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What's the worse case scenario if we don't raise the debt limit?
- Thread starter Skandelon
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Last time it happened, it caused our borrowing rate to go up .6%. I would expect a similar reaction this time, short term. No one will miss their social security check, despite the fearmongering of the president.
Long term could be more serious, but it won't go long term.
There is no doubt it will be raised, but republicans would be suckers to let it go up without substantial cuts already in place.
Long term could be more serious, but it won't go long term.
There is no doubt it will be raised, but republicans would be suckers to let it go up without substantial cuts already in place.
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I think the Dow will lose about 600 - 650 points or so and interest rates will go up about 1%. Then Congress will get something passed within a day and the market will rebound about 300 points. Interest rates will stay at the higher level for the near future (6 months or so.)
So the average Joe with his 401k invested in the stock market would lose about 5% of their savings overnight. Credit card interest rates would be adjusted up. Home mortgages interest rates would go up. Car loans would go up. In other words, obtaining credit will be enough tougher than it is now.
Not raising the debt ceiling could be the trigger for the double dip recession.
If the legislators actually refused to raise the debt ceiling, and demanded that the government live within its means? I think we would see a short (maybe two weeks) period of panic, followed a few months later by a HUGE economic upturn, and a new era of prosperity for the U.S.
Really? If about half of all the government spending that is baked into our economy were to be withdrawn, we would have "a few months downturn" followed by a huge economic upturn?
Millions of people not receiving social security checks, especially those with no other income, military personnel not receiving paychecks, medicare benefits being slashed for millions, would lead to an era of prosperity?
Pure fantasy.
Raising the debt ceiling and living withing our means in the future are really two different issues.
Raising the debt limit is to pay for loans on money that's already been spent. You can't unring the bell.
Republicans are using the debt ceiling primarily as leverage to get spending concessions they feel like they won't get any other way, just like democrats used it to gain concessions from Bush.
None of them have any intention of not paying our bills, but republicans want to limit the rise of the debt ceiling in the future by cutting spending. Democrats want to increas taxes and let the spending and debt continue to run wild.
The debt ceiling will be increased. Period.
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This is what is pure fantasy
Skandelon
<b>Moderator</b>
I know our own personal finances aren't the same as the government, BUT if I took on too much debt the worse thing seems to be to give me more credit so I could take out more debt.
It seems that the best thing to do would be to sell my boat, xbox, get rid of the dish network and stop eating out etc....in other words, stop spending and get rid of the things that caused me to overspend to begin with, right?
Am I oversimplifying this? It just appears there is a lot of frivolously government expenses that could be cut and it just doesn't seem right the private sector workers are taking pay cuts while government workers continue to get raises. It's like the government thinks they are immune to accountability during a recession.
What would happen if we did not raise the debt limit and defaulted?
1. We would loose credibility all over the world.
2. Interest rates would go up.
3. It would bring on a severe recession or depression all over the world.
4. No government would trust the US again.
1. We would loose credibility all over the world.
2. Interest rates would go up.
3. It would bring on a severe recession or depression all over the world.
4. No government would trust the US again.
No, not oversimplifying it. it needs to be reduced to terms we can understand. You Just need to take the next logical step and decide whether or not you intend to pay the people you already owe. The problem for you would be compounded if you added to one credit card to pay the others, because you didn't have the cash. You'd be headed for disaster sooner or later and so is the government.
Additionally the government has already authorized expenditures that have not gone on the books yet (like Obamacare), just like you may have made purchases that don't show up on your credit card balance yet that you can't cancel or return. The increase in the debt ceiling is to make room for those purchases, because the government will have to borrow the money to pay them.
The president and democrats won't let those expenditures be repealed or rolled back, so they have to be paid. Thus ,the increase in the debt ceiling.
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Skandelon
<b>Moderator</b>
That seems to be the problem. It would be like me with bad debt saying, "I can't rid of my boat, think of my children, they won't have fun this summer. The poor children."
I suspect there is enough wasteful spending and OVERSPENDING that could be cut where the "important" things wouldn't even need to be touched and our debts to others could still be paid, but I admittedly am no expert on the subject. It just seems to me that we have bitten off more than we can chew but are unwilling to spit anything out.
freeatlast
New Member
It is not a cut and dry answer. What we are seeing is a test run for what will come in a few month or possibly a very few years. First how long a shut down? Most of the world will put up with a short shut down although it will most likely have some effect on the world economy and our credit rating. We are not at the point where we cannot borrow more, but we are at the point where we cannot pay back what we have borrowed and will have to continue to borrow to pay what we have borrowed until we finally come to total default and bankrupt and we lose our place in the world community at the minimum.
