The Debt Ceiling Talks

by Pejman Yousefzadeh on July 10, 2011

I tend to agree with John Boehner’s decision to go for smaller spending cuts without a tax hike–a position which James Pethokoukis outlines. It is disappointing that we will only get $2.4 trillion in debt reduction over ten years instead of $4 trillion, and it is especially disappointing that comprehensive tax reform apparently won’t be part of any deal between the White House and Congressional Republicans, but right now, there just seems to be too much in the way of crafting and implementing a grand Congressional bargain. We are getting perilously close to default, and it would probably be best for the White House and Congress to agree on a smaller–but still significant–debt reduction package that will help bring us back to fiscal sanity, and will prevent the United States government from defaulting on its obligations. Agreeing to such a deal will but the government a lot of time to deal with the remaining long term fiscal problem, and the parties can go back to revisit the issue in order to finally bring about a tax reform package, and make any necessary further cuts to the budget.

I have no problem with the GOP’s objection to the White House’s insistence on higher taxes–quoted by Pethokoukis–an insistence that is especially bizarre, as House Republicans note, given that previously, the Obama Administration was insisting that we absolutely, positively, had to have a clean debt limit increase. But fairness requires me to point out that a couple of Republicans are being equally ridiculous. Michele Bachmann has apparently decided not to vote for a debt limit increase no matter what the final negotiated package may entail, and it appears that Tim Pawlenty is willing to follow her lead on that issue. Obviously, this puts pressure on the House Republican caucus to do the wrong thing by objecting to a good deal, and bringing about a catastrophic debt default. About the only Republicans in the Times story who are quoted as taking a reasonable position on the debt ceiling talks are Mitt Romney, and Jon Huntsman. By curious coincidence, they are the very same people who have the best chance of getting my vote in the Republican Presidential nomination contest.

  • Sy

    Deleting this feed.  Ignoring all the other spending cuts that can take place before the debt service is absurd.  What’s wrong with stalemate and no increase in the debt ceiling?  We’ve had enough.  Do we say next time is it?  Or the next time?  The two candidates you quote are the same type people that helped get us here.

    • Pejman Yousefzadeh

      What’s wrong with no increase? This. But I guess that since you have decided to delete this feed, you no longer have to entertain arguments that conflict inconveniently with your worldview.

      • Sy

        Thought you’d have a squishy answer so I checked back and wasn’t disappointed.  Quoting NPR and the Bipartisan Policy Center as your source is dubious at best and certainly only one side of the story.  The only way to break the cycle is to break the cycle.  The time is now.  According to the CBO interest on the debt is only 8% of the budget.  There are plenty of other areas to cut…and cutting is what we need.  What’s wrong with no increase…ok…lets decrease it.  The reality is that its critical for our government to live within its means just as we are expected to do.  Hey, lets do something crazy like freeing the private sector so we can grow our economy.  Stop the growth of government (well really reduce it) and reduce taxes.  Its only worked every time its tried. 

        • Pejman Yousefzadeh

          I like how you utterly fail to argue with the link I provided; you just pronounce it “squishy” and think that this is the end of the argument.
          Also, weren’t you supposed to stop reading this blog? You know, as you promised to do?

          • Sy

            I stated that I would be deleting your feed from my yahoo and have but am interested in your comments as they provide some insight.  So far they also support my decision to delete the feed…which I don’t take lightly.  Merely placing a link and stating that’s its proof is not debate.  Each source has a bias.  NPR is extremely biased.  Since you like links as proof:  http://www.hutchnews.com/Wirecolumns/Cal-thomas-column–1

            The “Bi-Partisan Policy Center”….  That’s like quoting the recent UN healthcare study as proof that the US needed Obamacare (hint read the criteria for the rankings).  What this country needs is some principled conservative economic policy (lower taxes, less government, less regulations) not bi-partisanship.  It only works every time its tried.

          • Anonymous

            Introducing the piece on NPR amounts to poisoning the well. Yes, NPR has a bias, but arguments need to be addressed; it is not enough to say “that argument comes from NPR, therefore it is wrong/I don’t have to take it seriously/I don’t need to address it because of bias,” etc. How would you like it if I wrote “CATO has a bias, therefore I don’t need to take its articles seriously”?
            Speaking of the CATO piece, it is likely right in saying that we will have enough to make interest payments. The problem, however, is that we will have to skimp on other payments. Since the United States government pays 80 million bills per month, that’s going to amount to a lot of payments skimped on. And if that happens, creditors–even the ones that are getting paid–will wonder whether the United States has become a significant credit risk, since it cannot pay all of its bills on time, and in full. This alone can help lead to higher interest rates for government borrowing, which means that it will be more expensive to borrow money, which means that we will have less of it to spend on defense, infrastructure, etc. This could lead to a lower standard of living for Americans. Meanwhile higher interest rates will filter down to the individual level since interest rates are pegged to Treasuries, which will mean that it will become a lot more expensive to use credit cards, borrow to buy a home or a car, or take out student loans.
            Notice that the CATO piece concedes that “[a] 1 percent increase in interest rates could cost taxpayers more than $100 billion per year.” It tells us that “we will have to hike interest rates to ensure that the Chinese and others keep buying our bonds” if we don’t solve our fiscal crisis. True, but if we don’t increase the debt limit, we will also have to hike our interest rates–and that hike will be sudden and quite significant. Given the anemic growth of the economy, such a hike will effectively end our ability to augment GDP growth through monetary policy.
            And of course, none of this even touches on the increased possibility of the dollar being ditched as the international reserve currency in the event that the debt ceiling is not raised.

