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US debt ceiling: Democrats and Republicans agree deal in principle

36 points by pg_1234 3y ago

Svip 3y ago
I recently learnt that Denmark and the US are the only two countries with a fixed debt limit. Several other countries have relative to GDP debt limits. The purpose is the same; to ensure that executive branch can borrow money without having to ask the legislative branch each time. The US debt limit has existed since 1939 in its current form, but it was only recently (like since the 1980s) that it has become a hot potato. Denmark's has existed since 1993, and only been raised once, though far higher than the actual debt. Other countries don't have these restrictions (fixed or relative), where it's usually because those countries' constitutions allow the executive branch to simply borrow money whenever it sees fit.
- bluecalm 3y ago
  I think the debt limit is a good idea as it forces some consensus about spendings. Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation. It's worse in countries that don't have separation between executive and legislative branch (most EU countries). For example in my country (Poland) you have a party winning an election and then they control both legislative, executive (parliament chooses the prime minister) and mostly judicial branch (not only attorney general is one of the ministers but because terms for supreme/constitutional courts are short they get to put their guys in as well. If they win two times in a row the majority of justice will be theirs. Once that's done there are 0 check and balances on them. They just spend on social programs and laws benefiting their electorate and screw anyone else. It's a terrible system where winner takes all and is beyond check and balances. Say what you want about US system but at least it's not free for all the way parliament democracy is. The debt limit is one of those checks - wanna spend money? - talk to the other side about it.
  - XorNot 3y ago
    What do you think happens when someone refuses to raise the debt ceiling? And who in power in the US both approved the current year spending budget, and is currently threatening to not raise the debt ceiling?
  - sschueller 3y ago
    The issue with thr US version of the dept ceiling is that the money was already spent. The discussions to raise it should be before they spend more.
  - arlort 3y ago
    > I think the debt limit is a good idea as it forces some consensus about spendings Except it doesn't, as seen in the US doing this dance on the brink every other year. What you actually are thinking of is a spending limit where either constitutionally or by statute you can't pass a budget that isn't balanced to some level. Being able to pass a budget with more spending than revenues and then saying "wait, we have to agree to borrow too" makes no sense > judicial branch (not only attorney general is one of the ministers The attorney general is not strictly considered a part of the judiciary in terms of separations of powers. The role of prosecutor is pretty firmly an executive one based on the model where the legislature makes the laws, the executive enforces them and the judicial checks they're being enforced as written The problem with poland is not as much the system as the fact that they fucked it up by appointing judges illegally. Any system is a free for all if you just break the rules, and parliamentary systems tend to be on average less of a free for all than presidential ones > wanna spend money? - talk to the other side about it That's the point, you already need to talk to the other side in order to spend the money, it's called passing a budget bill. A debt limit just allows you to decouple the debt discussion from the budget discussion, meaning that when it comes up it's either "raise it, we'll see about spending next budget" or "well, guess we're defaulting now"
  - the_why_of_y 3y ago
    Essentially a debt ceiling means: * legislature determines the government's income by setting tax rates * legislature determines the government's spending by passing the budget law * legislature determines the maximum amount of government debt by law Obviously if the budget law requires spending that exceeds the tax income, the difference has to be raised by the government by issuing debt. Now the legislature can pass these different laws such that the executive has no choice but to break one of these 3 laws, as it is arithmetically impossible to follow all of them at the same time. I fail to see what the benefit of that would be for anyone. If the legislature wants the government to spend less, they can simply pass a smaller budget.
  - hyperpape 3y ago
    > I think the debt limit is a good idea as it forces some consensus about spendings. This is what the budget does. The same legislature that is full of people saying they won’t raise the debt ceiling already passed a budget that implies spending money beyond the current debt ceiling. It passed, with majorities in both houses, and the President signed it. The negotiations were difficult. If we had an ounce of brains, we’d hold the debt ceiling negotiation at the same time as the budget negotiation. I’m not sure if there are congressional rules that prevent this, or if Congress just enjoys the idiocy.
