[Jasonstawnosaa]

http://www.washingtonpost.com/busine...y.html?hpid=z1

Obama-Boehner talks collapse, House Republicans say


By Paul Kane, Lori Montgomery and William Branigin, Updated: Friday, July 22, 6:00 PM


Debt-reduction negotiations between President Obama and House Speaker John A. Boehner collapsed Friday, derailing an effort to reach a landmark agreement to cut spending, overhaul the tax code and avert a government default, according to senior House Republican aides.


House leaders are now working with Senate leaders to craft an alternative plan to raise the federal debt limit, but so far they have not reached agreement on a way to meet an Aug. 2 deadline and avert a potentially major fiscal crisis.


Boehner (R-Ohio), who had been negotiating a $3 trillion deficit-reduction deal with Obama, planned to notify his Republican Conference of the development in a letter Friday night.


Word of the collapse of the talks came hours after Obama publicly reiterated his insistence that any broad deficit-reduction plan must include new tax revenue in addition to large spending cuts. Earlier Friday, the Senate rejected a bill from the Republican-controlled House that would have required a balanced-budget amendment and massive cuts, but no tax hikes.


The Senate also set aside immediate plans to consider a bipartisan measure to raise the federal debt limit and avert a government default, leaving it to the House to approve such a plan first. The moves were made in the hope that the House can pass the so-called “grand bargain” to reduce the deficit and raise the debt ceiling next week.


Speaking at a town hall meeting at the University of Maryland in College Park, Obama told a largely supportive audience, “We can’t just close our deficit with spending cuts alone.” That would mean senior citizens would have to “pay a lot more for Medicare,” students would have trouble getting education loans, job training programs would be trimmed and there were be “devastating cuts” in medical and clean-energy research, he said.


“If we only did it with cuts, if we did not get any revenue to help close this gap . . . then a lot of ordinary people would be hurt, and the country as a whole would be hurt,” Obama said. “And that doesn’t make any sense. It’s not fair. And that’s why I’ve said, if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well.”


Obama spoke a day after his talks with Boehner on a far-reaching deficit-reduction plan ran into a revolt from Democrats furious that the accord appeared to include no immediate provision to raise taxes.


With 11 days left until the Treasury begins to run short of cash, Obama and Boehner were still pursuing the most ambitious plan to restrain the national debt in at least 20 years. Talks focused on sharp cuts in agency spending and politically painful changes to cherished health and retirement programs aimed at saving roughly $3 trillion over the next decade.


But in his remarks Friday, Obama appeared to stick to his insistence that any large deficit-reduction deal include increased tax revenue. He provided no details of his talks with Boehner and made no mention of Democratic lawmakers’ objections to what they were told was a plan to postpone rewriting the tax code.


“This idea of balance, this idea of shared sacrifice, of a deficit plan that includes tough spending cuts but also includes tax reform that raises more revenue, this isn’t just my position,” he said. “This isn’t just a Democratic position. This isn’t some wild-eyed socialist position.” Rather, it argued, it is a position taken in the past by presidents from both parties who have signed major deficit-reduction deals.


“So we can pass a balanced plan like this,” Obama said. “The only people we have left to convince are some folks in the House of Representatives. We’re going to keep working on that.”


Obama also spoke forcefully about the need to raise the $14.3 trillion debt ceiling in the coming days.


“The one thing we cannot do is decide that we are not going to pay the bills that previous Congresses have already racked up,” he said. “The United States of America doesn’t run out without paying the tab. We pay our bills. We meet our obligations. We have never defaulted on our debt. We’re not going to do it now.”


After a 51-46 vote in the Senate against the House act to mandate balanced budgets, Majority Leader Harry M. Reid (D-Nev.) told his colleagues that the “Senate will wait anxiously” as the president and speaker continue their bargaining .


Boehner has told Reid and his own House colleagues that, if that deal comes together, the House must pass it by Wednesday to leave enough time to approve the comprehensive measure in the Senate, where parliamentary hurdles could drag out the process perilously close to the Aug. 2 deadline.


