Skip to comments.Here's Why Republicans Are Serious About a Default
Posted on 01/14/2013 8:51:05 PM PST by tentmaker
NEW YORK (TheStreet) -- Investors should understand why some Republicans are willing to allow the U.S. to default on its debt.
President Barack Obama on Monday took a preemptive approach to criticize Republicans on the looming debt-ceiling clash, as he said they had the choice between acting responsibly and paying Congress' bills, or acting irresponsibly by allowing the economy to crash.
(Excerpt) Read more at thestreet.com ...
There will be no default on the debt no matter what happens. The issue is whether or not we will continue with unlimited borrowing or put a responsible limit on our debt and begin working to pay it down. The last downgrade to US credit was issued because there was no serious fix to the spending problem. If spending is not reduced now, there will be another downgrade that hurts our credit. President Obama and the Democrats are intent on pushing our debt as high as they can because it suits their political agenda of growing the size of government, in spite of the fact that it is dangerous to our economy. Any damage to the economy will be their fault, not the fault of the Republicans who are trying to fix the problem by reducing spending.
But, Repubics lack the courage to refuse to raise the the Debt Ceiling. Repubics love to spend money we don't have just as much as 0bamatrons.
Here’s the bottom line — our current budget deficit of over a trillion dollars a year came as a result of making the crisis and stimulus spending we made in 2008 the BASELINE for current spending.
That yearly one trillion dollar deficit is the MAIN REASON why we have to continue borrowing money we don’t have.
Has anybody ever asked this question — HOW WERE WE ABLE TO PAY OUR DEBTS BEFORE 2008-2012 AT THE SAME TIME DEFEND THE COUNTRY, AND PAY FOR SOCIAL SECURITY, MEDICARE AND MEDICAID?
Simple, WE DID NOT SPEND AS MUCH MONEY AS WE ARE DOING NOW.
SOLUTION: GO BACK TO THE 2008 BUDGET and USE THAT AS THE BASELINE FOR ANY ENSUING BUDGET.
We have MORE THAN ENOUGH revenue to service our debts.
Republicans ought to coalesce around the Connie Mack PENNY PLAN ( Supported by Senators Rand Paul, Marco Rubio and Pat Toomey ).
The Mack Penny Plan is simple — eliminate one penny out of every federal dollar spent.
Doing this would balance our budget by 2019 and restore economic freedom by reducing spending and bringing fiscal discipline to Washington.
The Penny Plan continues to gain support and now has 70 cosponsors in the House of Representatives, as well as support from key senators like Marco Rubio, Pat Toomey and Rand Paul. If America’s families can cut one penny, or more, out of every dollar in their budgets, so can Washington.
Here are a few questions about Macks plan:
Does the math work — would it balance the budget in eight years?
How would Mack get to that 1 percent cut each year — would it be across the board in every area, including Social Security and Medicare?
Is it really gaining support? Or is it stalled?
Mack has a fact sheet that shows the numbers for H.R. 1848, the One Percent Spending Reduction Act.
Mack got the idea from the One Cent Solution. The founder, Bruce Cook, is a businessman from Georgia and a graduate of Harvard Business School.
The math works like this: For six years, the federal government would reduce spending by 1 percent each year. In the seventh year, funding would be capped at 18 percent of gross domestic product, which measures the size of the overall economy. By the eighth year, the plan would balance the budget and save $7.5 trillion over 10 years.
If Congress and the president couldnt reach an agreement about what to cut, the plan would trigger automatic across-the-board spending cuts.
Macks website shows the 1 percent reduction each year:
FY 2012 $3.382 trillion*, less 1 percent => $3.348 trillion cap
FY 2013 $3.348 trillion, less 1 percentt = > $3.315 trillion cap
FY 2014 $3.315 trillion, less 1 percent => $3.282 trillion cap
FY 2015 $3.282 trillion, less 1 percent => $3.249 trillion cap
FY 2016 $3.249 trillion, less 1 percent => $3.216 trillion cap
FY 2017 $3.216 trillion, less 1 percent => $3.184 trillion cap
At the beginning of fiscal year 2018, it sets an overall spending cap of 18 percent of gross domestic product.
The Penny Plan sets a framework for reducing spending. It will be up to Congress and the president to work together to determine how best to achieve those spending reductions.
(BTW, Connie Mack LOST his Senate race in Florida in 2012).
We’re not going to default.
The best that happens is we hold the line exactly where it’s at....for now.
Yawn. This is one of the oldest tricks in the book. Whenever your local government wants to raise taxes it’s “for the children” or cops and firemen. The stuff no one but the people getting paid off it is never threaten. Only the stuff we’d miss most.
Defaulting on debt because of a debt ceiling would be like you buying a new car after you lose your job instead of paying off the kneebreaker you borrowed from.
And we did it without a budget authorizing spending for the last three years....
Deem it so #1
What a Lutz, this Joe deaux guy.
Obama already said the same. He got it out there that Repubs can’t be seen with him, the right wing media makes it impossible, leading us to infer such an appearance would hurt reelection chances for any R seen with him.
The good of their re-election, or the good of the country, he says? What a Lutz. The country is likely gone, and the R’s enabled it, plain and simple.
“There will be no default on the debt no matter what happens.”
Well, not no matter what. We have defaulted before. I’d say the likelihood is vanishingly small, and the debt ceiling and Pub politics wouldn’t have anything to do with it. Washingtonians will pick default over not being able to buy votes should they ever come to a head.