    - makomk 3y ago
      The thing is, it's not the same legislature in the sense that the US has had an election since then and a different party has a majority in the House of Representatives than the one which passed the budget with all the spending. The real question which I think the media is ignoring is why they didn't raise the debt ceiling enough to fund that spending for at least a year or two when they still had power. The cynical answer to that is probably that it was an election tactic: they wanted to convince people to vote for them using the threat that the Republicans wouldn't come to a deal on the debt ceiling and would wreck the government.
      - hyperpape 3y ago
        The first point is somewhat fair regarding whether you can charge the current legislature with hypocrisy. It doesn’t really address the point that they’re gonna pass another budget this year under Republican control—so the debt ceiling is an absurd way to accomplish their goals. The second point I disagree with. The history shows that debt ceiling increases are quite frequent—almost annual. Most of the time it doesn’t provoke a debt crisis. While pre-handling increases with the budget would be better, it doesn’t seem to normally be done. It’s just sometimes the case that one party blocks the process (I think it’s true it’s mostly Republicans, but individual Democrats have opposed raising the ceiling and that’s completely irresponsible). So you don’t need an assumption that Democrats pre-planned this. https://sgp.fas.org/crs/misc/R43389.pdf#page10 https://sgp.fas.org/crs/misc/R43389.pdf#page10
  - roywiggins 3y ago
    > Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation. Spending levels are set by Congress, separate to the debt limit. The executive is not authorized to spend money that's not in the budget; there's no blank check. Abolishing the debt limit would not change this at all.
  - aldrich 3y ago
    I don't believe its accurate to say that most EU states have no separation between executive and legislative branches. The split is around 50%-50% with a majority of states actually having a bicameral system where these branches are separated, and this practically includes all major economic states of the EU as well as Poland and the EU itself. [1][2] In recent legal material, your country (Poland) is a well-known example of an EU state where the governing party has been systematically breaking down this bicameralism and state of law to accomplish exactly what you're describing though. [1] https://en.wikipedia.org/wiki/National_parliaments_of_the_European_Union https://en.wikipedia.org/wiki/National_parliaments_of_the_Eu... [2] https://data.ipu.org/compare?field=country%3A%3Afield_structure_of_parliament#pie https://data.ipu.org/compare?field=country%3A%3Afield_struct...
    - soco 3y ago
      The OP point was, that no matter how many chambers you have if one party wins majority in all of them and forms also the government (which usually happens), it will decide pretty much all it wants and go forward full steam with the opposition hopelessly running along barking. It's by design. The only chance is with coalitions as there will be more internal friction, but it's a very minor improvement indeed.
- rjtavares 3y ago
  Most other countries allow the executive branch to simply borrow money, not whenever it sees fit, but when it is required to execute the budget approved by the legislative branch. That is an important distinction.
  - deprecative 3y ago
    [flagged]
    - rjtavares 3y ago
      It is, because saying "executive branch can simply borrow money whenever it sees fit" makes it seem like the executive has unlimited power to spend.
      - deprecative 3y ago
        The Executive isn't determining that they need to borrow money. Congress did when they passed a budget and the Executive signed it into law. At that point Congress authorized revenue, borrowing, and expenditures, and other monetary considerations. So, again, there is no merit to the debt ceiling. It exists solely to act as a hostage for conservatives to use to harm the economy and claw back our safety net funding targeting veterans, the elderly, those living in poverty, and other vulnerable demographics.
    - JumpCrisscross 3y ago
      > Constitution explicitly prevents us from defaulting This is far from settled law. What it means for a debt to be “authorised by law” within this context is unresolved and frankly unclear. (The 14th Amendment requires paying debts. Not issuing new debt. Maybe the solution is forced sale of public assets, et cetera.)
    - jakear 3y ago
      In fact, we’ve defaulted many times in the past, but nobody seems to care about that. The treasury secretary indeed lied through her teeth about it, as did the WH press secretary. But of course, the media talking point is to blame Republicans for this “unprecedented calamity”. https://www.axios.com/2023/05/16/us-history-debt-default https://www.axios.com/2023/05/16/us-history-debt-default
- kasperni 3y ago