The Obama-Boehner plan is far more sweeping than the backup plan that Reid and Senate Minority Leader Mitch McConnell (R-Ky.) had been drafting, and its potential sweep has frayed nerves among both liberals and conservatives.


Lawmakers on both sides of the aisle say they are anxious to see the final framework and its impact on tax rates and cuts to popular entitlement programs. Reid, who was briefed by Obama Thursday night, along with other Democratic leaders, did not publicly endorse the emerging plan Friday morning.


“A lot of what’s going on, we don’t know,” he said in a speech on the Senate floor. “I wish them well.”


The deal that Obama and Boehner are trying to forge does not include specific tax increases as part of legislation to lift the debt limit, Democratic lawmakers said. Instead, savings would be generated through an overhaul of the tax code that would lower personal and corporate income tax rates while eliminating or reducing an array of popular tax breaks, such as the deduction for home mortgage interest. The tax rewrite would be postponed until next year.


Democrats reacted with outrage as word of that framework filtered to Capitol Hill Thursday, saying the emerging agreement appeared to violate their pledge not to cut Social Security and Medicare benefits as well as Obama’s promise not to make deep cuts in programs for the poor without extracting some tax concessions from the rich.


When “we heard these reports of these mega-trillion-dollar cuts with no revenues, it was like Mount Vesuvius. . . . Many of us were volcanic,” said Sen. Barbara A. Mikulski (D-Md.).


White House budget director Jacob J. Lew denied that a deal without taxes was in the works. “We’ve been clear revenues have to be part of any agreement,” he told reporters.


After a lunchtime meeting between Lew and Senate Democrats, Reid made no attempt to hide his anger, telling reporters that his caucus would oppose the “potential agreement” because it appeared to include no clear guarantee of increased revenue.


“The president always talked about balance, that there had to be some fairness in this, that this can’t be all cuts. There has to be a balance. There has to be some revenue and cuts. My caucus agrees with that,” Reid said. “I hope that the president sticks with that. I’m confident that he will.”


Congressional and administration officials said the White House informed Democratic leaders about the talks after Obama met privately with Boehner and House Majority Leader Eric Cantor (R-Va.) late Wednesday. Congressional aides, speaking on the condition of anonymity to detail private discussions, said the White House acknowledged that the emerging agreement is “to the right of the Gang of Six” — a bipartisan Senate debt-reduction framework unveiled this week — and far removed from what Democrats have said would be acceptable.


The White House is seeking a trigger that would allow the Bush-era tax cuts to expire for the nation’s wealthiest households. Boehner has proposed repealing provisions of Obama’s health care law, including the requirement that all individuals purchase health insurance after 2014.


Obama summoned top Democratic leaders in both the House and the Senate back to the White House later Thursday for further discussions.


While Senate Democrats fumed, other Democratic officials familiar with the administration’s approach to the talks said the goal is still to reduce the debt in a balanced way that tackles both the tax code and rising entitlement spending. While the two sides are nowhere near an agreement, the officials said, they are focused on a two-part package. The first measure would raise the debt limit through 2013 and specify cuts to domestic agencies, including the Pentagon, over the next decade.


If both sides agree, that measure could also include some tax and entitlement changes, such as ending breaks for corporate jets, raising the Medicare eligibility age or changing the measure of inflation used to adjust Social Security benefits. However, the largest tax and entitlement changes are likely to be left until next year, the officials said, when policymakers will have more time to weigh the effects on taxpayers, program beneficiaries and the economy.


The officials said the toughest part of the negotiations has been finding common ground on the magnitude of those changes and the shape of a mechanism that would automatically cut spending or raise taxes if Congress fails to follow through. In any case, the officials said, no taxes would go up and no entitlement changes would take effect until at least 2013.


Before leaving for the White House on Thursday, Reid cut short debate on the GOP bill that would impose federal spending caps and send a constitutional amendment requiring balanced budgets to the states for ratification. Reid had considered extending debate into the weekend, but instead he angrily declared it was “perhaps some of the worst legislation in the history of the country” and set the final vote for Friday.


