News How About That Us Government Money Management?

[The Albatross]

Gottcha, I'll dig it up but not tonight. I basically threw up on the title of the thread. It was cathartic but maybe not a very good discussion, eh? :O_o:

 

[Pietro]

I think this is a sore point for most people, even those who don't pay a whole lot of attention to politics. I don't know who said this, but, apparently, someone once said something to the effect that the failure of a democracy occurs when its leaders bankrupt the government coffers by granting every wish of their constituents in order to stay in power. This has got to stop.

 

[The Albatross]

Thank you for your graciousness... I had no idea how keyed up I was by the tread title.

 

[The Albatross]

In that quote, I was referring to the agreement from 14 months ago that you mentioned, where the Dems and Repubs had agreed on budget numbers. I wasn't familiar with that specific agreement.

Sequester, which Obama signed into law... a supposed 9 year agreement that 14 months down the road they decided to play hardball to get rid of. From New Republic:

"The current budget fight is mostly portrayed as one between House conservatives desperate to couple the FY14 budget to the elimination of Obamacare and Senate Democrats refusing to support anything but a “clean” continuing resolution (CR)—one that funds the government for another 11 weeks without any further policy agenda attached. This depiction is accurate as far as it goes, but ignores the role of House Democrats, whose leadership is now claiming that they won’t vote to continue sequester-level spending.

The Senate sent back the Republican CR stripped of its Obamacare provision on Friday, though they still approved a sequester-induced cap on federal spending at $988 billion—if only for a period of several weeks. Their House counterparts have now vowed to ignore that figure and instead push for a $1.058 trillion, the level originally set by the Budget Control Act. House Democratic Caucus Chairman Xavier Becerra called the Republican budget proposal “lunacy,” and Minority Whip Steny Hoyer has promised a fight. Meanwhile, a sizable Republican rump will also vote down legislation that doesn’t go after health care reform. The sequester could therefore become one of the prime movers behind a government shutdown.

Meanwhile, federal accountants are staring nervously at their ledgers. Even if a shutdown is averted, the sequester’s second year could prove calamitous in a way the first has not" (Source: New Republic, Link Removed

Now I'm no fan of sequester... it only targets discretionary spending... but all the stonewalling by Reid and company - not taking up bills, not negotiating on fiscal constraints, questionable tactics, the Dems and our President holding their breaths until we turn blue (obscure reference to the colors associated with their political party assigned by the NY Times and which I happen to think of as an insult because frankly, it's backwards.)

The Senate Democrats and our president's current request for spending levels coincided with the debt ceiling... ignoring their own bipartisan agreement on Sequester. Neither side likes sequester... but the Republicans were trying to hang on to SOME fiscal policy in a climate where there is no operating budget, no attempt to balance spending an revenues, and with the advent of yet another government subsidized entitlement program.

 

[anthony]

You don't need to be a rocket scientist to see where this is going:

http://upload.wikimedia.org/wikipedia/commons/8/87/CBO_-_Revenues_and_Outlays_as_percent_GDP.svg

You can't continue spending more than you earn... how long before other states follow Detroit and file for bankruptcy? The banks MUST collapse eventually, because they aren't getting anything back.

 

[Pietro]

Thank you for your graciousness... I had no idea how keyed up I was by the tread title.

In my original post, I indicated that I thought this post might cause a little trouble. ;) But trouble of the kind that gets people talking, arguing, and, unlike our "esteemed" representatives, probably coming to some basic form of reasonable agreement long before they do. In short, you are supposed to be keyed-up. This stuff matters, no matter what point of view you have.

Their House counterparts have now vowed to ignore that figure and instead push for a $1.058 trillion, the level originally set by the Budget Control Act. House Democratic Caucus Chairman Xavier Becerra called the Republican budget proposal “lunacy,” and Minority Whip Steny Hoyer has promised a fight.

This was getting press today. The Democrats have now rejected a plan by Senator Collins, from Maine, their best friend in the Senate on the Republican side, because the plan doesn't extend funding and debt levels for as long as they want, and because they want the original budgeting levels to be enacted, not the sequester-based levels. There may have been one or two other issues.