  I"m Danish and actually wasn't aware that we have a fixed nominal dept limit. Outside of the EUs 60% debt-to-GDP limit. For people interested in the difference between the US and Denmark with regards to the debt ceiling, take a look at [1]. [1] https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country-with-a-debt-ceiling-heres-how-denmark-avoids-the-drama.html https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country...
- noodlesUK 3y ago
  Parliamentary systems often don’t have these restrictions because failing to pass a budget would be considered losing a confidence vote and the government would be dissolved. It’s different with a U.S. style system with a fixed term congress and presidency that can’t be dissolved.
  - kevviiinn 3y ago
    Parliamentary sounds better than this bullshit
    - deleted 3y ago
      [deleted]
    - goalieca 3y ago
      Every confidence vote is 100% along party lines and the executive is the parliamentary leadership. Senior cabinet officials run the country and the prime minister holds all the power.
      - kevviiinn 3y ago
        Sounds better than politicians being controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about
        SAI_Peregrinus 3y ago
        Oh, they still do that. Cabinet officials are controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about.
        friend_and_foe 3y ago
        That stuff doesnt go away just because you use a parliamentary system. This is really a trait of democratic systems in general.
        3y ago
sampa 3y ago
who would've thought!
- thanatos519 3y ago
  Indeed. There may be merit in a debt ceiling, and careful consideration in increasing it, but this regularly-scheduled crisis is sheer fnord farce.
  - XorNot 3y ago
    There isn't though, at all. How much debt the US will take on is decided when the Federal budget is authorised. That's when it happens. The only thing the debt ceiling does is have the US arbitrarily go into default on treasury bills.
  - deprecative 3y ago
    There is absolutely no merit to a debt ceiling. If you want to curb spending you do that when you set the budget. You don't do it when the bill comes. Can you imagine trying to get out of your mortgage payment because you said you wouldn't spend more than $500 this month? The bank would laugh at you and foreclose.
    - JumpCrisscross 3y ago
      One argument for the debt ceiling is budgets, when passed, contain many unknowns. That said, a sensible debt ceiling would be closer to a government shutdown; discretionary spending is halted while non-discretionary payments continue.
      - aziaziazi 3y ago
        What budget’s unknowns does a dept ceiling fixes ? Take this budget line: Education: 1M$ Here « education » may have unknowns but the ceiling is supposed to apply to the second par : « 1M$ ». I can’t see what may be unclear in this number. > one argument Mind sharing others ? I’d would be (sincerely) happy to understand why US needs this while the rest of the world does not.
guidedlight 3y ago
There is a fair chance that far right republicans disagree with the deal, and force McCarthy back to the negotiating table.
- aww_dang 3y ago
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  - plagiarist 3y ago
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    - aww_dang 3y ago
      [flagged]
      - plagiarist 3y ago
        Deliberately pretending that all they want to do is limit government spending, or that that's why they're being called far right is a strawman. Not to mention the implicit theory that any of the far right are consistent with that from administration to administration. If you want comments that only add to the discussion without bad faith, start by reflecting on your own.
        aww_dang 3y ago
        There's an error of generalization here. There are some who would cut budgets in either case. These are politicians who are generally characterized as far right in the media. https://rollcall.com/2019/06/03/sen-rand-pauls-austere-budget-plan-goes-down-in-senate/ https://rollcall.com/2019/06/03/sen-rand-pauls-austere-budge... https://www.politico.com/story/2017/10/17/rand-paul-oppose-senate-gop-budget-243864 https://www.politico.com/story/2017/10/17/rand-paul-oppose-s... https://www.reuters.com/article/us-health-coronavirus-usa-massie-factbox/factbox-mr-no-meet-the-u-s-congressman-who-requested-a-formal-vote-to-delay-the-coronavirus-bill-idUSKBN21E26K https://www.reuters.com/article/us-health-coronavirus-usa-ma... There may be others, but these are two politicians who come to the top of my mind. However, generally speaking there are many GOP members who are content to approve spending on their own partisan budgets. This is a well known issue. As for the accusation, "that's why they're being called far right" I had hoped to avoid this by stating, "I do not dispute the characterization..." The reasons why some are described as "far right" are beyond the scope of this discussion. I do not attribute motive. It is simply an observation of the status quo. They are described as far right here and elsewhere. They seek to limit the government's budget regardless of which way the pendulum is currently swinging. They maybe described as "far right" for any number of reasons. It is