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Will the Debt Ceiling Be Raised?

Original post made by Cindy Cross, Parkside, on Jul 12, 2011

Will the Debt Ceiling Be Raised? By Cindy Cross
President Obama and congressional leaders are currently in negotiations to avoid debt default. Obama is refusing to budge on raising the $14.3 trillion debt ceiling.
"Never before in its history has the United States defaulted on its debt. The debt ceiling is not something that should be used as a gun against the heads of the American people to extract tax breaks for corporate jet owners, or oil and gas companies that make billions of dollars because the price of gasoline has gone up so high," said Obama.
Obama is insisting to congress that the issue not be extended, but resolved now. If negotiations fail, the Treasury will not have enough money to pay government workers and keep government institutions, like state parks, operating. Obama has set the deadline for reaching an agreement at August 2nd, while others argue that July 22nd is a more realistic date given the amount of time needed to set the deal (if any) in motion.
Failure to raise the debt ceiling could have far reaching, even catastrophic results. Many political pundits foresee the U.S. falling back into a recession, unstable foreign markets and a threat to the U.S. dollar's reserve status. If the government defaults, the 2008 bailout will look like a tiny ripple in comparison to the tsunami that will come.
Imagine the U.S. unable to make good on its debts. Bank loans would be virtually unattainable since bank funds would be insured by an unstable source—our own treasury.
In the next couple days, democrats will have to make a firm stand or forfeit their demand for increasing taxes on wealthy Americans and corporations. Republicans will have to scale down or forfeit their demands on cuts to Social Security, Medicare and Medicaid. A thick line has been drawn in the sand.
Congress has been stuck in a stalemate for two years; can they set aside politics for a while and get down to business? Much more is at stake than getting re-elected.

Comments (26)

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Posted by b
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 6:24 am

Oh, there will be a deal. The consequences are too substantial.

This "deal" will include lots of pain for the middle class, and no pain for the wealthy. Rumors suggest that there will be cuts to Social Security, Medicare, billions of stimulus dollars that have been going to small businesses, and millions of government jobs.

Those of you who have been "predicting" the start of the double-dip recession the past couple years may finally get your wish.


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Posted by Leland
a resident of Happy Valley
on Jul 12, 2011 at 6:37 am

The recent recession has worked well for me and my companies -- well, not all my workers, but the ones I kept on. I know the economy has been stagnant, but my profits have been up. I'm getting greatly increased productivity from my workers (they're scared silly! gotta love it!) and have a reasonably large labor pool of lumpenprols to pick from. Our overall sales in the US have been down, but the concept of nation is now obsolete anyway. Why care about the US when I can set up manufactories and merchandizing outlets across all of China? Chinese consumers are now where it's at, and so if we cut spending power of entitlement groups here in the US it's really no skin off my pearly whites.

The goal needs to be to stop the socialist attempt to break through the debt ceiling. If that means going into a deeper recession, I'm all for it. What's the old adage? What's good for my company is good for me; ask not what you can do for your country, ask what you can do to ensure that corporations realize higher profit margins.


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Posted by Blossom
a resident of Stoneridge Orchards
on Jul 12, 2011 at 6:55 am

Leland, your brilliant! Govt shutdown? Bring it on! Say, maybe a shutdown will be the start of fat public sector "workers" and obese (tax-draining) entitlement group members going on a much needed diet? The nation needs a few less potato chips and a bit more belt-tightening, especially for the unsustained entitlement recipients. They are the unfunded liabilities that are tied around our necks and choking us as the tsunami of debt crashes against our shorelines. The flood is coming. Perhaps a shutdown of govt and denial of govt workers' paychecks is our best hope.


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Posted by Wally
a resident of Livermore
on Jul 12, 2011 at 7:55 am

If they raise the debt ceiling it'll just give the tsunami more room to sweep across these great United States. Au contrarily wise, lowering the debt ceiling will better enable us to wall up against the flood of unsmiling Chinese coming to buy us and the Commie Koreans who are coming to take our incandesent lightbulbs away from us.


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Posted by John Douglas
a resident of another community
on Jul 12, 2011 at 8:37 am

It was okay for the republicans to fund two wars, lower taxes for the rich and deregulate the financial sector, but when it comes time for a little heavy lifting from the "haves", no deal! Government doesn't create jobs, at least long term jobs, but it does have to pay almost a hundred billion dollars a year on defense spending, which tells me that cuts need to be made. It is really a matter of what cuts and how deep. The two party system has become a two party power play for the purse strings, and unfortunately, neither side is really on the side of you and me, unless you are that one percent who owns more than fifty percent of the wealth in America. I'm not in that crowd!


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Posted by please
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 8:46 am

So, John D., you're claiming both parties are in support of protecting tax cuts for the rich? How so? Evidence? No? From whence your fantasy world?


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jul 12, 2011 at 9:08 am

Stacey is a registered user.

