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Why should the debt ceiling be raised? The debt ceiling has nothing to do with meeting ones obligations to creditors. If the debt ceiling isn't raised, simply

by yapcguy 13y ago

Why should the debt ceiling be raised? The debt ceiling has nothing to do with meeting ones obligations to creditors. If the debt ceiling isn't raised, simply prioritize what the country's money is going to be spent on.

JumpCrisscross 13y ago
"If the debt ceiling isn't raised, simply prioritize what the country's money is going to be spent on." 1. That could be a form of default. Not on the U.S. debt, but on its contracts. 2. Cash flows are lumpy - that's part of why we have government debt. Even reducing all non-debt payments to zero, the U.S. Treasury will have to default at some point before mid-November. There simply isn't enough money in the U.S. Treasury's account at the Federal Reserve to keep its cheques from bouncing.
- ericmason 13y ago
  They can always sell off some assets. Welcome to reality.
  - JumpCrisscross 13y ago
    You don't buy the furniture out of a burning house. A fire sale of a country's public assets in the midst of a political and financial meltdown isn't going to find much real demand.
    - jlgreco 13y ago
      The US certainly has assets that other would be willing to buy. As an obviously inflammatory/terrible example: I am sure many corporations or nations would leap at the chance to buy the mineral rights of national parks. How much would the Chinese give us for the right to stripmine Yosemite? A lot I bet. (Obviously that is a horrible idea, we should never stripmine our national parks...)
      - JumpCrisscross 13y ago
        You own Blackberry stock. It's your largest holding. You've seen it lose 90% of its value in the last 5 years. The CEO asks if you'd like to buy a cafeteria pass, good for free meals at the company cafeteria for the next 50 years. Most investors would say no. If a company is selling its cafeteria food to stay afloat, chances are (a) there won't be a company tomorrow or (b) it will find some way to repudiate inconvenient contracts, e.g. go bankrupt. Some very smart people bought into an Argentinian oil and gas deal. Then the friendly government became less friendly and their deeds were worthless pieces of paper.
      - bilbo0s 13y ago
        What Crisscross is trying to say is... Even if you buy assets from a government in turmoil... what is the likelihood that any new government emerging from that turmoil will allow you to keep the assets you purchased? Historically... the odds have not been favorable to investors.
        jlgreco 13y ago
        This is true, but I don't think we are anywhere close to there yet. If we started selling off land, I suspect there would still be buyers.
    - yapcguy 13y ago
      Au contraire, the best time to find a bargain is from a forced seller!
      - hobs 13y ago
        True, but the specific analogy basically means that you wait until it all burns down at least.
  - seanmcdirmid 13y ago
    We could sell California to China I guess.
  - bjterry 13y ago
    Obama should sell start selling indulgences. Every non-violent federal offender has a one-time opportunity to have their case dropped for $100,000. I'm pretty sure lots of people could pony up the cash through friends and family, if necessary. As a bonus, save costs on the Justice Department.
- tdees40 13y ago
  Perhaps more to the point, Obama doesn't have the legal authority to prioritize certain payments. If he doesn't pay something, then he would be in violation of the law. He can't just unilaterally not pay bills. This isn't some little technical problem, it's a real constraint. If the debt ceiling isn't raised, Obama is both (1) required by law to spend certain monies and (2) not allowed to borrow to spend that money. This could provoke a very real constitutional/legal crisis with no clear resolution.
  - fleitz 13y ago
    If he is unable to fulfill his obligations as required by law, I guess the only legal option is resignation.
    - bilbo0s 13y ago
      I think that the depth of the hypothetical that tdees postulates has eluded you... it would not be Obama who has a Constitutional/Legal crisis... it would be the United States. It would be, quite literally, US Law mandating the violation of ... US Law.
      - fleitz 13y ago
        Which the president as head of the executive branch is required to execute.
        bilbo0s 13y ago
        Sigh... OK... let's walk your suggestion through. The President resigns. The Vice-President succeeds. The Vice-President is now the President. Now the NEW President is obliged by US Law... to violate US Law. So we enact your solution again... The NEW President resigns... This time the Speaker succeeds... The Speaker is now the President. Now THAT new President is obliged by US Law... to violate US Law. So we enact your solution again... Do you see the problem yet?
        13y ago
jbigelow76 13y ago
Because if it's unilaterally raised it ceases to be a weapon.
21echoes 13y ago
> The debt ceiling has nothing to do with meeting ones obligations to creditors. yes, it completely does. the US does not have the cash on hand to continue paying out to its creditors. to continue to pay its creditors, it must borrow more money.
pekk 13y ago
The debt ceiling has everything to do with meeting obligations to creditors, and that is why it should be raised. Start with false premises, end up with false conclusions.

