The problem of the US debt ceiling

Mr_Mumble

A good US deficit-to-GDP chart showing how unprecedented the government shortfall is in peacetime.

purch

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous

Love it !!!!!!!!! :eek::rotfl:

wotsthat

The two sides unveil their rival debt plans..

http://www.bbc.co.uk/news/world-us-canada-14285268

I don't know what they are arguing about. They are effectively the same.

macaque_2

michaels wrote: »

How about showing the image RPI adjusted or even better as %GDP - much more meaningful I would have thought.

The US is unusual in arbitrarily imposing a limit - the actual limit must be the level at which the markets are willing to finance the debt (see Greece passim)

Between 2007 and 2009 public spending rose by circa £150 billion and GDP rose by circa £135 billion. From what I can see, GDP in the UK has just become a measure of government extravagance.

http://www.ukpublicspending.co.uk/budget_ukgs.php

nickj_2

if spending during that period has increased during 2 boom periods how can they ever hope to reduce it without taking drastic action that they, like other countries seem incapable of doing

Generali

Graham_Devon wrote: »

It's pretty much a foregone conclusion that the debt ceiling will be raised, which has me asking questions as to why there is a ceiling at all, if it's just going to continue to get broken and raised.

How can it simply keep being raised?

The debt ceiling is a historical oddity in the US that goes back to WW1.

Prior to the US joining the Great War in 1917, each bond issue that was sold had to be voted on by Congress as only Congress has the Constitutional ability to borrow money. This further reflects that at that time, the US didn't have a Budget as we know it today, they just used to vote to spend some money and sometimes would attach a requirement to borrow money to a spending bill.

When the USA entered the war, it was felt that the President needed the power to be able to act to borrow money quickly if the military situation required. As a result, Congress voted for a debt ceiling to be imposed, allowing the Government to borrow up to a fixed limit.

The ability for money to be borrowed willy-nilly has never been revoked. AIUI it is unconstitutional for Congress to allow a default.

Radiantsoul

It seems a bit daft as the US political system has already elected to spend the money. In effect it has written the cheques and seems to be voting on whether to honour them.

Generali

Radiantsoul wrote: »

It seems a bit daft as the US political system has already elected to spend the money. In effect it has written the cheques and seems to be voting on whether to honour them.

The Democrats for the most part voted on the current lot of discretionary spending, the Republicans now get to decide whether the checks go out of the door.

Radiantsoul

Generali wrote: »

The Democrats for the most part voted on the current lot of discretionary spending, the Republicans now get to decide whether the checks go out of the door.

Democracy in action I suppose.
It just seems like an unnecessary check and balance that is likely to weaken the USA. As an aside I find it interesting that the USA is seemingly unable to win wars against even the weakest of enemies despite a vastly superior arsenal.

mj12_2

Radiantsoul wrote: »

Democracy in action I suppose.
It just seems like an unnecessary check and balance that is likely to weaken the USA. As an aside I find it interesting that the USA is seemingly unable to win wars against even the weakest of enemies despite a vastly superior arsenal.

For the first point - being checked and balanced is always an inconvenience to those in power which is why they need to be checked and balanced in the first place :-). Congress controls spending so that they have a means of controlling the executive whom afterall control the military (a military they have to pay)

For the 2nd thats down to public sentiment (and possible a tiny amount of morality), were the US to use its 'vastly superior arsenal' in the manner your suggesting its population would explode once the images started hitting the TV and so i suspect would ours and europes. Theres also the reactions of the Russians and Chinese to consider.