If the Obama-Boehner deal comes together, House Republicans would move the legislation first in their chamber, perhaps later next week, according to a senior Senate GOP aide. This move would short-circuit a previous effort by Reid and Senate Minority Leader Mitch McConnell (R-Ky.), who have been crafting a backup plan that would allow Obama to increase the federal debt limit himself unless a two-thirds majority in Congress objected.


Policymakers are racing to forge agreement on a plan to stabilize the soaring national debt before Aug. 2, when the Treasury will be unable to pay the nation’s bills without additional borrowing authority. Lawmakers in both parties are reluctant to raise the $14.3 trillion debt limit without a clear plan for restraining future borrowing. But they are running out of time to strike such a deal, draft legislation, submit it to congressional budget analysts and win the votes needed to push it through Congress.


Despite the loudly ticking clock, Obama and Boehner are trying to revive the “grand bargain” that eluded them earlier this month. Then it was Republicans, including Cantor and other conservatives, who raised objections, saying they were unwilling to trade tax increases of as much as $1 trillion over the next decade for deep spending cuts and significant changes to Social Security and Medicare.


Since then, with polls showing increasing public annoyance with GOP intransigence, Cantor has signaled that his views on a grand bargain are in flux. So Boehner restarted talks with the White House. The White House, in turn, according to congressional sources, dropped its demand for a big upfront concession from Republicans: an agreement to immediately extend tax cuts enacted under President George W. Bush for middle-class households, leaving cuts benefiting the wealthiest households to expire on schedule next year.


Democrats said this element of the deal would have given them leverage against Republicans to force a rewrite of the tax code that raises revenue. Republican leaders are insistent on extending tax cuts for the highest earners, including many entrepreneurs and business owners. If that part of the bargain were taken off the table, the aides said, Democrats see no guarantee that Republicans would actually agree to an overhaul of the tax code that raises revenue.


Democratic Senate leaders warned the Republican-controlled House, meanwhile, that time is running out for a comprehensive deal that would include raising the federal debt limit. They urged the House to remain in session and to ignore “extreme right-wing ideologues” who reject compromise.


Reid said Friday that because of “changed circumstances,” as well as the constitutional requirement for revenue bills to originate in the House, he was dropping his call for the Senate to remain in session this weekend.






Staff writer Felicia Sonmez contributed to this report.

[spoddersedpn]

Congressional leaders work to avert default
Boehner, McConnell say they'll work over the weekend on plan to raise borrowing limit and cut spending.

msnbc.com staff and news service reports msnbc.com staff and news service reports
updated 29 minutes ago 2011-07-23T23:17:27


Jewel Samad / AFP - Getty Images President Obama chats with House Speaker John Boehner before a meeting in the Cabinet Room at the White House on Saturday, as the two tried to revive talks over the government's debt limit.