an entirely separate topic which could be debated at length. Perhaps you are projecting your own elaborate ideas, partisan biases and expectations into what was a simple and concise statement? Furthermore, you assume we should all implicitly understand your accusations and their frame of reference. Only by elaborating on why you feel it is a straw-man are we able to discuss this. Without elaboration we can only assume your intent, which more often that not leads to even more projection and partisan caricatures. Another interesting ambiguity is "semi-sophisticated". It could have meant that HN was too sophisticated for the stawman you alleged. Perhaps it meant that HN isn't sophisticated enough to read the sentence without inflammatory nonsense. I'll leave that as an exercise for the reader.
ur-whale 3y ago
Have they ever not? Where's the news exactly?
- hypertele-Xii 3y ago
  "The news", despite the understandable confusion stemming from its name, isn't about what's new; It's about what's current. "The thing that happened before just happened again" is still news.
netfortius 3y ago
After reading some supporting material associated with this topic, I became a fan of MMT. For those interested, I recommend Stephanie Kelton's "The Deficit Myth", and Randall Wray's work. The latter has recently published a really ELI5 for the subject: "Money for Beginners" (NOTE: pay attention to the author - there are quite a few books with similar title)
- JumpCrisscross 3y ago
  MMT as an academic concept is fascinating. MMT as a policy tool is useless; if we could predict when runaway inflation will arise we’d have a perfect solution to central banking.
  - unmole 3y ago
    > MMT as an academic concept is fascinating. MMT as a policy tool is useless What is good about MMT is not original and what is original in MMT is not good.
    - netfortius 3y ago
      > What is good about MMT is not original and what is original in MMT is not good. As you just paraphrased either Dr. Samuel Johnson, or Reverend Martin Sherlock (jury is still out on this one), would you care to elaborate on your characterization, please?
wunderland 3y ago
Every few years (until they drop the farce altogether and sell the country off for parts to the billionaires), the US will have another manufactured crisis like this. And every time the two parties will come together to strip public goods and social programs.
- i2cmaster 3y ago
  [flagged]
agentgumshoe 3y ago
The debt limit theatre is ridiculous. It's basically an argument about not approving earlier spending after the fact. If they don't want to hit debt ceilings, stop approving spending that pushes into it in the first place...
- friend_and_foe 3y ago
  They hold each other hostage until the last minute then come up with a deal that allows the right people to line their pockets in the end.
Wiki39366 3y ago
[flagged]
- krapp 3y ago
  The United States runs the world's reserve currency - it is existentially impossible for it to be "broke." People really need to stop thinking the finances of nations operate by the same rules as a family balancing their checkbook. America's "check" is never going to "bounce."
  - BLKNSLVR 3y ago
    Which reinforces the fact that this is pure theatre and therefore ridiculous. However, yes, a country's financials are apples and oranges to a household's, although it's primarily politicians that intentionally do the illogical comparison in order to score cheap political points against "the other guy" because most of the proletariat can't distinguish between apples and oranges.
  - aww_dang 3y ago
    Interesting perspective. Why then does the US government claim to hold gold? If things are as you say, there would be little need for these reserves. https://en.wikipedia.org/wiki/United_States_Bullion_Depository#:~:text=As%20of%202021%2C%20the%20U.S.,reserves%20were%203%2C364%20metric%20tons https://en.wikipedia.org/wiki/United_States_Bullion_Deposito.... >As of 2021, the U.S. gold reserves total 8,134 metric tons. The next highest holdings were Germany's, whose gold reserves were 3,364 metric tons.[43] As of 31 July 2020, Fort Knox holds 147.34 million troy ounces (4,583 metric tons) of gold reserves with a market value of US $290.9 billion, representing 56.35% of the gold reserves of the United States.
    - xmcqdpt2 3y ago
      To shore up the FX value of the USD in an emergency, https://en.m.wikipedia.org/wiki/Foreign_exchange_reserves https://en.m.wikipedia.org/wiki/Foreign_exchange_reserves Most other countries hold USD for this purpose, but of course the US can't do that. Note that this has literally nothing to do with the ability to repay debt, and that the Treasury bills market is larger and more liquid than the gold market. The US holds like 600 B$ worth of gold. There are like 30 trillion dollars in outstanding treasuries. Even if all the gold was liquidated at current market value without slippage, it would only be enough to pay back 2% of the debt.
tmaly 3y ago
It is interesting to look at history in US prior to the Federal Reserve Act. If the government wanted to spend money on some effort, they needed the citizens to buy bonds. This seems like a better form of democracy.

