US gubmint shutdown + default + subprime sequel?

[Xiahou]

These people are adults, why is this happening?

Because a significant number of them live in a fantasy world where tax hikes in a stagnant economy are a good idea.

[Samurai Waki]

Because a significant number of them live in a fantasy world where tax hikes in a stagnant economy are a good idea.

Just like Lowering Taxes during wartime is a good idea.

[Strike For The South]

Because a significant number of them live in a fantasy world where tax hikes in a stagnant economy are a good idea.

It's a repeal of one particular tax and the closing of loopholes

Or else it will just fall on the back of the middle and working class. Ho hum, rich get richer, poor get poorer

[Subotan]

Because a significant number of them live in a fantasy world where tax hikes in a stagnant economy are a good idea.

The logic behind that is that lower taxes compel firms to invest and take on more workers. This is not strictly accurate. Although it allows firms to take on more workers, it does not compel firms to take on more workers. The reason that unemployment is so high and growth is so low at the minute is because firms in the States were able to lay off huge amounts of workforce whilst experiencing huge productivity gains by forcing the remaining workers to work harder better faster stronger for fewer and longer. These productivity gains have allowed firms to stay in the black as demand has plummeted; indeed, many firms are now sitting on lots of liquidity which they could choose to expand their business with.

But they haven't! This is because demand has not yet expanded enough to compel firms to expand supply to meet that increased demand. Low taxes aren't doing enough to keep demand up (And, as an aside, all the gains in living standards tha Americans should have from lower taxes are offset by pricier healthcare than the rest of the world). Whilst tax hikes might at first glance seem to reduce demand yet further, this is not necessarily the case. The marginal propensity to consume of the super-rich is low; if you're poor and you get a tenner, you're more likely to go out and spend it immediately than a rich person is. Likewise, taking a tenner off a poor person is more likely to affect their consumption than it is the rich person. By taxing the rich (who, as has been said, are often sitting on piles of cash as well as having done very well over the past decade), in order to redistribute to the poor (E.g. studies have shown that food stamps and unemployment benefit are the single most effective means of increasing wealth in the economy, per $ spent by the government) demand can be increased, and the deficit can be brought down.

[Xiahou]

Frankly, it looks like we're already headed towards a double-dip recession. The first quarter growth was just revised down to 0.4%. The second quarter initial numbers are a tepid 1.3% and likely to be revised down later as well. If you think raising taxes is the solution to this problem.... see my earlier post. Higher taxes would further damage the economy and likely result in lower tax revenue. I'm afraid you're going to have to hold off on your redistribution of wealth until we're in better economic times.

Just like Lowering Taxes during wartime is a good idea.

And how does re-arguing this solve anything? Not very "adult", I must say....

[a completely inoffensive name]

Frankly, it looks like we're already headed towards a double-dip recession. The first quarter growth was just revised down to 0.4%. The second quarter initial numbers are a tepid 1.3% and likely to be revised down later as well. If you think raising taxes is the solution to this problem.... see my earlier post. Higher taxes would further damage the economy and likely result in lower tax revenue. I'm afraid you're going to have to hold off on your redistribution of wealth until we're in better economic times.

Except they were not raises on individual tax rates. Obama's proposal had all revenues coming from closing corporate and individual tax loopholes. No rates were raised.

[HopAlongBunny]

Ready for a conspiracy theory?

I thought so. Pull up a chair.

The gov't is going to pull a GM style restructuring. Social Security is actually cash-flow positive as long as the gov't pays interest on the bonds it holds as securities. A "technical default" will necessitate hard decisions; since not paying interest to foreign holders would be catastrophic the gov't will short shrift domestic holders (not all of course). As gov't programs become cash starved due to missing interest payments, the "weak cash sucking programs" will be restructured any way the gov't likes. The burden of adjustment will come to rest where it always ought to. On the poor, elderly, and most needy of the population.