Congressional leaders were working over the weekend to design new legislation to head off a government default.
House Speaker John Boehner told House Republicans in a conference call after meeting with President Barack Obama Saturday that he hoped to be able to announce a "viable framework for progress" by 4 p.m. EDT on Sunday, before Asian financial markets open, two participants told the Associated Press.
The goal is to produce at least a framework agreement to raise the nation's debt limit by Monday, congressional officials said. Even that would allow scarcely enough time for the House and Senate to clear legislation in time for Obama's signature by the Aug. 2 deadline, a week from Tuesday.
Inconclusive meeting Saturday
Obama conferred at the White House for about an hour Saturday with congressional leaders in an attempt to revive negotiations over raising the debt ceiling, but no news of progress emerged from that meeting.The Obama-Boehner negotiations had ended abruptly Friday when the House speaker decided there was no prospect of success.
Financial markets could react nervously to the potential that no accord might be reached by the time the government reaches the debt limit on Aug. 2 and is unable to borrow more money to finance its debt.
While warning of the gravity of the situation, Obama said Friday night, "I remain confident that we will get an extension of the debt limit and we will not default."
In his press conference Friday night, frustration was evident in Obama’s voice as he said, “I’ve been left at the altar now a couple of times” in what he described as "very intense negotiations" with Boehner.
“I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything? Can they say yes to anything?”
Referring to congressional leaders, he said, “We have run out of time and they are going to have to explain to me how it is that we are going to avoid default.”
Obama's only bottom line
Obama said his only requirement for an agreement was legislation that provides the Treasury enough borrowing authority to tide the government over through the 2012 election. Boehner said he had little interest in a short-term extension either.
Obama said Friday night that he'd offered Boehner was “over a trillion dollars in cuts to discretionary spending, both domestic and defense. We then offered an additional $650 billion in cuts to entitlement programs — Medicare, Medicaid, Social Security.”
He did not specify a time period for the cuts, but presumably he meant over the usual ten-year budget forecasting period. Cuts of $650 billion in Medicare, Medicaid, and Social Security outlays would amount to roughly a three percent reduction in the ten-year cumulative spending of those programs.
He said he also asked for new tax revenues, but less than the $1 trillion that the bipartisan “Gang of Six” senators were seeking in their proposal released Tuesday.
If his proposal was unbalanced, Obama said, “It was unbalanced in the direction of not enough revenue.”
Boehner gives his side of the story
But in his version of events, Boehner Friday night blamed Obama for insisting that $400 billion more in new taxes must be raised as part of any agreement.
"It's the president who walked away from his agreement and demanded more money at the last minute," Boehner said. "And the only way to get that extra revenue was to raise taxes."
He said, “We had an agreement on a revenue number — a revenue number that we thought we could reach based on a flatter tax code with lower rates and a broader base that would produce more economic growth, more employees and more taxpayers, and a tax system that was more efficient” in collecting taxes.
Boehner said, “A deal was never reached, and was never really close.” He said he’d decided “to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward.”
Where some agreement was reached
Still, aides on both sides said agreement had been reached on two highly controversial changes.
One would raise the age of eligibility of Medicare gradually from 65 to 67 for future beneficiaries, while the other would slow the increase in cost-of-living raises in Social Security checks.
Additionally, aides said the two sides were not able to bridge their differences over the triggers designed to force Congress to enact both tax reform and cuts to Medicare and other benefit programs by early next year. Both sides also were apart on the size of cuts for Medicaid, the health care program for poor and disabled Americans.
Publicly held debt is now at its highest level than at any time in American history other than the period after World War II when the costs of the war were being paid off.
In a report last month, the Congressional Budget Office said publicly held debt “is expected to equal roughly 70 percent of the economy’s annual output, or gross domestic product (GDP), at the end of this fiscal year, up from 40 percent at the end of 2008.”
It said "that sharp deterioration in the fiscal situation" was caused by "an imbalance between spending and revenues that predated the 2007–2009 recession and turmoil in financial markets," a drop in tax revenues caused by workers losing their jobs or suffering pay cuts, and an increase in spending on Medicaid and other benefit programs caused by the recession, as well as by the costs of policies, such the $830 billion stimulus , enacted in response to the recession.

http://www.msnbc.msn.com/id/43864749...ill/?GT1=43001

[Loolasant]

Some consequences of not raising the debt ceiling:

Six consequences of not raising the debt ceilingNational Journal May 27, 2011

Treasury Secretary Timothy Geithner announced on May 16 that the federal government had reached its borrowing limit. With the $14,294,000,000,000 cap on debt imposed by Congress firmly in place, the Treasury began a series of "extraordinary" measures designed to stave off a potential government default until August 2.
If Congress fails to raise the debt limit by August 2, the Treasury has only two options: It can default on its debt - meaning, stop paying its creditors around the world - or continue to pay creditors but halt any other federal spending above what the government collects in taxes. In effect, that would mean an overnight spending cut of about 40 percent.
Here are six consequences if the Treasury is forced to choose one of those options:

