Debt Ceiling Stall Out

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Geithner has obviously amended his prediction, and the current wisdom, backed up by the U.S. Treasury, is that Aug. 2 is the absolute final date after which the U.S. would be unable to meet its “obligations.” Obligations which have only been met for the time being, according to the Obama administration, by using “accounting maneuvers.”

Has the United States exhausted all of its “accounting maneuvers?” If Rand Paul is correct, the answer is no. He explained that the government currently takes in $200 billion per month, and that current interest on the debt amounts to $20 billion per month. If he is correct, then “default” would have to be consciously implemented by the Treasury Secretary, as opposed to something that would happen automatically. In other words, Geithner would have to prioritize America’s financial obligations.

The reality that this is within the scope of Geithner’s capabilities was revealed in a 1985 exchange between then-Senator Bob Packwood, chairman of the Senate Finance Committee, who asked the Government Accountability Office (GAO) whether such prioritization was possible. “It is our conclusion that the Secretary of the Treasury does have the authority to choose the order in which to pay obligations of the United States,” offered the GAO, further noting that the Treasury “is free to liquidate obligations in any order it finds will best serve the interests of the United States.”

There is also the possibility of additional accounting maneuvers which center around America’s gold supply. An act of Congress would allow the value of America’s gold, currently held at the Fed and set at $42.22 per ounce under the Par Value Modification Act, to be reset at market prices. This would push the value of the Treasury’s deposits at the Federal Reserve to nearly a half trillion dollars, which the Treasury could use to settle debts without selling the gold itself.

Sen. Jim DeMint (R-SC) indicated what he thought of the well-publicized hard deadline versus Mr. Geithner’s ability to give Congress more time to reach a deal. “Secretary Geithner’s approach to dealing with the looming debt crisis is to take his hands off the wheel and let the car careen over the cliff,” DeMint said in a statement. “He has numerous tools at his disposal to avoid default, but his refusal to explore all options and just play chicken with the federal debt is deeply irresponsible.”

So what is the current reality? There is no question that the overall argument has swung in favor of the Republicans. For the first time in a very long time, Democrats are talking about serious cuts to federal spending. How large those cuts are depends on whether Congress hammers out a long-term deal, which Reuters reports is around $2 trillion in spending cuts, or whether law-makers do indeed “kick the can down the road,” forcing more negotiations closer to the 2012 election.

Yet it remains to be seen if Republicans are pushing too hard. Ostensibly conservative New York Times columnist David Brooks contends the Republicans have achieved the deal he called the “mother of all no-brainers” even if they allow some taxes to be raised. Brooks warns that if debt ceiling talks fail, “independents [sic] voters will see that Democrats were willing to compromise but Republicans were not.” Perhaps, but it is equally possible that voters, as indicated by the Republican landslide in the 2010 election, have already made up their minds who the more fiscally irresponsible party is.

The bet here is that any deal will come down to two simple realities. First, despite the president’s ostensible desire that both parties abandon ultimatums and political rhetoric, members of neither party will accept a deal in which key concessions can be defined as a major “loss” for their side and a “victory” for their opponents. Second, while any “compromise” will undoubtedly engender the wrath of each party’s faithful followers, both parties can live with that reality — if they can convince themselves they have earned the respect of the crucial independent vote heading into the 2012 election.

Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.

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  • taxpayer

    The Republicans will cave because Boehner and McConnell are the party leaders, rather than real Republicans. They will want to play golf and footsie with Obama. 2012 can't come soon enough.

  • StephenD

    Eventually, it will come down to us having to put out more…for less. No matter how you slice it, Increasing "Corporate Taxes" or Taxes on "The Rich" will ultimately be passed down to us in increased product cost or less jobs. I contend there isn't a corporation in the world that has ever paid a tax. Do you think they'll allow the profit margin to suffer if taxes are increased? Why should they? They merely increase the cost to the customer to make up the increased tax. In the mean time, the Democrats say they are helping us by going after the rich and evil corporations and those taking a chunk out of "Free America" fall for it. Those of us that work for a living get slammed in the end.

  • Jim_C

    "Perhaps, but it is equally possible that voters, as indicated by the Republican landslide in the 2010 election, have already made up their minds who the more fiscally irresponsible party is."

    "Fiscally irresponsible?" It's not hard to understand–Jobs did not magically appear in two years, so people voted against the incumbent's party. Granted, Americans have limited short-term memory, but it's possible they just might remember the years that preceded this recession. Wars, tax cuts, regulation/deregulation….

    Thanks for the link to Brooks's column though. Quite sensible.