by yapcguy 13y ago

JumpCrisscross 13y ago

"If the debt ceiling isn't raised, simply prioritize what the country's money is going to be spent on." 1. That could be a form of default. Not on the U.S. debt, but on its contracts. 2. Cash flows are lumpy - that's part of why we have government debt. Even reducing all non-debt payments to zero, the U.S. Treasury will have to default at some point before mid-November. There simply isn't enough money in the U.S. Treasury's account at the Federal Reserve to keep its cheques from bouncing.

ericmason 13y ago
They can always sell off some assets. Welcome to reality.
- JumpCrisscross 13y ago
  You don't buy the furniture out of a burning house. A fire sale of a country's public assets in the midst of a political and financial meltdown isn't going to find much real demand.
  - jlgreco 13y ago
    The US certainly has assets that other would be willing to buy. As an obviously inflammatory/terrible example: I am sure many corporations or nations would leap at the chance to buy the mineral rights of national parks. How much would the Chinese give us for the right to stripmine Yosemite? A lot I bet. (Obviously that is a horrible idea, we should never stripmine our national parks...)
    - JumpCrisscross 13y ago
      You own Blackberry stock. It's your largest holding. You've seen it lose 90% of its value in the last 5 years. The CEO asks if you'd like to buy a cafeteria pass, good for free meals at the company cafeteria for the next 50 years. Most investors would say no. If a company is selling its cafeteria food to stay afloat, chances are (a) there won't be a company tomorrow or (b) it will find some way to repudiate inconvenient contracts, e.g. go bankrupt. Some very smart people bought into an Argentinian oil and gas deal. Then the friendly government became less friendly and their deeds were worthless pieces of paper.
    - bilbo0s 13y ago
      What Crisscross is trying to say is... Even if you buy assets from a government in turmoil... what is the likelihood that any new government emerging from that turmoil will allow you to keep the assets you purchased? Historically... the odds have not been favorable to investors.
      - jlgreco 13y ago
        This is true, but I don't think we are anywhere close to there yet. If we started selling off land, I suspect there would still be buyers.
  - yapcguy 13y ago
    Au contraire, the best time to find a bargain is from a forced seller!
    - hobs 13y ago
      True, but the specific analogy basically means that you wait until it all burns down at least.
- seanmcdirmid 13y ago
  We could sell California to China I guess.
- bjterry 13y ago
  Obama should sell start selling indulgences. Every non-violent federal offender has a one-time opportunity to have their case dropped for $100,000. I'm pretty sure lots of people could pony up the cash through friends and family, if necessary. As a bonus, save costs on the Justice Department.
tdees40 13y ago
Perhaps more to the point, Obama doesn't have the legal authority to prioritize certain payments. If he doesn't pay something, then he would be in violation of the law. He can't just unilaterally not pay bills. This isn't some little technical problem, it's a real constraint. If the debt ceiling isn't raised, Obama is both (1) required by law to spend certain monies and (2) not allowed to borrow to spend that money. This could provoke a very real constitutional/legal crisis with no clear resolution.
- fleitz 13y ago
  If he is unable to fulfill his obligations as required by law, I guess the only legal option is resignation.
  - bilbo0s 13y ago
    I think that the depth of the hypothetical that tdees postulates has eluded you... it would not be Obama who has a Constitutional/Legal crisis... it would be the United States. It would be, quite literally, US Law mandating the violation of ... US Law.
    - fleitz 13y ago
      Which the president as head of the executive branch is required to execute.
      - bilbo0s 13y ago
        Sigh... OK... let's walk your suggestion through. The President resigns. The Vice-President succeeds. The Vice-President is now the President. Now the NEW President is obliged by US Law... to violate US Law. So we enact your solution again... The NEW President resigns... This time the Speaker succeeds... The Speaker is now the President. Now THAT new President is obliged by US Law... to violate US Law. So we enact your solution again... Do you see the problem yet?
        13y ago

jbigelow76 13y ago

Because if it's unilaterally raised it ceases to be a weapon.

21echoes 13y ago

> The debt ceiling has nothing to do with meeting ones obligations to creditors. yes, it completely does. the US does not have the cash on hand to continue paying out to its creditors. to continue to pay its creditors, it must borrow more money.

pekk 13y ago

The debt ceiling has everything to do with meeting obligations to creditors, and that is why it should be raised. Start with false premises, end up with false conclusions.