essentially means that interest rates will be higher than they otherwise would be — with that, the interest rate adds to your debt over time,” Chinn said. “So what it does is, paradoxically or ironically, depending on how you say it, you’re going to accumulate debt faster as a consequence of hitting the debt ceiling.”
So, ultimately, why should I care about the debt ceiling?
“I think you should care that your country pays its bills,” Irving said. Especially when those bills include salaries for federal workers and the military, food benefits and Social Security payments.
Plus, you know, after the year and a half we’ve had, the last thing we need is “catastrophic economic consequences.”