  • dan

    Still an upside down city (D.C.) where, to the Demo-Covets, people and businesses keeping what they've earned is an expense (to/for government). Excuse me, but ALL government spending is an expense, to include government's "investment" in whatever (roads, schools, education, military, blah, blah blah, and more gubment Babble-on).

    • Jim_C

      Well a heck of a lot of businesses do business with the government, and DC is also filled with ex-GOP congressmen lobbying for those dollars, so what's your point?

  • Jim_C

    I'm going to give you guys a free clue as to what the real problem with the GOP and its TEA party critics is right now:

    “…But we cannot rely on custom or conscious alone to interpret and enforce the rules; we need an umpire. These then are the basic role of government in a free society; to provide a means where we can modify rules, to mediate differences among us on the meaning of rules, and to enforce compliance with the rules on the part of those few who otherwise would not play the game.” –Milton & Rose Friedman

    "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices" (Adam Smith, The Wealth of Nations, 1776).

  • Jim_C

    (Cont'd) You guys are so fixated on the fetish of "government tyranny" that you've completely missed the REAL problem: government takeover by private interests–PRIVATE tyranny. It's why we've had lax to no enforcement of the rules, its why we have rigged regulation and reckless deregulation. And while it infests both parties it is the GOP who is most beholden. The TEA party rightly senses this, but can't articulate it because it is blasphemy against capitalism. If they could articulate this–my friends, you'd have a game changer on your hands.

    But guess what? Fox would never allow this blasphemy! You know it's true.

    • Chezwick_mac

      "PRIVATE tyranny", eh Jim?

      You don't believe that the PUBLIC UNIONS and THEIR stranglehold on elected officials (mostly Dems) AND public policy is at all problematic? What about non-profits and THEIR lobbying power?

      Nope, it's all those evil capitalists, eh? Nice to have someone so "objective" to set us all straight.

      • Jim_C

        That's right, Chezwick. In fact it's not even close. Why? Because a job at the SEC just means you'll rake in the Wall Street dough as a consultant on how to fox the Fed when you step down. Because a job in Congress just means you'll rake in the K street dough bringing in contracts when you step down. There is no incentive to enforce the rules of the game Adam Smith and Friedman refer to. The income gap is REAL. The middle class is going to feel the burn–you know it, I know it. Meanwhile, our wonderful captains of industry have gotten exponentially (key word, there, Chez) wealthier BY DESIGN my friend. Not necessarily because of "evil," but just because they could, because that was how they rigged the game.

        And you want to compare that to some guy making $50,000/yr trying to save his pension? Good luck with that one on the campaign trail.

        • ObamaYoMoma

          The income gap is REAL. The middle class is going to feel the burn–you know it, I know it. Meanwhile, our wonderful captains of industry have gotten exponentially (key word, there, Chez) wealthier BY DESIGN my friend. Not necessarily because of "evil," but just because they could, because that was how they rigged the game.

          Actually, the whole class warfare argument is and has always been a ludicrous canard. It may appeal to people like you who don’t have any common sense, but luckily it fails with people who do have common sense. Those captains of industry that you hate, despise, and vilify, can’t rig the game for their benefit and make themselves richer and everyone else poorer at the same time, since in order for them to become richer they must sell more of their production, and if they can’t sell as much of their production because they made everyone else poorer, then logically they inevitably will become poorer as well since they can’t sell as much of their production.

          Liberals like you who don’t have common sense and have also been inculcated cradle to grave to hate the rich, profits, and capitalism, assume the rich gets richer by osmosis and by rigging the game, but in the real world it really doesn’t work that way.

          • Jim_C

            I come from a family of capitalists. I co-own a business. I am pro-business, pro-capitalism. I envy no one their hard-earned gains. I'm just not religious about free markets and I think there is such a thing as a social contract. Society costs. I see the gov't has a key role to play in order to ensure actual free, fair markets. It has abdicated this role, BY DESIGN. I quote the architect of capitalism and the free market's biggest proponent to demonstrate this. You've got nothing but name calling.

          • ObamaYoMoma

            I come from a family of capitalists. I co-own a business. I am pro-business, pro-capitalism. I envy no one their hard-earned gains. I'm just not religious about free markets and I think there is such a thing as a social contract. Society costs. I see the gov't has a key role to play in order to ensure actual free, fair markets. It has abdicated this role, BY DESIGN. I quote the architect of capitalism and the free market's biggest proponent to demonstrate this. You've got nothing but name calling. It's you who doesn't get the real world. You're not even in my league.

