Consequences of a US default

[Gaspar]

So in case you haven't heard, the GOP has staged a "strategic" retreat.  O'Connell suggested that maybe they abandon wrangling over the debt ceiling in entirety and vote to give Obama the sole responsibility for raising.  In exchange for this power he suggested a convoluted Roberts'-Rules-of-Order-style path to allow the GOP to save as much face as possible, all the while making Obama take the heat for raising the ceiling. 

This is a trial balloon and there's no real sense that it can make it through the House, but it's pretty clear that he's making a suggestion that the GOP walk away from the fight entirely, rather than either go for the gusto with Obama's $4T cuts + tax increases or even Biden's negotiated $2T of cuts + increases.  In other words:  if taxes are any part of the solution whatsoever, it's better to walk away from the negotiations entirely than compromise. 

Which leaves me speechless, really.  Does this mean that the leadership knew this was an empty exercise all along?  Does it mean that the GOP caucus is really too fractured to offer any votes at all?  And does it mean we won't raise the ceiling at all anyway (since negotiations are at a stalemate, anyway)? 

I can't get over the level of cynicism this takes.

Don't think he will take it because it requires him to detail spending cuts over time to equal the increase in debt ceiling.    Both President Obama and his party know that there is no chance they will cut enough to make up for the increase, therefor setting a devastating trap.  The only mantra they will have left is "Increase Taxes."

In the plan the Republicans agree to accept President Obama's cuts but, they get the opportunity to present their own cuts as well that the president may choose not to accept.  The trap is what you and I both know, that the president has no intention of cutting a damn thing, and even if he does, the cuts will never match the increases in spending he has in store.  Meanwhile the Republicans will grandstand by proposing cuts on a daily basis and then just be flabbergasted and shocked when they are denied by the administration.

By 2012 with little or no cuts and more massive increases in spending, plus the gargantuan burden of Obamacare looming, President Obama will lose whatever teensy tiny shred of fiscal responsibility he may have retained, and the Republicans will look like real budget hawks.  He's already campaigning for Carter's second term, if he accepts this compromise he might as well pack his bags.

I for one will be mad at the Republicans though for turning this into a campaign strategy rather than taking advantage of a serious opportunity to reverse the path to ruin.

[Gaspar]

Here are the steps of the plan:


1.  The Republicans agree to a plan that allows President Obama to raise the debt ceiling by as much as $2.3 trillion in three installments within the  next year.

2. The President would be required to submit to the congress a list of proposed spending cuts equaling the amount of the debt ceiling increase.  Apparently these would not have to be REAL spending cuts --- they could simply be cuts in spending increases.  Which is exactly what President Obama would propose because he has no intention of ever cutting spending.

3. Congress would have the opportunity to present additional spending cuts to the president which he would of course ignore.  This would then trigger a vote to approve or disapprove of his debt increases. 

4. Congress would vote to disapprove based on lack of corresponding spending cuts. Obama would then veto the resolution of disapproval.

5. Neither house would be able to come up with the two-thirds vote necessary to override Obama's veto, so the debt ceiling increase would take effect.

6. Republicans then get to blame Obama and the Democrats for the increases in the debt ceiling.


I don't think the country can afford to play this game just for Republican political gain.

[Teatownclown]

Here's today's best read on the budget from a paper that seems to have remained objective despite the News Corp tag....

JULY 13, 2011
Budget Solution: Squeeze the Middle

http://online.wsj.com/article/SB10001424052702304584404576440250900783950.html

"Neither President Barack Obama nor Republicans say they want to target the middle class. But budget gaps projected for the next decade are so large they can't be reined in without hitting those in the middle. There simply isn't enough income at the top to tax, nor enough spending on people at the bottom to cut."

[carltonplace]

  The trap is what you and I both know, that the president has no intention of cutting a damn thing, and even if he does, the cuts will never match the increases in spending he has in store.  Meanwhile the Republicans will grandstand by proposing cuts on a daily basis and then just be flabbergasted and shocked when they are denied by the administration.