It seems that the Democrats are attempting to take advantage of polling that shows blame being targeted at the Republicans for the move regarding tying Obamacare to the latest budget negotiations. This requirement is apparently all but dead to most, save for a collection of House Republicans -- and, yet, things are still not happening.

I'm sick about this. I agreed that the tactic linking ACA to these financial bills was ill-advised. Regardless of whether this is a common tactic, used previously, in this instance, it was poorly thought-out with no end-game. It was akin to sticking your tongue out on a playground. However, the fact that the Democrats now believe that they can strong-arm the Republicans, instead of just getting the damned finances stabilized for all the reasons they've been whining about for the past two weeks, demonstrates some very bad credibility on their part.

Not to mention the fact that they continue to ignore the harsh truth that @anthony clearly stated: "You can't continue spending more than you earn...." Such spending is supposed to be done in times of emergency -- war, natural disasters, etc. -- not to keep paying for every pet project that keeps them getting re-elected. Those without some selfish, personal agenda have got to be heard.

Ultimately, it's up to us, the electorate, to dump the entire bunch, if necessary. But you have to have people run for the office -- and today, without the backing of organizations that help perpetuate many of Washington's bad behaviors, and without enormous amounts of cash to bash your opponents with, it's nearly impossible for a candidate to win an election. The system created by the Founding Fathers remains sound; but it really needs a severe enema.

obscure reference to the colors associated with their political party assigned by the NY Times and which I happen to think of as an insult because frankly, it's backwards.

Why do you think this is backwards? I don't even know why the colors are assigned as they are -- I just thought it was some tradition. :)

but the Republicans were trying to hang on to SOME fiscal policy in a climate where there is no operating budget, no attempt to balance spending an revenues, and with the advent of yet another government subsidized entitlement program.

If the Republicans have removed the issues regarding ACA and provided a "clean bill", then the Democrats need to do what they've implied they were going to do all along -- sign it. At this point, if ACA and other pinpoint targets are off the table, it is now up to the Democrats as to whether the government opens or not, and whether we default or not. If we default, even after a clean bill has been offered, it will be time for serious action to change our leadership en masse, regardless of the challenges.

 

[The Albatross]

If the Republicans have removed the issues regarding ACA and provided a "clean bill", then the Democrats need to do what they've implied they were going to do all along -- sign it. At this point, if ACA and other pinpoint targets are off the table, it is now up to the Democrats as to whether the government opens or not, and whether we default or not. If we default, even after a clean bill has been offered, it will be time for serious action to change our leadership en masse, regardless of the challenges.

I disagree on the point of ACA. If the Dems wanted to ignore Sequester, which is law by the way, just as much as ACA is... then it was not out of line to attach something to the increase in spending.

 

[Pietro]

If the Dems wanted to ignore Sequester, which is law by the way, just as much as ACA is... then it was not out of line to attach something to the increase in spending.

I'm not sure we disagree. :) I don't believe that the Dems should be ignoring the Sequester. That was not what they claimed their problem to be; they asked for a "clean bill" that didn't target ACA, period. And they were getting that; but they are now playing around, like a cat playing with a mouse.

My understanding is that the Dems refusal to accept Sequester-level spending only occurred in the last day or two, and that ACA wasn't added as an issue to counter this.

 

[The Albatross]

Nope, the spending requested exceeded the amount that would have needed to be appropriated. Republicans balked, because it was about the only fiscal negotiation and law that reined in spending... a 9 year agreement and only 14 months old. Dems wanted to ignore their own law and get the approval. All this fuss about a clean bill... is a bug a boo... they had been holding stuff up or refusing to take up bills for months.

 

[Pietro]

Well, according to Dead Link Removed, the Senate was close to hashing-out something that would be acceptable to the President, Senate, and 200 House Democrats. House Republicans, however, were still divided, and then the Heritage Action for America, aligned with the "Tea Party" block, sent an email "urging lawmakers to vote no because the House bill 'would do nothing to stop Obamacare’s massive new entitlements from taking root.'”