1. Cut $125 Billion Per Month - Right now, the federal government must borrow an additional $125 billion each month to finance all of its commitments. If the Treasury chooses to continue to pay creditors but stop all other federal spending, the government will have to begin reducing its spending by $125 billion every 30 days--mmediately. These cuts could affect everything from NASA and the FBI to congressional salaries and White House operating expenses.
2. Treasury Bonds Collapse - If the government defaults on its debt, economists say that prices for Treasury bonds would collapse and interest rates would probably soar to record highs. The centrist Democratic think tank Third Way estimates that the bond rate increases alone would eliminate nearly 650,000 jobs in the United States.
3. Cut Medicare and Social Security - To reduce spending by $125 billion a month, the government would have to make deep cuts to the two giant entitlement programs for the elderly, Medicare and Social Security.
4. Stock Market Plunge - Wall Street generally agrees with Geithner that it would be a disaster if the U.S. defaulted on its debt. In addition to damaging the nation's creditworthiness in global markets, most experts agree it would torpedo the stock market and very possibly trigger a double-dip recession.
5. Government Furloughs or Mass Layoffs - The federal government would most likely turn to furloughs or mass layoffs to immediately cut spending, possibly including the salaries earned by the approximately 2,000 people who work at the Bureau of Public Debt, the department that borrows the money to keep the federal government running. This could drain even more money from local economies and the states' tax bases.
6. Sky-High Mortgage and Interest Rates - If the government defaults, interest rates on mortgages would shoot up and homebuyers and small businesses would have trouble getting loans even if they could afford the higher interest.

http://www.govexec.com/dailyfed/0511...bt-ceiling.htm


More reasons to worry:

Even More Evidence of the Negative Consequences of not Raising the Debt Limit

Steven L. Taylor · Monday, July 18, 2011 ·

Politico posts a report from MF Global that notes a failure to raise the debt ceiling would impact not just the federal government’s bond ratings, but local governments as well.
From the report:

• In addition to placing the U.S. Government’s debt under review, Moody’s also placed on review approximately 7,000 Aaa-rated muni issuances with direct links to the U.S. debt.
• Over the next two weeks, Moody’s will likely place on review for downgrade thousands of additional Aaa-rated muni issuances with indirect links to federal debt and liquidity.
• We believe that Moody’s has correctly identified threats to hospitals, some local governments and all state governments, as they rely on government revenue streams – particularly, Medicaid funds; but we think the problem may be even larger.
• We think Moody’s understates the threat to issuers that rely on federal education funds to sustain their normal
  operations.
• We believe that there could be a domino effect. If the prospect of a federal government shutdown continues to loom large, ratings agencies will be compelled to look more carefully at local schooldistricts and municipalities that have issued securities for purposes of undertaking capital protects in support of primary and secondary education.

But, don’t listen to experts on the bond market, because what do they know?

http://www.outsidethebeltway.com/eve...he-debt-limit/

[geraint.faughn]

Some people don't believe the hype:

Bachmann: Geithner is wrong about consequences of not raising debt limit

Posted by The Right Scoop on Jul 11, 2011 in Politics | 91 Comments

Bachmann tries to tell BilO that we have enough money coming in to pay off what we owe our creditors along with the big entitlements, and even tells him it’s provable by just looking at the books. But BillO in his stubbornness refuses to entertain such an idea and continues to believe what Geithner has said about catastrophic consequences of not raising the debt ceiling on August 2nd. It’s as if he has bought into the left’s narrative and believes Bachmann isn’t smart enough to convince him or something – at least that’s the vibe I got. All I wanted to hear him say was that he would check into it but as I said he wouldn’t even entertain the idea.
Despite the host I thought it was a very good interview for her. She said what needed to be said, confidently, that Geithner is wrong and refused to take BillO’s bait of calling Geithner a liar. I’m not sure why he took it there but he did. The normal first reaction would be that he’s just wrong.
I actually think he is lying, especially in light of what I know as well as what Goldman Sachs recently said, courtesy of Jim Pethokoukis:There are essentially two plausible outcomes. One is that the two sides agree on a deal in coming weeks, with headline cuts of $2+ trillion over a 10-year horizon, probably mostly composed of discretionary spending caps that gradually squeeze projected outlays in a highly back-end loaded fashion. The other outcome – whose probability has unfortunately risen in recent weeks – is that there is no deal by August 2. Even in this case, we continue to believe a default is extremely unlikely, as the Treasury would likely prioritize interest payments, Social Security and Medicare payments, and “essential” defense payments over other types of spending, and should have enough revenues to cover the essentials. But make no mistake: the negative consequences of failing to make other payments would be very severe. In the month of August, projected outflows exceed projected inflows by about $150bn (not annualized), or about 12% of GDP. Even if we allow for a further decline in cash holdings in the Treasury’s account with the Fed, this means that a failure to reach a deal would imply a huge, immediate fiscal retrenchment. The economic consequences of such a retrenchment would likely force a deal within a few days.Maybe BillO should expand his list of reliable sources. Pethokoukis is a good one.
In any even I say kudos to Michele Bachmann on a good interview with an ignorant and gullible host:


http://www.therightscoop.com/bachman...ng-debt-limit/

[jhfkgkfdvjk]

'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body

The Huffington Post
July 23, 2011

WASHINGTON -- Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.

This "Super Congress," composed of members of both chambers and both parties, isn't mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers -- six from each chamber and six from each party.

Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.

House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal, multiple news reports and people familiar with his plan say. A picture of Boehner's proposal began to come into focus Saturday evening: The debt ceiling would be raised for a short-term period and coupled with an equal dollar figure of cuts, somewhere in the vicinity of a trillion dollars over ten years. A second increase in the debt ceiling would be tied to the creation of a Super Congress that would be required to find a minimum amount of spending cuts. Because the elevated panel would need at least one Democratic vote, its plan would presumably include at least some revenue, though if it's anything like the deals on the table today, it would likely be heavily slanted toward spending cuts. Or, as Obama said of the deal he was offering Republicans before Boehner walked out, "If it was unbalanced, it was unbalanced in the direction of not enough revenue." ...

FULL ARTICLE

[LookSe]

I don't know how they get a default out of this. Tax revenues are about $2.2 trillion a year and the bond interest is about $450 billion. Keep paying the interest, and cut the rest out of other disbursements until they make a deal. The default think is unwarranted fearmongering by the administration to avoid having to make real substantive cuts in the budget.

[ugosanchezo]

yeah, it is all the administrations fault for not wanting to make substantive cuts in the budget. Really, you've got to be kidding me. Let's put this another way... this is all the fault of the tea party terrorists for not wanting to substantially increases tax revenues by repealing a Bush tax cut that contributed to our being in this position in the first case.

and btw,just who determines what other disbursements get cut?

[Afigenatjola]

^^ BTW, the administration has offered up $3TN in expenditure cuts including cuts in entitlements, defense, and discretionary categories.

[gastabegree]

That's not the point. They're talking about this as a default. I take that as them saying there isn't enough money to float the bond interest payments. That's appears to be patently false.

Also, the Bush tax cuts were only to the general treasury revenues. All the major entitlements have their own revenue streams, except they're all running deficits. May the need to be cut to fit their dedicated revenues. Really nothing is going to happen unless the Republicans put the Dems feet to the fire on entitlements, and that's exactly what their doing.

yeah, it is all the administrations fault for not wanting to make substantive cuts in the budget. Really, you've got to be kidding me. Let's put this another way... this is all the fault of the tea party terrorists for not wanting to substantially increases tax revenues by repealing a Bush tax cut that contributed to our being in this position in the first case.

and btw,just who determines what other disbursements get cut?

[GlarlraTpople]

hmmmm sounds like it's time to buy stock in Kool aide - a lot of "folks" seem to be drinking it

[intmarkworkk]

Oh God ... Sure, just pay off the interest of the debt and everything will be hunky dory.