We weren’t able to do it back then, either. The last time we had a balanced budget and no debt was when freakin’ Old Hickory was president. We are worse off for spending more now, but pre-2008 wasn’t the Golden Age. We were doomed then, too. It’s just that there’s less time before our souls come due now.
We are not your servants and you are not our king.
You work for us and your employment can be terminated at our whim.
Apparently not, judging by what happened a couple months ago. Tons of people were whimming all over the place, yet we're still stuck with the guy.
The majority of Americans think Republicans are a bunch of hypocrites and buffoons.
The Tea Party and the GOP are in a difficult negotiating position because of the terrible reputation they have among the American people. I read a recent poll that 65% of Americans have a negative view of the Tea Party. The GOP House only has about a 12% approval rating.
Also, they didn’t seem too interested in deficits during Bush.
We need to get the spending back to Pre-Obama levels.
If Americans go one week without their Social Security checks, EBT cards being recharged, or TANF ATM cards(direct welfare cash payments), then America will have one heck of an interesting conversation.
Acting responsibly means adjusting our expenditures to match our income, living within our means.
Reduce spending by a penny per dollar? They won’t even stand for less increase in spending.
We weren't. Not even close.
Republicans ought to do a lot of things, but they won't. It will do nobody any good to hope that they will do what they ought to.
They will no longer be a serious national party by 2016.
——— Obama on Monday took a preemptive approach——
Was he boasting of his tyrannical power or projecting his fear?
Either way he comes off as a loser. He shows that the way forward is best without Obama
The plan sounds good. The GOP has as many good plans as the Democrats has ‘good’ intentions.
Unfortunately, the party is composed of cowards and liars. Connie Mack did not even try for the seat. GOP=Geriatric Obtuse Perjurors.
Maybe that is because they are...
Hard work and determination are no longer part of the American lexicon. Americans believe in magic. We want someone with a wand to come in and wave it all away.
RE: We weren’t. Not even close.
My point is we survived with government revenues of just $2.6 trillion ( not the $3.6 trillion today ). There was no mass starvation, no seniors being thrown to the snow with no medical care, no debt default.
If we could do it with $2.6 trillion then, why can’t we do it now?
edit to add:
And heres why there is NO chance of a default (and why Obama is simply posturing, or at worst, LYING ):
There are two parts to the obligations subject to the debt ceiling: that part of the principal maturing during the time in question and the interest payments that the federal government must make on its debt.
Between February 15 and March 15 of this year, the federal government will owe roughly $38.1 billion in interest payments. Failure to make those payments would indeed result in default. However, the federal government will also collect an estimated $277 billion in taxes and other revenue over that same period, meaning there will be MORE THAN ENOUGH money available to make those interest payments.
True, the federal government would not have enough revenue to continue spending the $452 billion that it otherwise would over that period. It would have to prioritize its expenditures until the debate was resolved. But there would be, for example, enough money to afford the interest on the debt, military salaries, Social Security, and Medicare, with at least $90 billion left over for other things.
So, wheres the problem? ANSWER: WE WANT TO SPEND MORE THAN WE TAKE IN.
Simple solution: DONT SPEND MORE THAN WE TAKE IN. In other words, WE DON’T NEED THE ADDITIONAL 1 TRILLION DOLLARS WE HAVE BEEN SPENDING SINCE WE DESIGNED AN INEFFECTIVE “STIMULUS” BUDGET IN 2009 WHICH BECAME THE NEW NORMAL!!
Whats so hard to understand?
The historical lesson is that when Hoover was president, everything he wanted to do to end the Great Depression was thwarted by the Democrat controlled congress. But not always.
In the first half of Hoover’s term, congress was all Republican. Then the House was won by the Democrats, who absolutely *refused*, point blank, to do anything to lift the US out of the Great Depression, figuring correctly that Hoover would be blamed.
In other words, the parallels are enormous, but the Republicans should contemplate the outcomes.
In Obama’s first term, the Republicans played along with him, passing continuing resolutions instead of Harry Reid even permitting the senate from discussing a budget.
And Obama was reelected. The Republican house could have done what the Democrats did during Hoover, and ruined Obama, but they didn’t, so they lost.
Now they have yet another chance. If they raise the debt ceiling, they and the country will lose again, and they will be slammed with the mid-term elections. Democrats may very well get an entirely Democrat congress for the last two years of Obama.
But if the Republicans fight, refuse to pass the debt ceiling, yes there will be economic trouble. But Obama and the Democrats are the ones who will suffer for it.
And the earlier the Republicans start, the less it will be held against then come the mid-terms. But this may be their last chance to prove themselves worthy. Otherwise, they may again be relegated to minority status for another 50 years, and radical Democrats will systematically destroy America.
If they fail to disarm him, John Boehner and Mitch McConnell should not just be turned out of office, but their names should be stricken from the books, and their families sterilized.
However, it won't happen. There are too many Repubics who are no different, essentially, than Democrats . . . they are strung out junkies addicted to spending money we no longer have.
Wish it weren't so, but . . . things will have to get much worse before they will ever get better. America is in for a very bad patch.
>>Repubics love to spend money we don’t have just as much as 0bamatrons.
Demonstrably false. There are at least pockets of resistance to this in the Republican Party. There are none, zip, nada in the Democrat Party.
Pushing the falsehood that there is no difference doesn’t help matters.
“Demonstrably false,” you say. Then you refer to “at least pockets of resistance to this in the Republican Party,” Which is an admission that what I say is not “Demonstrably false.”
I agree with almost everything you said, save that I don’t consider rolling over debt to be “paying” debt. Especially when we’ve been doing it since the initial baby boomers, who are now at retirement age, were delivering newspapers.