            You claim to be pro-business and pro-capitalism in one sentence and then in the very next sentence you denounce free markets and promote big government. In addition, it doesn’t matter who you quote, as action speaks louder than words, and thus it’s really kind of hard not to notice your left/lib hypocrisy. Hence, I call you out for what you really are: a tax and spend big government leftwing liberal, and like all leftwing liberal hypocrites, you believe your sh!t don’t stink because you are convinced you are smarter than everyone else. Well, you can believe whatever you want, but the truth is you are not. You are just full of yourself.

          • Jim_C

            It's funny when you say I'm promoting big government when I quote Milton Friedman on the very subject, because it proves my point: you're blinded by ideology. To you it's not about solving problems–it's about power.

            You are a vocal advocate for real, competition-destroying, game-rigging tyranny–and you don't even know it. You think you're a Minuteman when you're just a waterboy for Karl Rove!

          • ObamaYoMoma

            Hurts when you get bested in an argument, don't it, ObamaYoMama?

            Wow…you are even more delusional than even I originally first realized. Damn…sucks to be you. No wonder you buy into the absurdity of class warfare like a loon.

            It's funny when you say I'm promoting big government when I quote Milton Friedman on the very subject, because it proves my point: you're blinded by ideology. To you it's not about solving problems–it's about power.

            Actions speak louder than words. Indeed, you can quote anyone you like and pretend to love capitalism all you want, I don’t care, but when you then turn around and in the very next sentence denounce free markets and advocate for more powerful and bigger government, it kind of demonstrates that not only are you a left/lib hypocrite, but also that you are a tax and spend big government leftwing hack as well.

            To you it's not about solving problems–it's about power.

            Since when is the solution for anything making the government bigger and more powerful? It’s not, as making the government bigger and more powerful has always failed exactly because of the law of unintended consequences, as government solutions always end up creating far more new problems than they solve.

            In addition, since the federal government was hijacked and co-opted by the left, it has become nothing but a complete and utterly incompetent dysfunctional basket case. Sort of like you. Hence, the last thing we should do is continue feeding the monster.

            You are a vocal advocate for real, competition-destroying, game-rigging tyranny–and you don't even know it. You think you're a Minuteman when you're just a waterboy for Karl Rove!

            Actually, I can’t stand Karl Rove, because he sold us GWB as a conservative when he really was a stealth leftist and one of he most leftwing Republicans that ever held the office of president.

            In addition, you admitted you hate free markets and by default free competition, which is why you prefer big government – to curb free competition, and the only game rigging that occurs, occurs only when big government interferes with free markets and free competition. Hence, not only are you delusional, but you are also a leftwing big government tax and spend ignoramus as well.

          • Jim_C

            See, you may not like Karl Rove, but you'll be his waterboy all the same. It's what he does. You're an appropriate shill for him because, as an ideologue, discernible reality means nothing to you. As Rove put it:

            "We're an empire now, and when we act, we create our own reality. And while you're studying that reality—judiciously, as you will—we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors…and you, all of you, will be left to just study what we do."

    • kafirman

      Jim, in a free market, as George Gilder has proved, profit is a measure of altruism. If there is a supplier's "conspiracy" to raise prices, then reduce the barriers/regulations to market entry and allow someone to get rich by undercutting the conspirators. The free market is the solution, not the problem.

      • Jim_C

        Free markets are not the problem. Capitalism wins: is the best system devised to enable the greatest amount of prosperity for the greatest amount of people. But people get a bit too ideological, religious, about free markets. I've quoted Adam Smith and Friedman, above, to show even they knew this. So did Hayek. So did Greenspan.

        • kafirman

          "the REAL problem: government takeover by private interests–PRIVATE tyranny."
          So which is it Jim, "PRIVATE tyranny" or "Free markets are not the problem."

          • Jim_C

            It is guys who have benefitted from the free market, not to mention the infrastructure of the United States, with unfettered access to the government through election, appointment, or lobby, pursuing their own interests, not only can make the market less free but shape policy decisions behind closed doors without electorate input. You guys seem blind to the fact that the government is not run by "leftists," but by, let's call them "elitists." They are not especially interested in the the nation's integrity and well-being. They're interested in shareholder bottom line. That's appropriate in their boardrooms, but when it makes its way into public policy, including foreign policy decisions, maybe that's not such a good thing, eh?

            Milton Friedman said it: We need an umpire.

            Our umpire has been bought off.

          • kafirman

            As the Constitution indicates, Government has a place in the economy. But that place is very limited. Government (“Congress”) should regulate the value of currency. Gold standard is the right way. The value of the dollar should be fixed to a certain volume of gold. That is legitimate government involvement in the economy. If the policy is free market, low regulations/taxes, sound money then the governments possibilities for chicanery are limited.