36 points by pg_1234 3y ago

Svip 3y ago

I recently learnt that Denmark and the US are the only two countries with a fixed debt limit. Several other countries have relative to GDP debt limits. The purpose is the same; to ensure that executive branch can borrow money without having to ask the legislative branch each time. The US debt limit has existed since 1939 in its current form, but it was only recently (like since the 1980s) that it has become a hot potato. Denmark's has existed since 1993, and only been raised once, though far higher than the actual debt. Other countries don't have these restrictions (fixed or relative), where it's usually because those countries' constitutions allow the executive branch to simply borrow money whenever it sees fit.

bluecalm 3y ago
I think the debt limit is a good idea as it forces some consensus about spendings. Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation. It's worse in countries that don't have separation between executive and legislative branch (most EU countries). For example in my country (Poland) you have a party winning an election and then they control both legislative, executive (parliament chooses the prime minister) and mostly judicial branch (not only attorney general is one of the ministers but because terms for supreme/constitutional courts are short they get to put their guys in as well. If they win two times in a row the majority of justice will be theirs. Once that's done there are 0 check and balances on them. They just spend on social programs and laws benefiting their electorate and screw anyone else. It's a terrible system where winner takes all and is beyond check and balances. Say what you want about US system but at least it's not free for all the way parliament democracy is. The debt limit is one of those checks - wanna spend money? - talk to the other side about it.
- XorNot 3y ago
  What do you think happens when someone refuses to raise the debt ceiling? And who in power in the US both approved the current year spending budget, and is currently threatening to not raise the debt ceiling?
- sschueller 3y ago
  The issue with thr US version of the dept ceiling is that the money was already spent. The discussions to raise it should be before they spend more.
- arlort 3y ago
  > I think the debt limit is a good idea as it forces some consensus about spendings Except it doesn't, as seen in the US doing this dance on the brink every other year. What you actually are thinking of is a spending limit where either constitutionally or by statute you can't pass a budget that isn't balanced to some level. Being able to pass a budget with more spending than revenues and then saying "wait, we have to agree to borrow too" makes no sense > judicial branch (not only attorney general is one of the ministers The attorney general is not strictly considered a part of the judiciary in terms of separations of powers. The role of prosecutor is pretty firmly an executive one based on the model where the legislature makes the laws, the executive enforces them and the judicial checks they're being enforced as written The problem with poland is not as much the system as the fact that they fucked it up by appointing judges illegally. Any system is a free for all if you just break the rules, and parliamentary systems tend to be on average less of a free for all than presidential ones > wanna spend money? - talk to the other side about it That's the point, you already need to talk to the other side in order to spend the money, it's called passing a budget bill. A debt limit just allows you to decouple the debt discussion from the budget discussion, meaning that when it comes up it's either "raise it, we'll see about spending next budget" or "well, guess we're defaulting now"
- the_why_of_y 3y ago
  Essentially a debt ceiling means: * legislature determines the government's income by setting tax rates * legislature determines the government's spending by passing the budget law * legislature determines the maximum amount of government debt by law Obviously if the budget law requires spending that exceeds the tax income, the difference has to be raised by the government by issuing debt. Now the legislature can pass these different laws such that the executive has no choice but to break one of these 3 laws, as it is arithmetically impossible to follow all of them at the same time. I fail to see what the benefit of that would be for anyone. If the legislature wants the government to spend less, they can simply pass a smaller budget.
- hyperpape 3y ago
  > I think the debt limit is a good idea as it forces some consensus about spendings. This is what the budget does. The same legislature that is full of people saying they won’t raise the debt ceiling already passed a budget that implies spending money beyond the current debt ceiling. It passed, with majorities in both houses, and the President signed it. The negotiations were difficult. If we had an ounce of brains, we’d hold the debt ceiling negotiation at the same time as the budget negotiation. I’m not sure if there are congressional rules that prevent this, or if Congress just enjoys the idiocy.
  - makomk 3y ago
    The thing is, it's not the same legislature in the sense that the US has had an election since then and a different party has a majority in the House of Representatives than the one which passed the budget with all the spending. The real question which I think the media is ignoring is why they didn't raise the debt ceiling enough to fund that spending for at least a year or two when they still had power. The cynical answer to that is probably that it was an election tactic: they wanted to convince people to vote for them using the threat that the Republicans wouldn't come to a deal on the debt ceiling and would wreck the government.