Just my humble opinion ;p

[a completely inoffensive name]

A mature response

Telling the truth is very mature. Little kids fib all the time, not adults, except when it comes to spouses and cops.

A) His characterization of "tax hikes" is completely wrong.
B) He is clearly attacking the Democrats for "living in a fantasy land" when the Republicans are asking for a Constitutional Amendment in order to America to not get downgraded.
C) It comes out of no where to what I saw as a facetious comment from Strike (I don't think he really just called Congress a bunch of adults), so I can only assume it came from partisan frustration.


The American system was designed by the founders to be a place of compromise, it's what allowed the Constitution to be approved in the first place. The Republicans, specifically the Tea Party branch is acting antiamerican by outright refusing to compromise, choosing instead to sabotage the standing and strength of the nation for ideological purity.

[Xiahou]

The American system was designed by the founders to be a place of compromise, it's what allowed the Constitution to be approved in the first place. The Republicans, specifically the Tea Party branch is acting antiamerican by outright refusing to compromise, choosing instead to sabotage the standing and strength of the nation for ideological purity.

Hillary Clinton wants to talk to you.

[a completely inoffensive name]

Hillary Clinton wants to talk to you.

Complete strawman. This isn't a matter of them disagreeing and arguing. Tea Party is refusing to vote for anything. Boehner walks out 3 times. OBama gives a plan with a money ration of 3 cuts to 1 increase in revenue and gets walked out on.

This is playing the "starving the beast" tactic to the utmost extreme. And you need to do better if you want to be in the right.

EDIT: Alright, I gotta stop being an ass.

[Xiahou]

Let's take a step back shall we? Boehner's plan roughly cuts $900bn over the course of ten years for an equivalent, but immediate increase in the debt ceiling. Do you realize that if all those cuts were made immediately, -this year- we would still be running a deficit for the year? So, at best case, he's talking about trimming a 10th of our current annual deficit. Do you also realize that the "down the road" cuts are non-binding because the current Congress can't pass legislation that ties the hands of subsequent ones.

So basically, what you have is $22bn of cuts in the 2012 budget, in return for a $900bn increase in the debt ceiling. Obama and Reid have called that "dead on arrival". You call him "antiamerican" for proposing it. Who's being unreasonable and unwilling to compromise? When it comes to cutting the deficit, Boehner's plan barely even registers yet the Democrats would have you think they want to throw grandma off a cliff.

[a completely inoffensive name]

Let's take a step back shall we? Boehner's plan roughly cuts $900bn over the course of ten years for an equivalent, but immediate increase in the debt ceiling. Do you realize that if all those cuts were made immediately, -this year- we would still be running a deficit for the year? So, at best case, he's talking about trimming a 10th of our current annual deficit. Do you also realize that the "down the road" cuts are non-binding because the current Congress can't pass legislation that ties the hands of subsequent ones.

So basically, what you have is $22bn of cuts in the 2012 budget, in return for a $900bn increase in the debt ceiling. Obama and Reid have called that "dead on arrival". You call him "antiamerican" for proposing it. Who's being unreasonable and unwilling to compromise? When it comes to cutting the deficit, Boehner's plan barely even registers yet the Democrats would have you think they want to throw grandma off a cliff.

The Republicans are still being the unreasonable ones. Obama and the Democrats are justified in calling it dead on arrival. Here is the problem. Boehner's plan would have the debt ceiling only extended for the equivalent of a few months. It will become an issue again just in time for the 2012 election. Obama wants a plan that will at least extend the debt ceiling past the 2012 election so that this issue does not become a campaign issue and so a longer term plan can be implemented.

Moody's has been saying that neither the Republican plan nor Reid's own plan would stop Moody's from going ahead with a credit downgrade for the US because they are not comprehensive enough.

The youtube video you linked to seems to be about Paul Ryan's plan, not the current plan proposed by Republicans, so I don't see how that is relevant to the statement you imbedded it in.