Say that over and over and over while the credit rating of the US gets bumped down a notch or two.

[levitratestimon]

Enjoy the kool aid but then please get real about where we're at ...

Sources: Congressional Budget Office; Center on Budget and Policy Priorities

[dodsCooggipsehome]

I'm not drinking any...I completely understand where we are at- not in a good place by any means.
I'm buying stock in it cause I can't believe how many people are drinking it believing everything is hunky dory!

[RenyBontes]

Smart man. How much will that Kool Aid stock have to go up to counteract the rising interest rates and costs of living?

[mikelangr]

I don't know but at the rate we're going, it'll be the only stock not crashing.

[TobaccoNUE]

That's what seems upside down. Keep ladeling on vast amounts of new debt, no problem. Cap it, and they sky is falling.

I don't get how this is a "default" event, if they can plainly keep paying the interest on the outstanding debt or even roll it over. If you want to argue the point of taking out new debt to fund gov't operations, that's a different subject.

Oh God ... Sure, just pay off the interest of the debt and everything will be hunky dory.

Say that over and over and over while the credit rating of the US gets bumped down a notch or two.

[huedaanydrax]

Also, the Bush tax cuts were only to the general treasury revenues. All the major entitlements have their own revenue streams, except they're all running deficits. May the need to be cut to fit their dedicated revenues. Really nothing is going to happen unless the Republicans put the Dems feet to the fire on entitlements, and that's exactly what their doing.

But that did not prevent us from deploying accounting treatments that enabled partially offsetting deficits in the budget with surpluses in the trust fund. It is either all one big pot of stuff or it is not.

[tofRobbroolve]

SNAPSHOT-Developments in U.S. debt talks
WASHINGTON, July 26 | Tue Jul 26, 2011 10:27pm EDT

(Reuters) - Here is the situation on Tuesday as lawmakers try to close in on a deal for Congress to raise the U.S. government's $14.3 trillion borrowing limit by an Aug. 2 deadline and avoid a debt default:
* Competing plans to raise the debt ceiling from the Democratic-controlled Senate and Republican-controlled House of Representatives have a lot of similarities, White House senior adviser David Plouffe says.
* The House postpones an expected Wednesday vote on the plan by Speaker John Boehner, the top Republican in Congress, until at least Thursday after non-partisan budget experts say it would not deliver the spending cuts it claimed.
* President Barack Obama's chief of staff, Bill Daley, says: "There are lots of plans out there but I'm confident that the default that some people fear will not occur."
* Prioritizing U.S. debt payments to avoid a default would be "deeply disruptive" to the economy, Standard & Poor's global head of sovereign ratings says.
* The White House says it is continuing to talk behind the scenes with members of Congress to break the impasse.
* A Reuters poll shows 30 of 53 economists surveyed think at least one of the major credit agencies will strip the United States of its top-notch credit rating. Most also say wrangling over debt has already damaged the economy.
* A Reuters/Ipsos poll finds 56 percent of Americans want a combination of government spending cuts and tax increases in a deal to bring down the U.S. budget deficit and permit a vote to raise the debt ceiling -- the approach favored by Obama and his fellow Democrats.
* Obama will not use a clause in the U.S. Constitution to bypass Congress and raise the debt limit on his own, the White House says.
* Republican Representative Jim Jordan, who is aligned with the fiscally conservative Tea Party movement, opposes the Boehner plan. Steny Hoyer, the Democrats' top vote counter in the House, says "a few" Democrats may vote for it.
* The U.S. dollar falls broadly and gold hovers near a record high above $1,619 an ounce as investors seek safety. The debt gridlock also hits U.S. stocks.
* International Monetary Fund chief Christine Lagarde urges the United States to quickly resolve the stalemate, warning that failure to reach agreement would have serious consequences for the world economy.
* United Parcel Service Inc (UPS.N), the world's largest package delivery company, gives a cautious economic outlook and cites stalled U.S. debt talks, sending its shares lower.
* Americans answer Obama's request to make their voices heard on the debt crisis, crashing websites with e-mails and flooding the telephone lines of lawmakers in Washington with thousands of calls. (Compiled by John O'Callaghan)

http://www.reuters.com/article/2011/...76N04120110727

[hapasaparaz]

The one thing that annoys me the most are catch phrases and euphemisms.