The "grand plan" that Boehner was going to agree to had nearly 4 trillion in cuts. How can you say that he doesn't intend to cut...he has stated clearly that America has to get its financial house in order.

[DolfanBob]

I know that it's a stupid question, but dont other Countries owe us a ton of Money ?
What kind of Seal Team 6 do we need to send in to collect ?

[Townsend]

I know that it's a stupid question, but dont other Countries owe us a ton of Money ?
What kind of Seal Team 6 do we need to send in to collect ?

Well I've heard "debts forgiven" a lot over the years when talking about aid for other nations.

[we vs us]

the president has no intention of cutting a damn thing

I don't know any such thing.  He came up with $2T in cuts via the Biden negotiations, and was actually offering up to $4T based on last week's discussion.  Unless you think he's flat out lying to the country then he's put an astronomical amount of cuts on the table -- to the point where he has his own caucus freaking out and declaring they won't/can't support his cuts. 

But it's not about facts, though, and that's obvious.  You seem to think Obama lies about everything all the time, and that if it goes against your side it must be a fakeout, or a lie, or sociopathy, or some sort of double dealing, rather than the truth.

[Gaspar]

I don't know any such thing.  He came up with $2T in cuts via the Biden negotiations, and was actually offering up to $4T based on last week's discussion.  Unless you think he's flat out lying to the country then he's put an astronomical amount of cuts on the table -- to the point where he has his own caucus freaking out and declaring they won't/can't support his cuts. 

But it's not about facts, though, and that's obvious.  You seem to think Obama lies about everything all the time, and that if it goes against your side it must be a fakeout, or a lie, or sociopathy, or some sort of double dealing, rather than the truth.

Name a single cut that he presented. 

As usual he pontificated about broad strokes, but when it came down to it was not able to offer a single thing he would be willing to put his name on.

Exactly like his budget "framework speech," he is very willing to talk, but not to deal.

[guido911]

See this one about how Rupert Mudoch's News Corp not only had a $0 tax burden but they also were paid nearly $50 bil by the US?

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=137811869&m=137811860

Oopsie.

Please be advised that the David Cay Johnston column published on Tuesday stating that Rupert Murdoch's U.S.-based News Corp made money on income taxes is wrong and has been withdrawn. News Corp's filings show the company changed reporting conventions in its 2007 annual report when it reversed the way it showed positive and negative numbers. A new column correcting and explaining the error in more detail will be issued shortly.

http://blogs.reuters.com/mediafile/2011/07/13/advisory-david-cay-johnston-column-on-rupert-murdoch-is-withdrawn/

[nathanm]

Perhaps this graphic will dispel Gaspar's notion about the "gigantic" spending increases we've supposedly seen from Obama.



Yeah, income security is up, which is exactly what should happen when unemployment is high.

[Teatownclown]

We now know that Mitch McConckel is a shell er, shil for teabaggers....a real chicken sh!t to put us through this drama....come on GOP, show some leadership.

Don't Cry For Me Mitch McConnell
http://www.nytimes.com/2011/07/14/us/politics/14fiscal.html?_r=2&nl=us&emc=politicsemailema1

btw, nice graph Nate...

[guido911]

Perhaps this graphic will dispel Gaspar's notion about the "gigantic" spending increases we've supposedly seen from Obama.



Yeah, income security is up, which is exactly what should happen when unemployment is high.

Enough with the graphs, I am a real dollars kinda person. And I thought the stimulus was supposed to stop rising unemployment.

[Hoss]

Enough with the graphs, I am a real dollars kinda person. And I thought the stimulus was supposed to stop rising unemployment.

Kinda like how cutting taxes for the rich would increase revenue?

[Breadburner]

The Lame One is trying to scare the old folks.....

[dbacks fan]

Was it guido or TTAC that wanted to cut breaks for the top income earners and cut entitlements (welfare) tothe states with the lowest tax returns?