    - hyperpape 3y ago
      The first point is somewhat fair regarding whether you can charge the current legislature with hypocrisy. It doesn’t really address the point that they’re gonna pass another budget this year under Republican control—so the debt ceiling is an absurd way to accomplish their goals. The second point I disagree with. The history shows that debt ceiling increases are quite frequent—almost annual. Most of the time it doesn’t provoke a debt crisis. While pre-handling increases with the budget would be better, it doesn’t seem to normally be done. It’s just sometimes the case that one party blocks the process (I think it’s true it’s mostly Republicans, but individual Democrats have opposed raising the ceiling and that’s completely irresponsible). So you don’t need an assumption that Democrats pre-planned this. https://sgp.fas.org/crs/misc/R43389.pdf#page10 https://sgp.fas.org/crs/misc/R43389.pdf#page10
- roywiggins 3y ago
  > Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation. Spending levels are set by Congress, separate to the debt limit. The executive is not authorized to spend money that's not in the budget; there's no blank check. Abolishing the debt limit would not change this at all.
- aldrich 3y ago
  I don't believe its accurate to say that most EU states have no separation between executive and legislative branches. The split is around 50%-50% with a majority of states actually having a bicameral system where these branches are separated, and this practically includes all major economic states of the EU as well as Poland and the EU itself. [1][2] In recent legal material, your country (Poland) is a well-known example of an EU state where the governing party has been systematically breaking down this bicameralism and state of law to accomplish exactly what you're describing though. [1] https://en.wikipedia.org/wiki/National_parliaments_of_the_European_Union https://en.wikipedia.org/wiki/National_parliaments_of_the_Eu... [2] https://data.ipu.org/compare?field=country%3A%3Afield_structure_of_parliament#pie https://data.ipu.org/compare?field=country%3A%3Afield_struct...
  - soco 3y ago
    The OP point was, that no matter how many chambers you have if one party wins majority in all of them and forms also the government (which usually happens), it will decide pretty much all it wants and go forward full steam with the opposition hopelessly running along barking. It's by design. The only chance is with coalitions as there will be more internal friction, but it's a very minor improvement indeed.
rjtavares 3y ago
Most other countries allow the executive branch to simply borrow money, not whenever it sees fit, but when it is required to execute the budget approved by the legislative branch. That is an important distinction.
- deprecative 3y ago
  [flagged]
  - rjtavares 3y ago
    It is, because saying "executive branch can simply borrow money whenever it sees fit" makes it seem like the executive has unlimited power to spend.
    - deprecative 3y ago
      The Executive isn't determining that they need to borrow money. Congress did when they passed a budget and the Executive signed it into law. At that point Congress authorized revenue, borrowing, and expenditures, and other monetary considerations. So, again, there is no merit to the debt ceiling. It exists solely to act as a hostage for conservatives to use to harm the economy and claw back our safety net funding targeting veterans, the elderly, those living in poverty, and other vulnerable demographics.
  - JumpCrisscross 3y ago
    > Constitution explicitly prevents us from defaulting This is far from settled law. What it means for a debt to be “authorised by law” within this context is unresolved and frankly unclear. (The 14th Amendment requires paying debts. Not issuing new debt. Maybe the solution is forced sale of public assets, et cetera.)
  - jakear 3y ago
    In fact, we’ve defaulted many times in the past, but nobody seems to care about that. The treasury secretary indeed lied through her teeth about it, as did the WH press secretary. But of course, the media talking point is to blame Republicans for this “unprecedented calamity”. https://www.axios.com/2023/05/16/us-history-debt-default https://www.axios.com/2023/05/16/us-history-debt-default
kasperni 3y ago
I"m Danish and actually wasn't aware that we have a fixed nominal dept limit. Outside of the EUs 60% debt-to-GDP limit. For people interested in the difference between the US and Denmark with regards to the debt ceiling, take a look at [1]. [1] https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country-with-a-debt-ceiling-heres-how-denmark-avoids-the-drama.html https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country...
noodlesUK 3y ago
Parliamentary systems often don’t have these restrictions because failing to pass a budget would be considered losing a confidence vote and the government would be dissolved. It’s different with a U.S. style system with a fixed term congress and presidency that can’t be dissolved.
- kevviiinn 3y ago
  Parliamentary sounds better than this bullshit
  - deleted 3y ago
    [deleted]
  - goalieca 3y ago
    Every confidence vote is 100% along party lines and the executive is the parliamentary leadership. Senior cabinet officials run the country and the prime minister holds all the power.
    - kevviiinn 3y ago
      Sounds better than politicians being controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about
      - SAI_Peregrinus 3y ago
        Oh, they still do that. Cabinet officials are controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about.
      - friend_and_foe 3y ago
        That stuff doesnt go away just because you use a parliamentary system. This is really a trait of democratic systems in general.
      - 3y ago