The portions of the speech made by Obama that I have heard were all strait forward, this is what we need to do.

Then I start hearing from BOTH sides phrases like "American People" (all 2% of them), and another that fails me now which all seem to side-step the actual import of what is going on and tries to make it sound friendly and simple to the american people.

Here's the bottom line. MAJOR cuts need to be made, primarily in the Military budget. MAJOR changes need to be made in regards to regulations on Health Care Providers and ESPECIALLY insurance agencies and pharmaceutical companies (any time that Medicare is raised, the cost of care mysteriously goes up to match, I cry SHENANIGANS!!!!).

IN ADDITION, the tax breaks that Bush and Co. gave their supporters need to be allowed to expire. We need money from those than can afford it now to REDUCE the debt. The combination of losing our manufacturing and labor overseas AND a huge debt whose INTEREST ALONE is almost $500B/year is just inexcusable.

Both "sides" need to dig into their false promises and make concessions to get us back to a point where we can argue about where our SURPLUS DOLLARS will be going, not about how we are going to handle our debt.

[AALee]

http://www.nytimes.com/2011/07/27/us...gewanted=print


By BINYAMIN APPELBAUM
WASHINGTON — It turns out the federal government is sitting on some extra cash.


Thanks to an inflow of tax payments and maneuvering by the Treasury Department, the government can probably continue to pay all of its bills for several days after Aug. 2, providing potentially critical breathing room for Congress to raise the debt ceiling, according to estimates by several Wall Street banks and a Washington research organization.


The consensus is that the government will not run short of money until Aug. 10, when it would be unable to cut millions of Social Security checks without borrowing more money.


President Obama has described Aug. 2 as a “hard deadline” for Congress to increase the maximum amount that the government is allowed to borrow.


“We have to do it by next Tuesday, Aug. 2, or else we won’t be able to pay all of our bills,” Mr. Obama told the nation in his speech on Monday night.


Jay Carney, the White House spokesman, restated that position on Tuesday.


“That’s not a guess. That’s not a political opinion,” Mr. Carney said. “It is the judgment of career analysts at the Treasury Department. We give up our borrowing authority without action by Congress. And the result of that risks default for the United States for the first time in our history.”


That description, however, conflates two distinct events.


The government will exhaust its ability to borrow more money on Aug. 2, which is equivalent to maxing out a credit card. But there still will be cash in the federal wallet.


Some Republicans have expressed skepticism about the Aug. 2 deadline, describing it as an artificial line drawn by the Obama administration for political reasons. Analysts emphasize, however, that the deadline is real; it’s just the date that is inexact.


“Should policy makers wait till Aug. 10 to come to an agreement? If they can agree sooner, absolutely not. There are no definites in this case,” analysts for Barclays Capital wrote in a note to clients entitled “Is August 2 really ‘August 2’?”


Analysts also said that all of the estimates, including those from Treasury, were necessarily inexact, because they relied on variables like incoming tax payments. That means each passing day without a deal increases the risk that money will run out.


“This is more like predicting the weather than predicting the sunrise,” said Jay Powell of the Bipartisan Policy Center, a nonprofit in Washington that has analyzed the issue.


There are other risks in waiting. The Treasury must continue to repay debts as they come due, then borrow the same amounts anew. Officials are concerned that it will become harder to find investors for United States government securities, and that remaining buyers will demand higher interest rates.


The Treasury plans to auction about $87 billion in short-term securities next Monday and Tuesday. The following week it plans to hold a much larger auction of long-term debt.


All told, the government plans to borrow almost $500 billion in August. If interest rates climb by even a tenth of a percentage point, the annual cost would rise by $500 million.