It's interesting that the markets haven't acted more dramatically so far. The dollar has declines, and the stock market has had a bad week, but nothing dramatic. Today we got GDP numbers that were much lower than expected, but the reaction has been muted. I'm going to assume that the markets are smarter than I am, which means that there is still confidence that either Reid or Boehner will get a plan passed their own chamber. Even if they do, I still don't see how they get that very same plan passed the other chamber, but what do I know?

I think that if nothing happens today, and the weekend is more of the same, Monday will be a very bad day for the markets.

Ray Jay wrote:The other difference between the Reid plan and the Boehner plan is how much (and long) they extend the credit limit. Boehner extends by $900 billion (which is only 6 to 8 months!) whereas Reid extends by $2.2 trillion which gets us past the next election. If there aren't a lot of specific cuts, than a short leash makes sense given our profligate ways.

Furthermore, as Krauthammer pointed out several days ago, the Dems are pointing to Reagan, who raised the limit 18 times, as some kind of role model. Well, do the math: 18 raises in 8 years means each raise averaged less than 6 months in length--and the economy didn't collapse, contra the current White House. He only wants the longer term (btw, I'm thinking it's more than $2.2T) because he knows he's wrong about the people being with him and doesn't want to debate it before the election.

Frankly, I prefer much larger cuts accompanied by small tax increases for the wealthy (over $1 million of income). I haven't seen the details of the gang of 6 plan, but I probably be comfortable with that sort of approach.

Because they don't have details--just an outline.

See, I think, based on what you said, you and I could come to an agreement. So, I don't get this. Well, I do. The Dems think they control the government. The GOP Tea Party contingent is adamant, so you have a complete breakdown.

Part of the problem is Democrats want to define "rich" as $200K (single) or $250K (married). That is ludicrous. If you live in Tooele, Utah that might be rich, but it's not in most urban or suburban area. And, I think whatever taxes you and I agree to raise have to be tied to inflation so we don't wind up with another AMT debacle.

The other important point here is that none of these plans have passed any chamber of the legislature or have been approved by the President. We should get a vote on Boehner's plan tonight, and it will be close. I hope it passes.

Hopefully today. I am a Tea Party guy, but they are blowing it here. They have an opportunity to really put the heat on the Democrats and they're blowing it.

If Obama and Reid veto it without an alternative, I don't see how you can conclude this is anyone's fault but theirs. They are against the Republican plan, but they haven't put forth a specific one of their own, and it's not clear that they have the necessary votes in either chamber to pass it.

Obama is supposedly addressing the nation at the moment. It better be a different song. He is a broken record and has proposed nothing. In fact, his actions during this negotiation remind me of nothing so much as TR's words about the critic and the man in the arena. Obama has been, effectively, a spectator, yelling at the man trying to get something done (Boehner).

Meanwhile, GDP is supposedly 1.3%, i.e. anemic. 1st Quarter was downgraded to 0.4%.

I remember Danivon saying we were doing the right thing by all that government spending and comparing our growth favorably with the UK.

How do you like it now, Dan?

Our growth figures for Q2 came out earlier in the week. 0.2% on the quarter, 0.7% over the past full year.

So we are doing worse than you are.

danivon wrote:Our growth figures for Q2 came out earlier in the week. 0.2% on the quarter, 0.7% over the past full year.

So we are doing worse than you are.

Are you on the verge of borrowing 18% more on your debt? Getting downgraded?

And, is several trillion really worth the difference between 0.2 and 0.4%?

We have lost about 1% of projected GDP, which cumulatively is worth a comparable amount to our economy over a few years.

Our deficit is about the same as yours as a proportion of GDP, and while we do not have a debt limit, and our debt was lower (thanks to balanced budgets up to 2001 and lower deficits thereafter), a year will increase debt by about 1/6.

Next question

And yes, the economy is more important than the budget.

I can see why the TP is revolting against Boehner's plan. It calls for only $900 billion of reductions over the next ten years, where the estimated deficit is about $10 trillion, and the actual spending is something like $30 trillion. In other words, it represents a 3% reduction in federal spending over a 10 year period, or a rounding error. The latest reports is that they want something transformative, such as a balanced budget amendment, to go with it.

By the way, the latest estimates are that Apple has more cash on its balance sheet than the US Treasury.

I think the thing about Boehner's plan was that it would give a short period for the TP (or anyone else) to come up with more drastic cuts that could be part of a hard-ball debate in early 2012. I see why it would have been to their advantage to back it, whether it got vetoed by the Senate/Prez or had passed.