sampa 3y ago

who would've thought!

thanatos519 3y ago
Indeed. There may be merit in a debt ceiling, and careful consideration in increasing it, but this regularly-scheduled crisis is sheer fnord farce.
- XorNot 3y ago
  There isn't though, at all. How much debt the US will take on is decided when the Federal budget is authorised. That's when it happens. The only thing the debt ceiling does is have the US arbitrarily go into default on treasury bills.
- deprecative 3y ago
  There is absolutely no merit to a debt ceiling. If you want to curb spending you do that when you set the budget. You don't do it when the bill comes. Can you imagine trying to get out of your mortgage payment because you said you wouldn't spend more than $500 this month? The bank would laugh at you and foreclose.
  - JumpCrisscross 3y ago
    One argument for the debt ceiling is budgets, when passed, contain many unknowns. That said, a sensible debt ceiling would be closer to a government shutdown; discretionary spending is halted while non-discretionary payments continue.
    - aziaziazi 3y ago
      What budget’s unknowns does a dept ceiling fixes ? Take this budget line: Education: 1M$ Here « education » may have unknowns but the ceiling is supposed to apply to the second par : « 1M$ ». I can’t see what may be unclear in this number. > one argument Mind sharing others ? I’d would be (sincerely) happy to understand why US needs this while the rest of the world does not.

guidedlight 3y ago

There is a fair chance that far right republicans disagree with the deal, and force McCarthy back to the negotiating table.

aww_dang 3y ago
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- plagiarist 3y ago
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  - aww_dang 3y ago
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    - plagiarist 3y ago
      Deliberately pretending that all they want to do is limit government spending, or that that's why they're being called far right is a strawman. Not to mention the implicit theory that any of the far right are consistent with that from administration to administration. If you want comments that only add to the discussion without bad faith, start by reflecting on your own.
      - aww_dang 3y ago
        There's an error of generalization here. There are some who would cut budgets in either case. These are politicians who are generally characterized as far right in the media. https://rollcall.com/2019/06/03/sen-rand-pauls-austere-budget-plan-goes-down-in-senate/ https://rollcall.com/2019/06/03/sen-rand-pauls-austere-budge... https://www.politico.com/story/2017/10/17/rand-paul-oppose-senate-gop-budget-243864 https://www.politico.com/story/2017/10/17/rand-paul-oppose-s... https://www.reuters.com/article/us-health-coronavirus-usa-massie-factbox/factbox-mr-no-meet-the-u-s-congressman-who-requested-a-formal-vote-to-delay-the-coronavirus-bill-idUSKBN21E26K https://www.reuters.com/article/us-health-coronavirus-usa-ma... There may be others, but these are two politicians who come to the top of my mind. However, generally speaking there are many GOP members who are content to approve spending on their own partisan budgets. This is a well known issue. As for the accusation, "that's why they're being called far right" I had hoped to avoid this by stating, "I do not dispute the characterization..." The reasons why some are described as "far right" are beyond the scope of this discussion. I do not attribute motive. It is simply an observation of the status quo. They are described as far right here and elsewhere. They seek to limit the government's budget regardless of which way the pendulum is currently swinging. They maybe described as "far right" for any number of reasons. It is an entirely separate topic which could be debated at length. Perhaps you are projecting your own elaborate ideas, partisan biases and expectations into what was a simple and concise statement? Furthermore, you assume we should all implicitly understand your accusations and their frame of reference. Only by elaborating on why you feel it is a straw-man are we able to discuss this. Without elaboration we can only assume your intent, which more often that not leads to even more projection and partisan caricatures. Another interesting ambiguity is "semi-sophisticated". It could have meant that HN was too sophisticated for the stawman you alleged. Perhaps it meant that HN isn't sophisticated enough to read the sentence without inflammatory nonsense. I'll leave that as an exercise for the reader.