          • Sy

            With your logic there is no debt limit for the US Government and we have to do it because we have walked ourselves into a corner  So then you are admitting that there is a corner and a day of reckoning. 

            In either case, better to act now while the repercussions are less than catastrophic and the climate politically advantageous.  Refusing to raise the debt limit forces the government to prioritize spending…something they desperately don’t want to do but what is desperately needed for our economic recovery.  For more read here:  http://blog.heritage.org/2011/07/11/the-u-s-government-debt-default-bogie-man-scares-no-one/

            Further, to address your other point, a ticket for jaywalking is not the same as a conviction for murder.  Both are crimes but significantly different.  As a source NPR is not the ticket.  Evidence of this is voluminous.  Arguably CATO much less bias and while the link above (which also supports my position) is from Heritage, Heritage is adept at supporting their positions with logic and thorough analysis.  NPR…not so much.

          • Pejman Yousefzadeh

            1. I never said that there was no debt limit for the government. If there were no debt limit, we would not be having a debate about whether to raise the debt ceiling. The presence of a “ceiling” necessarily indicates that there is indeed a debt limit.
            2. Refusing to raise the debt limit will only serve to make the United States a deadbeat on millions of bills. Do you actually think that creditors won’t notice? Do you really think that won’t have an effect on the country’s credit rating, its ability to borrow, and interest rates for both the government and its citizens?
            3. Your third paragraph is more well-poisoning, and you blithely dismiss warnings about the debt ceiling without actually contending with those arguments. And of course CATO has a bias. So does Heritage. I have no problem with them having biases; as a small-government libertarian-conservative, I hold many of those biases myself. CATO is even on my blogroll (twice!). But I cannot simply say “CATO has a bias, therefore I won’t contend with inconvenient arguments,” which is why in my last comment, I actually went through the CATO piece and specified where I think it came up short.

          • Sy

            Cato released some excellent commentary on this matter this morning: 
            http://www.cato.org/pub_display.php?pub_id=13339

  • Anonymous

    You’re supporting the two squishiest “conservatives” in the GOP primary? Quelle surprise.

    Is there no way for the executive branch to prioritize and/or cut spending so that there is no default? It’s completely and entirely impossible?

    • Pejman Yousefzadeh

      Point out where I said that it is impossible. Or better yet, stop lying about what I wrote.

      • Anonymous

        Point out where I said that you said that it is impossible. Or, better yet, stop lying about what I wrote. An interrogative isn’t the same thing as a declaration. I asked you a perfectly legitimate question. But you knew that.

        And allegedly squishy? Who are you trying to kid? Also, do me a favor and don’t presume to know anything about who I’d support. I don’t want Bachmann (who is very likely smarter than you), Hunstman, or Romney.

        • Pejman Yousefzadeh

          You didn’t ask me a legitimate question. You tried to reframe what I wrote in a way that made it easier for you to attack my position. Your question was nonsensical, because I nowhere said or implied that it is impossible to cut spending so that there is no default. This blog post is in large part about how to cut spending so that there is no default, in the event that you have failed to notice. As for whether I am going to lose sleep at night worrying about whether Bachmann is smarter than me, please be assured that I am not. Additionally, I am no longer going to lose sleep worrying that you are going to wade into my comments section and pollute it with bad arguments, and insults that add nothing to the discussion, save the knowledge that time should no longer be wasted debating people like you.

  • Anonymous

    Feed deleted.

  • https://openid.aol.com/opaque/15880aaa-ab2f-11e0-8195-000bcdcb5194 deftone582

    So, not only are you an authoritarian, you’re also a liar. How novel.

    I’d like to say that you’re like Charles Johnson of LGF, banning anyone who has the temerity to disagree with you, but you also seem to ban anyone who ever-so-slightly offends your oh-so-delicate sensibilities and for asking questions to which they just want an answer. Then, to top it all off, you completely mischaracterize their question, impose your own intent over theirs, never give them a chance to rephrase or clarify, and, of course, fail to answer the question. Good show, old chap, good show.

    Maybe, if you do that sort of underhanded thing enough and you’re lucky, you won’t have any readers left and then you can post to the one person who always agrees with you.

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