"In the next couple days, democrats will have to make a firm stand or forfeit their demand for increasing taxes on wealthy Americans and corporations. Republicans will have to scale down or forfeit their demands on cuts to Social Security, Medicare and Medicaid. A thick line has been drawn in the sand."

This is another one of those opportunities for Republicans and Democrats to both point the finger at each other and say, "If only they would stop insisting!" If ONLY the Republicans would stop insisting on spending cuts. If ONLY the Democrats would stop insisting on raising taxes. It makes the other side look like they are being obstructionists and don't have the best interests of America at heart; part of the push and pull between parties for voters. Well, NEITHER of them have America's best interests at heart. It doesn't take any raises in taxes or spending cuts in order to raise the debt ceiling, but you can be sure of the consequences for failure.


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Posted by Political manipulation
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 10:59 am

More political manipulation - this time by Obama - although neither side is clean on this:

The Fearmongering At The Top Begins: Obama Says "Can Not" Guarantee Social Security Payments Without A Debt Ceiling Hike
Web Link

Which is utter BS! Read below:

"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue," Obama said in an interview with CBS, according to a transcript on the network's web site. "Because there may simply not be the money in the coffers to do it," Obama said."

Is that so Mr. President? Please explain then how according to the most recent DTS the YTD (fiscal) amount paid out on Social Security is $469 billion, well below the amount collected from Federal Tax Deposits of $780 billion.


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Posted by Brock
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 12:10 pm

I hope they do not extend it, we need to live within our meAns.


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Posted by resident
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 12:16 pm

Agree with Brock. We need to reduce Social Security, Medicare and Medicaid payments by a sufficient amount so that we can live within our means. Senior entitlements and defense are the biggest contributors to the deficit and they are the programs that need to be cut. We can't afford to keep giving handouts.


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Posted by Logic
a resident of Carlton Oaks
on Jul 12, 2011 at 12:28 pm

Good thinkin 'political manipulation', brock and resident. If we're not spending as much on social security than we take in, then it would seem to follow that we don't need to cut it, don't ya think?

I guess it's easier just to say the govt needs to go on a diet.

Way to go, Stacy. Draw a false equivalence between obstructionist Repubs and Dems, stating that Dems' attempts to extend ceiling is obstructionist.

Have any of you looked at the deficit BEFORE Bush tax cuts and then AFTER tax cuts went into effect? Didn't think so.


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Posted by Political manipulation
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 1:18 pm

Logic - of course the government needs to go on a diet - that was not the point I was making. Instead, I was reacting to the threat by some (including Obama) that the world is going to end if we don't raise the debt level and the false reasoning they are professing.

And BTW, Bush is equally bad as Obama if not worse so you won't see me defending him. Obama had a recession to contend with but it was grossly irresponsible of him to grow baseline government so much during this recession. Instead he should have spent the money on infrastructure. At least we would have had something to show for all this debt we took on.

What I find interesting in this debate is the lack of acknowledgement that we have no choice but to control our debt/spending. Either we do it now under our own volition or we will be forced to at a later date to do so (just like is happening with Greece). The only choice here is whether/no we will do it on our own or our hand will be forced. Given this, I'm surprised that some still say we don't need to deal with it now.

The longer we wait, the more tramatic the transition will be. If you really care about future entitlements, you would be screaming as loud as Tea Party folks.

Lastly, so you don't categorize me incorrectly, I believe it is grossly irresponsible for Republicans not to be considering revenue enhancements at this point, especially corporate tax loopholes. I'll admit that I despise big, inefficient government and the tax burden that goes with it but we all need to face the severity of the situation we face and all need to make sacrifices from corporations through those within government entitlement programs.

We are simply out of money.


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Posted by resident
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 1:31 pm

" If we're not spending as much on social security than we take in, then it would seem to follow that we don't need to cut it, don't ya think?"

Sorry friend, but it doesn't work that way. It all comes from the same pool. "Social Security taxes" get spent on anything the government likes and Social Security payments can be pulled from general taxes or borrowing. It isn't some separate kind of tax. That is pure fiction. You may also want to check that claim about spending as much as we are taking in.

Web Link

You haven't said anything about Medicare and Medicaid. No one would claim that we are spending less on them than we take in. As a Republican, I am against taxing the very people who create the jobs. That would be insanity. So that leaves spending cuts. If you're going to cut, you have to cut where the real money is spent, and that means Social Security, Medicare, and Medicaid.


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Posted by Mellow Fellow
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 1:48 pm

The invisible hand at work


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jul 12, 2011 at 2:34 pm

Stacey is a registered user.

Back in May, 82 Democrats of the House joined with Republicans in rejecting a clean vote on the debt limit. When Bush was president, Republicans voted to raise the debt ceiling (and had no qualms against doing so) and Democrats (Obama too) voted against it. The limit does not appear to be a useful tool in controlling spending. It's just a political football for the parties. Whoever is in favor of raising the limit typically depends upon who is in power. Web Link


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Posted by steve
a resident of Parkside
on Jul 12, 2011 at 9:33 pm

So much for that Social Security lockbox, eh, resident? Wasn't that what Algore called it? No co-mingling of funds so our retirement savings could be diverted for other projects or unrelated expenses.
Maybe Chicken little was right...the Dems want the sky to fall so they can demonize those on the right.