This block does not constitute the entire House GOP, but, according to this article, Boehner (the House GOP leader and Speaker of the House) can't even get the 17 GOP votes necessary to pass the Senate's bill.

If true, and this causes us to default, this is essentially murder/suicide on the part of the House GOP for our financial system. The last thing we need is for the securities market to tank again (even though it's arguably overpriced anyway). But it probably will -- maybe not precipitously on the 17th (although it could), but, as we get closer to November 1st, if things continue to be unsettled, the market's downward trend will accelerate and then tank. I'm on serious securities watch, now, to protect my retirement accounts. I don't buy/sell very often -- I'm a pretty passive investor. However, a US default is going to make US everything worth a whole lot less.

If we default, we need to take a dead-serious look at how to get some changes made in Washington, with regard to both procedure and personnel -- including the possibility of a Constitutional amendment to prevent this from happening again.

 

[The Albatross]

Outside organizations actually have little to do with it. Shenanigans were already afoot because the debt ceiling was likely already exhausted sometime between May and July. The "clock" was frozen for 4 months, while the US Treasury began using "extraordinary measures" to (in the form of "reserves") to keep the Obama Administration about 25 million dollars below the ceiling:

"On May 17, when the Treasury first froze the debt at $16,699,396,000,000, Lew sent a letter to House Speaker John Boehner stating: “In total, the extraordinary measures currently available free up approximately $260 billion in headroom under the limit, as described below.”.

Among the “extraordinary measures” Lew said he could take to create this “headroom”:1) not investing new money from the Civil Service Retirement and Disability Fund (CSRDF) in U.S. Treasury securities, which he said would create $6.4 billion in “headroom” per month, 2) not reinvesting $58 billion ion Treasury Securities held by the CSRDF that would be maturing and not reinvesting $16 billion in interest owed to the fund, which would create $74 billion in headroom, 3) suspending the routine daily reinvestment of $160 billion in special Treasury securities held by the Federal Employees’ Retirement System Thrift Savings Plan, which would create another $160 billion in headroom, and 4) suspending the routine daily reinvestment of Treasury securities held by the government’s own Exchange Stabilization Fund, which would create another $23 billion in headroom.

On May 20, Lew sent a letter to Boehner saying the “debt issuance suspension period” he had declared would “last until August 2, 2013, the last day that Congress is expected to be in session before Labor Day.”

However, on Aug. 2, Lew sent Boehner another letter. This time, he said: “I have determined that a ‘debt issuance suspension period,’ previously determined to last until August 2, 2013, will continue through October 11, 2013, the last day Congress is expected to be in session before the Columbus Day recess.”

Then, on Aug. 26, Lew sent Boehner another letter stating: "Based on our latest estimates, extraordinary measures are projected to be exhausted in the middle of October." (Source article, Treasury: We’ve Kept Debt Exactly $16,699,396,000,000 For 4 Months )


The fact is... since Lew's initial letter, had Harry Reid took up House submissions instead of delaying, killing them or tabling them. This could have been averted.

The truth is, that we hit the debt ceiling in May/June... and the inneptitude of the Senate and Dems caused this to happen. "You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before" (Rahm Emanuel, Obama's former White House Chief of Staff).

I would suggest that this tactic, one which has served Dems well, is at the root of this "manufactured crisis".
The media for the most part was complicit, carrying the president's water... no reporting that I was or questions to Obama's administration about the mysterious frozen debt clock or US Treasury report appeared on major media.

Smoke and mirrors, slight of hand... and only when the Republications in the House dared to attach a condition to the bill defunding Obamacare did Joe and Jane Q Public start listening to the discussion. The discussion is a fiscal one. It was created by the president, his administration, and the Dem controlled senate. It is a travesty to suggest that the House is putting a gun to anyone's head or attempting to extort or blow up the economy. When in fact Reid, and his cronies had a full 6 months minimum to avert this scenario.

 

[The Albatross]

Interestingly, Lew or the Obama Administration didn't appear to take this matter up publicly (transparently) with Senator Reid. The blame shifting already was in the works commencing the May 17 letter and the subsequent letters to Senator Boehner.