Can someone explain in simple terms this debt ceiling thing?

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Replies

  • CalusaCalusa Posts: 11,881 Officer
    What cadman said.

    Yes, very good explanation of the issue. Thanks cadman! :applause
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  • FloydFloyd ; in N. Tampa or DownEast MainePosts: 1,081 Officer
    Using the credit card analogy:

    US Credit Card..........issued by the government....money is supplied by us, investors, foreign countries, and the Treasury Dept, who can print money at will, with no backing other than the full faith and credit of the US. The US credit has always been rated good/AAA, but is now in question.

    Credit Limit.........this is the same as the debt limit or credit ceiling that congress is fussing about. They raise the credit limit occasionally so they can spend more money. This usually means that more money is owed and there is a corresponding increase in the national debt.

    Finance Charge.......this is what it costs to live on borrowed money, and includes interest charges on all the T-bills and bonds and loans to foreign companies.

    Minimum Payment Due......this is the amount required to pay the interest, and all the fixed charges that the government is obligated to pay each month. This includes big portions of the federal budget like military spending, social security, medicare, ect.

    Balance Due .......this is the minimum payment plus all the new spending. This new spending is an area that includes some discretionary items that we will have to cut.

    I have read that 40% of each dollar spent by the government is borrowed money.
    I have also read that the federal budget has doubled since 1965.
    These two items are unsustainable, and the longer it is allowed to continue the harder it will be to ever get the budget back to a manageable condition.

    Another thing, most of the talk today about the deficit and spending seems to lack any discussion about reducing the amount of foreign borrowing or reducing the balance on "our" credit card. From what I can tell, the proposals today that boast of spending reductions are mostly counting reductions in future projected spending as cost cutting, rather than actual cuts or rollbacks in federal spending.

    Feel free to correct this and post a more accurate version. I'm not a financial guy.
    Federal spending: http://www.heritage.org/budgetchartbook/total-government-spending
    Government Debt Chart: http://www.usgovernmentspending.com/debt_deficit_brief.php
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  • cadmancadman Home of the Gators Posts: 24,456 AG
    Floyd wrote: »
    I have also read that the federal budget has doubled in the last 10 years.
    These two items are unsustainable, and the longer it is allowed to continue the harder it will be to ever get the budget back to a manageable condition.

    Another thing, most of the talk today about the deficit and spending seems to lack any discussion about reducing the amount of foreign borrowing or reducing the balance on "our" credit card. From what I can tell, the proposals today that boast of spending reductions are mostly counting reductions in future projected spending as cost cutting, rather than actual cuts or rollbacks in federal spending.

    Feel free to correct this and post a more accurate version. I'm not a financial guy.

    The only part I disagree with is the doubling spending every tens years is unsustainable. That is not true. Spending has doubled every decade except 1990 to 2000 without major issues. What you need to be concerned about is government spending as a percent of GDP. We are above 20% of GDP currently (one number being used is 24%). This is what is unsustainable in peace time (well relative peaceful, only three undeclared wars). Most of the tea party guys want to cap at 18%, which is also not sustainable with 3 wars going. But even at 18% we would still be running a deficit since revenue has fallen to 15% of GDP as a result of this recession. Due to the recession a balanced budget is impossible.

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  • spinfreakspinfreak Posts: 5,204 Officer
    aniano wrote: »
    I'm just jealous of all the attention you get. :-)

    You're the famous one here, mr author man :p
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    YOU NEED PROFESSIONAL HELP! Seriously. Do it for yourself and loved ones. You have issues
  • mustang190mustang190 Posts: 9,772 Admiral
    Simple,, you don't pay debt with more debt!
    2013 Pathfinder 22 TE , 150 Yamaha,
  • CaptTaterCaptTater Posts: 20,096 AG
    mustang190 wrote: »
    Simple,, you don't pay debt with more debt!

    Oh yes we do.. Ring ring ring.. This is China..
    We need more money.
    Okay.
    Thanks buddies, here's another 10% of our economy mr China
    Thanks.

    Who was this man? He nailed it.
    The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
    I did not read the story but if you take tax payers money maybe you should be held to some standards.-Cyclist
    when we say the same thing about welfare recipients, you cry like a wounded buffalo Sopchoppy
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  • lawaiaalawaiaa Posts: 1,266 Officer
    WHY THE %#?* IS THIS IN OT????? C'MON YOUZ GUYS YOU KNOW THE RULEZ.

    All you guys that complain how bad politics is...... post over there or shut up. You know who you are.

    Why do the rules get bent for certain folks?

    Three pages... this is BS!!!
  • Mark O.Mark O. Posts: 3,401 Captain
    I remember back in the Reagan years...the people were saying "no 3 trillion dollar debt" That seems pretty good now.
  • CalusaCalusa Posts: 11,881 Officer
    lawaiaa wrote: »
    WHY THE %#?* IS THIS IN OT????? C'MON YOUZ GUYS YOU KNOW THE RULEZ.

    All you guys that complain how bad politics is...... post over there or shut up. You know who you are.

    Why do the rules get bent for certain folks?


    Three pages... this is BS!!!

    Well I got all I asked for in this thread. They can chit can it for all I care.
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    Member #12478
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  • spinfreakspinfreak Posts: 5,204 Officer
    lawaiaa wrote: »
    Three pages... this is BS!!!

    you should change the posts per page in your settings. Most everyone has it set at 40 posts. That way you're not clicking from page to page to page on longer threads
    Exiled Dungeon Master of The Freakshow :cool:
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  • Lucky7Team2Lucky7Team2 Posts: 6,794 Officer
    pupraiser wrote: »
    If you've reached your CC limit, then you need to "start cleaning dishes" vs. going more into debt. Well, unless the dept ceiling is being raised so that someone will pay my mortgage.

    Actually you ate the food and decided you do not like how it tastes and you do not want to pay for it or can't afford it. The argument is whether you will wash dishes to pay it off or mop the floor. One owner wants you to mop, one wnats you to wash.
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