  • ObamaYoMoma

    In my opinion the all-important independent voting block pushed incessantly by the lamestream media is complete and utter garbage and a canard employed by the Left, establishment RINO Republicans, and especially the lamestream media to dupe conservatives into holding their respective noses and voting for the lesser of two evils.

    The proof is Bob Dole and John McCain were both well-established liberal RINO Republicans, yet they both lost their respective elections big time. While GWB, on the other hand, ran in 2000 as being a true conservative and won, even though overall he was a stealth leftist and one of the most liberal RINO Republicans ever elected to the office. So liberal in fact that the infamous Republican Party meltdown that occurred in 2006 after almost six years of constant betrayal of conservative principles and that also led to the Democrats taking over both houses of Congress was the inevitable result. Indeed, the Tea Party movement today is a direct result of mostly liberal RINO Republican politicians being elected to Congress and the office of presidency, as most true conservatives feel locked out and as if they don’t have a voice.

    Hence, the dirty little secret the Left, the establishment RINO Republicans, and especially the lamestream media all don’t want you to know, because they want to maintain their stranglehold onto power, is that the all important independent voting block canard is nothing but propaganda used to scare and dupe true conservatives into believing that Republicans can’t win national elections unless they vote for RINO establishment Republicans that are the lesser of two evils.

    I don’t know about everyone else, but in protest I didn’t hold my nose and vote for the lesser of two evils in 2008, as I simply stayed home and didn’t vote at all, and I won’t hold my nose and vote for the lesser of two evils ever again. I’ll be damn if I’m going to aid, abet, and assist the Left in hijacking and co-opting the Republican Party, the same way it has already hijacked and co-opted our federal government. The only difference between Barack Obama and John McCain is Obama relative to McCain is wrecking America a little faster.

    • Jim_C

      "Independent voters" are a faction taken into consideration not just by the "lamestream media" (yawn) but by each and every person involved with running any national campaign, for a democrat, republican, or space invader. In other words, people who know what they're talking about because they actually deal with it as part of their job–as opposed to you, sitting with one hand in your pants and a can of Pringles, and your "opinion."

      • ObamaYoMoma

        The reality is the all important independent voting block of swing voters canard is all propaganda created by leftwing establishment RINO Republicans, the left, and especially the lamestream press, and if that canard were true, then how did Bob Dole, a well known liberal RINO Republican for years and subsequently John McCain, for years one of the most liberal RINO Republican members of Congress both lose? As according to the all important independent voting block of swing voters canard, there is no way that a true conservative can possibly win elections because they are way too far to the right.

        Furthermore, after the Dole debacle in 1996, Karl Rove in 2000 smartly repackaged GWB as being a true conservative, while at the same time successfully branding John McCain as a liberal, and since outside of Texas the rest of the country didn’t know GWB from Adam, he was able to maintain the charade long enough to get GWB elected. But nevertheless GWB didn’t run as a liberal Republican to win the fickle independent voting block of swing voters, he ran as a true mainstream conservative. Not only that, but Rove threw Dick Cheney into the kitty, to also make the Bush/Cheney ticket appear to be even more conservative than it really was. It was only years later that the conservatives finally figured out that GWB didn’t have a conservative bone in his extremely liberal body, and the 2006 Republican Party congressional debacle was the result. Very apparently, you exposed again that you don’t have the first clue.

  • Asher

    We need to put in place http://www.Cut,Cap,BalancePledge.com in both houses before the Debt Ceiling is raised. We need a Balanced Budget amendment, and A Constitutional Amendment that it would take 2/3 of the House to approve a tax Hike before it is passed. More spending and Raising taxes will not get the economy moving, it will be the opposite.

  • Wesley69

    Republicans had better hold to their cut, cap and balance pledge if they know what's good for them. They can not accept any direct tax increases as Obama has consistently proposed. Closing some loopholes could be done, particularly those enjoyed by a small segment of the population. Republicans must realize it is the President who is playing this game of chicken and he knows the media will back him when the day of reckoning comes due.

    Republicans need to educate the people saying that money comes into the government at all times so interest on the debt can always be paid. What is cut is not up to Congress, but up to the President and his financieal heavywieghts, That is where the politics of fear come in and the President knows how to play this part of the game very well.

  • ObamaYoMoma

    The way to raise federal revenues is not to raise taxes but instead to grow the economy and you can’t grow the economy by raising taxes. Like when taxes are raised on cigarettes, liquor, beer, and gasoline, inevitably less of those products are consumed. Likewise, when you raise taxes on the economic engine of our economy you end up with less economic growth, higher unemployment rates, and in the long run less federal revenues. Not only that but it inevitably harms most Americans through higher unemployment, slower wage growth, and the fact that higher taxes for the most part will inevitably get passed down to consumers.