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Posted by resident
a resident of Another Pleasanton neighborhood
on Jul 12, 2011 at 10:12 pm

Was it Gore that said that? Doesn't surprise me at all. He still thinks the presidency was stolen from him.


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Posted by Logic
a resident of Carlton Oaks
on Jul 13, 2011 at 6:38 am

Should we raise the debt ceiling to help Bush finance an unjust, inhumane war against innocents and which costs hundreds of billions of dollars? Or should we raise the debt ceiling to ensure Obama admin can extend existing entitlement programs for the elderly in this country?

Despite claims of the unread right-wing propagandists on this thread, the questions are not morally equivalent. Serious shortage of educated posters here!

No takers on the relationship between Bush tax cuts for the rich and the nation's debt, eh? Didn't think so.


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Posted by TARP
a resident of Another Pleasanton neighborhood
on Jul 13, 2011 at 7:59 am

Logic - Neither an unjust war nor out-of-control entitlement spending are good things. The longer we fund both, the lower the standard of living will be for future citizens.

By playing one spending monstrosity off of another, I believe you are doing a diservice to the topic and trying to redirect the conversation to protect the entitlement programs you clearly support.

It can't be any more simple - we are out of money. Yes, we can continue to charge up our country's credit card, but that just puts off the day of reckoning and elevates that inevitable pain of readjustment. Just ask Greece.


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Posted by steve
a resident of Parkside
on Jul 13, 2011 at 8:47 am

Logic? Rather than the constant talking points of blaming Bush (who, by the way is out of office), why not focus your rath on the One in power who can do something about the problem---you know, the guy who got us involved in another war (in Libya--soon to be Yemen and Syria) and who claimed he'd get us out of Iraq and Afghanistan. He could stop the spending now, as he promised, but no.....you choose to blame Bush for the continuing outlay of funds and young lives. Pathetic.
Where's Code Pink and the other pacificist lefties? No, making war gets a pass when there's a Dem in power. Hypocritical--ya think?


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Posted by opposed to the rathists
a resident of Amberwood/Wood Meadows
on Jul 13, 2011 at 11:08 am

You need to tone down your rath, steve. Then you need to get to a remedial education center and learn how to read and write -- two basic requisites for rational thought. In case you hadn't noticed, Obama is winding down wars in Iraq and Afghanistan, attempting in a reasonable and deliberate and cautious way to undo 8 years of unbelievable damage done by Bush and his underlings. We haven't lost a single soldier in Libya. Sorry to distract you with this. Are you still crawling on your carpet looking for that dime you dropped?


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Posted by steve
a resident of Parkside
on Jul 13, 2011 at 12:22 pm

opposed-your Messiah said he would have troops out by now. Innocent civilians have been killed in Libya and you're apparently OK with that?! Obama was supposed to close Gitmo and lower unemployment below 8% and yet you still sing his praises as though this amateur had actually accomplished something positive. I just hope while you're walking behind Obama that he doesn't stop too fast or you may injure your nose.


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Posted by Lisa Stanley
a resident of Amador Estates
on Jul 22, 2011 at 12:33 pm

Here is a idea leave the disabled and elderlys money alone take these big income tax checks I am all the other americans get use them for our "debt". Lower the amount all goverment politicians and other officals make. My idea could save us $300,000 a year just cutting our dear prez back to $100,000 a year and other politicians should make $50,000 a year that is ample enough save us $150,000 a politician. And income taxes being withheld from us will save millions maybe even trillions. I get $4,000 a year back if you have just 100 people who get that you save $400,000 a year and we all know there is more than 100 people with fat income tax checks.


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Posted by Tom
a resident of Mariposa Ranch
on Jul 24, 2011 at 6:22 pm

If the debt ceiling is not raised, it will achieve the same effect as passing a balanced budget amendment without all the political bickering. DON'T RAISE THE DEBT CEILING!! Force the politicans to live within our means.


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Posted by VM
a resident of another community
on Jul 27, 2011 at 5:03 pm

"live inside our means"? the elderly and disabled don't have jobs. some don't have families. social security is the only MEANS they have to pay their bills. my mother for instance. she has MS. and my brother has cancer. if she doesn't get her check this month she will default on her mortgage. more than that, she simply won't be albe to survive, she won't have the gas money to take my brother to his radiation treatment.


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Posted by Blossom
a resident of Stoneridge Orchards
on Jul 28, 2011 at 7:42 am

Why should MY (husband's) taxes go to support YOUR relatives? Go your own way. Your relatives should have married into money. Then they wouldn't be feeling entitled to bleed money from others. Cancer? MS? Pulleeeeze!


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