ur-whale 3y ago

Have they ever not? Where's the news exactly?

hypertele-Xii 3y ago
"The news", despite the understandable confusion stemming from its name, isn't about what's new; It's about what's current. "The thing that happened before just happened again" is still news.

netfortius 3y ago

After reading some supporting material associated with this topic, I became a fan of MMT. For those interested, I recommend Stephanie Kelton's "The Deficit Myth", and Randall Wray's work. The latter has recently published a really ELI5 for the subject: "Money for Beginners" (NOTE: pay attention to the author - there are quite a few books with similar title)

JumpCrisscross 3y ago
MMT as an academic concept is fascinating. MMT as a policy tool is useless; if we could predict when runaway inflation will arise we’d have a perfect solution to central banking.
- unmole 3y ago
  > MMT as an academic concept is fascinating. MMT as a policy tool is useless What is good about MMT is not original and what is original in MMT is not good.
  - netfortius 3y ago
    > What is good about MMT is not original and what is original in MMT is not good. As you just paraphrased either Dr. Samuel Johnson, or Reverend Martin Sherlock (jury is still out on this one), would you care to elaborate on your characterization, please?

wunderland 3y ago

Every few years (until they drop the farce altogether and sell the country off for parts to the billionaires), the US will have another manufactured crisis like this. And every time the two parties will come together to strip public goods and social programs.

i2cmaster 3y ago
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agentgumshoe 3y ago

The debt limit theatre is ridiculous. It's basically an argument about not approving earlier spending after the fact. If they don't want to hit debt ceilings, stop approving spending that pushes into it in the first place...

friend_and_foe 3y ago
They hold each other hostage until the last minute then come up with a deal that allows the right people to line their pockets in the end.

Wiki39366 3y ago

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krapp 3y ago
The United States runs the world's reserve currency - it is existentially impossible for it to be "broke." People really need to stop thinking the finances of nations operate by the same rules as a family balancing their checkbook. America's "check" is never going to "bounce."
- BLKNSLVR 3y ago
  Which reinforces the fact that this is pure theatre and therefore ridiculous. However, yes, a country's financials are apples and oranges to a household's, although it's primarily politicians that intentionally do the illogical comparison in order to score cheap political points against "the other guy" because most of the proletariat can't distinguish between apples and oranges.
- aww_dang 3y ago
  Interesting perspective. Why then does the US government claim to hold gold? If things are as you say, there would be little need for these reserves. https://en.wikipedia.org/wiki/United_States_Bullion_Depository#:~:text=As%20of%202021%2C%20the%20U.S.,reserves%20were%203%2C364%20metric%20tons https://en.wikipedia.org/wiki/United_States_Bullion_Deposito.... >As of 2021, the U.S. gold reserves total 8,134 metric tons. The next highest holdings were Germany's, whose gold reserves were 3,364 metric tons.[43] As of 31 July 2020, Fort Knox holds 147.34 million troy ounces (4,583 metric tons) of gold reserves with a market value of US $290.9 billion, representing 56.35% of the gold reserves of the United States.
  - xmcqdpt2 3y ago
    To shore up the FX value of the USD in an emergency, https://en.m.wikipedia.org/wiki/Foreign_exchange_reserves https://en.m.wikipedia.org/wiki/Foreign_exchange_reserves Most other countries hold USD for this purpose, but of course the US can't do that. Note that this has literally nothing to do with the ability to repay debt, and that the Treasury bills market is larger and more liquid than the gold market. The US holds like 600 B$ worth of gold. There are like 30 trillion dollars in outstanding treasuries. Even if all the gold was liquidated at current market value without slippage, it would only be enough to pay back 2% of the debt.

tmaly 3y ago

It is interesting to look at history in US prior to the Federal Reserve Act. If the government wanted to spend money on some effort, they needed the citizens to buy bonds. This seems like a better form of democracy.