Obama's plan had 1.6 trillion dollars in cuts. 700 billion more than Boehner's plan, and in return he wanted to close loopholes. Not increase taxes, but close loopholes. This is a solid, very long term and much more important conservative plan since the revenues would only amount to 1.2 trillion. Tea Party said no because it was Obama plain and simple. They won't work with Obama and they have made it their mission statement to make a blanket opposition to everything he does and says. Again, this is not how the government was envisioned to work. The minority power is to force a compromise that will make sure that the will of the minority is not trampled upon. The will of the minority is not being trampled upon because obama gave 1 trillion in discretionary cuts and 680 billion in cuts to social programs, the programs that conservatives want cut the most. To continue to refuse, reject and hold the economic standing as a hostage is anti-american because it goes against what the system was designed for.

The Boehner plan is simply political fodder that they know is not meant to be legitimate. The goal of the plan is to have it pass the house, let the democrats kill it and give themselves the ability to say, "we tried" to their constituents and the country. Even then, the Tea Party was giving them hell because they didn't want any sort of plan passed because they want the default to come to force massive cuts to fulfill their ideological purity.

What they could have done is have Boehner and Reid both pass their plans, then go about with the process of "reconciliation" to work out the details and merge the two bills. But they didn't, after the Boehner bill barely passed by 8 votes, they went and immediately killed the Reid plan to egg him on to kill Boehner's plan in the Senate.

This has been the plan and it shows how much of a joke the Republican's have been "trying".

1. Obama gives plan.
2. Boehner walks out and flat out rejects it.
3. Boehner comes up with his own plan that he knows is not good enough for the health of the country because Moody's and other credit rating agencies says it isn't good enough.
4. Boehner says he wants his plan done or the US will default.
5. Boehner gets his plan passed in the one place he knows he can get it passed.
6. Boehner then provokes the Democrats into killing his bill.
7. Republicans ride the frustration of the default to power by saying they were the only ones with a plan.

The Republicans are playing politics pure and simple and they are acting as the victims when it is clear they are the aggressors.

If Obama and the Democrats were being the unreasonable ones here, why did the Republicans kill the Reid's plan instead of trying to merge it into a bipartisan plan. Why did the Republicans have to postpone Boehner's plan until today even though they have a 240 person majority in the house? They could have passed their own plan 3 weeks ago but they didn't.

The writing is on the wall.

[Centurion1]

the plan just passed in the house.

and then the senate voted it down i believe.

Edit: damn conflicting news

[Xiahou]

Obama's plan had 1.6 trillion dollars in cuts.

Wait, Obama has a plan? Links plz.

Not increase taxes, but close loopholes.

Those are the same thing. If you used to be able to deduct (for example) your mortgage payment, and now you can't... your taxes have gone up. This isn't really that complicated. IIRC, some of the "loopholes" bandied about are about equipment depreciation. This would be a disincentive to new purchases for businesses. Allow me to reiterate- new taxes aren't a good idea in a stagnant economy. Businesses are still grappling with the fallout from Obamacare, they don't need this heaped on as well. Our tax code, is a mess- we should eliminate deductions and lower rates accordingly.. but that's a discussion for another time.

The Republicans are still being the unreasonable ones. Obama and the Democrats are justified in calling it dead on arrival. Here is the problem. Boehner's plan would have the debt ceiling only extended for the equivalent of a few months. It will become an issue again just in time for the 2012 election. Obama wants a plan that will at least extend the debt ceiling past the 2012 election so that this issue does not become a campaign issue and so a longer term plan can be implemented.

Indeed- having the debt ceiling come up again before the election is the last thing Obama wants. It could be very damaging to him politically. Both sides are playing politics with this looking to either blame the other if things fall apart or to take credit if something gets done. In either case, they're both trying to control the narrative and neither are negotiating in good faith. If anything, it's the House GOP freshmen who have been the best about being principled on the issue. They made campaign promises to vote against any new taxes and some ran on voting against any debt ceiling increase. Like it or not, they're keeping their word and doing what they ran on.