I believe the TP'ers are looking for the Balanced Budget Amendment to be brought up in the next six months. They do not believe either the Dems or Reps of bringing the issue to the vote of the houses. (rightfully so IMHO).

Doctor Fate wrote:

Ray Jay wrote:The other important point here is that none of these plans have passed any chamber of the legislature or have been approved by the President. We should get a vote on Boehner's plan tonight, and it will be close. I hope it passes.

Hopefully today. I am a Tea Party guy, but they are blowing it here. They have an opportunity to really put the heat on the Democrats and they're blowing it.

I spent much of Wednesday in a car listening to the radio where several of these Tea Party Reps were interviewed. My take-away is that they were completely nuts. It reminded me when I was young and I would debate religious people about religion. I learned the hard way that you can't argue issues of faith because at issue is FAITH.

These guys seem to be adopting a faith-based approach to political ideology. You can use logic on them all day long, but if it's outside their orthodoxy, it's bad, the political equivalent of sin, or worse. I think leadership is doing what they can, but they are like the Pope and the Protestants at the time of Martin Luther.

A week ago I would have said that they would figure out some kind of compromise, but now I agree with Ray, I don't think they're going to get it done. Complete dumbsh*ts all of them, but especially these ignorant faith-based ideologues.

bbauska wrote:I believe the TP'ers are looking for the Balanced Budget Amendment to be brought up in the next six months. They do not believe either the Dems or Reps of bringing the issue to the vote of the houses. (rightfully so IMHO).

What would a Balanced Budget Amendment entail?

Would it insist upon a zero deficit budget? Seeing all the hassles over trying to get a reduction in deficits of up to $400Bn a year, I'm sceptical that an instant deficit cut of over a $Trillion is possible at all. Seeing that Boehner thought he had a plan to cut about 50% more than it actually did, I'm not sure that it's as easy as some would wish it is to come up with savings.

One problem is that a cut in one area may lead to increased costs elsewhere.

And here's my essential thinking about the adamance that no taxes be increased:

So, it's acknowledged that debt isn't that good, and that deficits are bad. You may be able to reduce deficits by cutting spending alone (although good luck with that!), but you aren't going to be able to reduce the value of debt unless you are collecting more tax than is being spent.

However, if that were to happen, I can't believe for one second that Tea Partiers and others would not be clamouring for tax cuts to avoid the government 'profiting' from tax.

But, if you think that the debt limit is too high and you want it to go down, at some point people are going to have to start paying it down. So, who pays it?

Taxpayers.

The faster you want debt to go down, the more that taxpayers will be contributing. And why is this such a bad idea? After all, Americans have been voting for governments that spend more that Americans are prepared to pay for. Who do you think owes the money? Americans.

(good news is that the majority of the US public debt is owed to Americans - you would be paying it back to yourselves)

Danivon,
You are correct that the taxpayers pay the deficit and debt. Simple.

I think that the recipients of government services could "share the load". Think about that... You cut services until the debt is paid.

Recipients of government services are generally taxpayers, Brad (I know there's the trope about 51% of Americans not paying Income Tax, but that's not the only Federal tax, let alone the only way that people indirectly end up paying towards government).

Playing 'taxpayers' off against 'recipients' makes great soundbite, but the reality is a good deal more complex.

Anyway, you didn't answer my question about the 'Balanced Budget Amendment'. What does it actually mean?

As the BBA has not been legislated yet, it is only conjecture as to what politicos put forth. Therefore the following is opinion only...

The BBA would require the Federal government to not spent more than it takes in.

Taxes could not be increased w/o 2/3 approval from both houses and a Presidential signature.

Deficits must be decreased by 8% every year.

Deficits spending is allowable if 2/3 majority of both houses approve it. (i.e. Pearl Harbor / WW2)

The preceding represent the views of bbauska only. We now return you to your normally scheduled programming.

Several pages ago, Steve indicated that Obama / the Congress haven't approved a budget for something like 800 days. I was hoping to understand that better. Per Wikipedia:

http://en.wikipedia.org/wiki/2011_Unite ... ral_budget

The budget did not pass by the September 30 deadline, and the government was funded by a series of seven continuing resolutions continuing funding at or near 2010 levels. The budget negotiations culminated in early April 2011, with a tense legislative standoff leading to speculation that the nation would face its first government shutdown since 1995. However, a deal containing $38.5 billion in cuts from 2010 funding levels was reached with just hours remaining before the deadline. The 2011 budget was enacted on April 15, 2011, as Public Law 112-10.