The problem is that at some point there will be a total default and that is when everything will break lose. Our personal savings will be gone and we lose just about everything we have. Most likely the government will declare a martial law and the military would rule instead of the people, but we would not be able to defend ourselves against major power if they come against us.
We could not raise the debt ceiling, and still pay our bills. The payments on our debt is about 200 billion per year. The total yearly tax revenue, is over 2 trillion. Very simple: force the government to operate on a 1.8 trillion dollar federal budget, whatever it takes.
Simultaneously, institute a 10 percent tariff on ALL imported goods. Bingo. A balanced budget.
My prediction:
Republicans will fold. They'll accept promises for spending cuts from Obama he has no intention of keeping and give him the tax increase he wants. The only thing that will happen will be the tax increase and modest spending cuts as window dressing.
And hand him the 2012 election in the bargain.
Republicans will fold. They'll accept promises for spending cuts from Obama he has no intention of keeping and give him the tax increase he wants. The only thing that will happen will be the tax increase and modest spending cuts as window dressing.
And hand him the 2012 election in the bargain.
freeatlast
New Member
Where did you get those numbers? The payment on our debt is over 1.5 trillion a year. We are borrowing over 4 billion every day to pay on the debt. 4 billion times 356= 1.46 trillion and that is VERY conservitive because this president has nearly trippled the deficit since in office. No it is not possible to balance the budget much less the debt.
freeatlast
New Member
I think that is very much a possibility.
Wow...this was easy! Below are CTB's "points," and my rebuttals (the hardest thing was picking which angle from which to decimate his argument--there were so many...).
1. We would ""loose" credibility all over the world.
- From what I can tell...who cares who "looses" credibility? Maybe it would allow us to re-think our spelling, and simply "lose" credibility. Not to mention...maybe it's time I quit caring what Botswana thought of our credit rating. Borrowing should be on the back-burner anyway. Maybe this will help the free-loader nations handle their own problems, anyhow.
- Well, speaking as someone who once owed WAY too much money...maybe it's time for living beyond one's means had a penalty. We haven't learned any other way...It's funny how 18% interest bothers you less when you're debt-free. And yes...I know that interest rates will be a problem. But if we must deal with it, then bite the stinking bullet now, before we crash!
- "The sky is falling!" Chicken-little scare tactics. Tired of the histrionics and the untruths. Everything in the last five years has offered the same threat. I'm sorry, but you folks lie too much. I don't believe you. And even if you're right...it beats listening to chronic liars from Washington and their sycophants.
- Good. Maybe they'll quit asking us for $$. I'm tired of being the world's emergency ATM, anyway. I'm great with emergency food shipments. I'm quite tired of AK-47's and playground equipment for tin-horn republics. (They're going to blow up the playground equipment, anyway!)
- (Insert projectile vomiting sound effect here). I'm sick of lies disguised as "worst-case scenarios." When you over-borrow, scatological events occur (how's that for cleaning up a very true but vulgar phrase?). One should think of that before engaging in stupid, stupid over-extension of one's means...And if you borrow enough...there's no "cute" way out of the mess. If there was, you'd be on some stupid Lifetime TV show for flamers. In other words: Welcome to the "actions have consequences" network. Hope you enjoy our programming.
I just know I'm tired of being lied to by the socialists--just so they can raise the amount of my money they steal, spend, and buy votes with. Every few months, a crisis that will ruin everyone comes along...and all we have to do is give up some $$ so that Grandma doesn't die. Well, I love your Grandma. But she ain't dying...and I figured out that our leaders are filthy liars. So I'm done listening.
Congress: Let the debt ceiling rot. I got smart in 2003, and realized I didn't need to borrow more $$. Now, granted...you're a GREAT deal stupider than me...but even you, in your limited brain-stem functions should figure out that when you reach rock-bottom....ceasing to dig is always wise. Quit borrowing! Bite the bullet! Yes, it will cost you next election...but if you love your country (most of you don't), then do it!!!
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No, my friend, it is not. The payment on the debt we have already taken, is only 200 billion per year. You are confusing the amount of money we are still borrowing, with our payments on our present debts.
Yes, it is possible to balance the budget.
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