    Moreover, we got into this fiscal mess we are in by compromising with the Left, but we will not get out of this fiscal mess we are in by continuing to compromise with the Left.

    • Jim_C

      We've had tax cuts for years. Where is the growth? Where are the jobs?

      Well, we decided to go nation-build in the ME with a two-front war, for one thing. We also allowed our banking system to look more like casinos. Wha wha "Left" wha? Where have you been?

  • ObamaYoMoma

    We've had tax cuts for years. Where is the growth? Where are the jobs?

    Up until the financial market collapse, there was very healthy economic and job growth for years thanks to the Bush tax cuts. However, two things happened almost simultaneously, the Islamic world waged financial stealth jihad against the West during an election year by manipulating oil supplies causing oil prices to skyrocket at the same time, and those skyrocketed oil prices had the same exact impact on our economy as raising taxes, as the last thing the Islamic world wanted was for another Republican to win the White House.

    Next, the artificially high gas prices helped precipitate the financial collapse, which was the final nail in the coffin for the economy. Then the federal government’s panicked corrective actions were almost as bad as the financial collapse itself, and only exacerbated the problem and made the recession deeper. Meanwhile, none of the over inflated bubbles were allowed to collapse, Thus. they still could burst at anytime.

    Of course, the financial collapse was a direct result of government over-regulation and over-reach, as the Dhimmicrat Party along with a few leftwing RINO Republicans had for years regulated financial institutions to make loans to first minorities that had no hope of ever repaying them back, and then subsequently for everyone. Then when it became evident that those mortgages weren’t worth the paper they were printed on, the federal government reacted again by creating new federal regulations to bundle those worthless mortgages with good mortgages, thereby poisoning our entire financial system at the same time in the process.

    The rest as they say is history, the law of unintended consequences inevitably kicked in and then it was only a matter time before the whole house of cards created by big government over regulation and over reach came tumbling down. Of course, as usual no one was held to account and then the Dhimmicrats together with the lamestream media like clockwork successfully blamed the whole damn thing on a lack of government oversight and federal regulations caused by congressional Republicans during an election year like always.

    Hence, Obama got elected and with the Dhimmicrats already in control of both houses of Congress, they proceeded to imitate FDR’s and Jimmy Carter’s Keynesian economic policies by massively growing government, implementing new and greater regulations that predictably stymied economic growth, and then by spending money recklessly like there were no tomorrows, and so today it is very surprising the economy is not any worse off that what it is. Not to mention that cramming government socialized health care down the American people’s throats and against their will also greatly exacerbated the problem as well.

    Well, we decided to go nation-build in the ME with a two-front war, for one thing. We also allowed our banking system to look more like casinos. Wha wha "Left" wha? Where have you been?

    Hey, fantasy based nation-building missions in far away Islamic countries are not a product of conservatism, but instead a product of liberalism, as although GWB in 2000 under the stewardship of Karl Rove ran as a true conservative promising that he would never deploy American troops in nation-building missions, that nevertheless is exactly what he did at the first opportunity, as GWB with his Religion of Peace™ being hijacked by a tiny minority of extremist canard, didn’t have a conservative bone in his extremely liberal body.

    Nevertheless, as counterproductive as both fantasy based nation-building missions were and still are, they didn’t have any discernable impact in the ultimate collapse of our economy, as that was the direct result of years of big government over regulation and over reach, that was exacerbated by the financial stealth jihad that was waged by the Islamic world against America during an election year.

    Hence, very typical of most delusional leftists, you couldn’t be any more clueless or mentally bankrupt.

    • Jim_C

      Great story bro.

      "financial stealth jihad"–cute!

  • tagalog

    Probably the solution for our economic difficulties will involve both cuts in spending and tax increases. But there should be ABSOLUTELY NO DEAL on increasing the debt ceiling until the party or parties that favor federal government spending agree to BINDING commitments to cutting spending by at least $4 trillion over the next ten years. Once we have reached a commitment to that, it's kosher to talk about tax increases.

  • Steve

    NEWS ALERT: Check out the Conservative Richard Duncan's book "The Corruption of Capitalism" for a macroeconomic analysis of how really terrible the world and USA economies really are. He predicted the 2008 Depression years before the collapse and is of the opinion so many trillions of private wealth was wiped out in 2008 that without major government deficits and spending the whole economy collapses. Very dishearting for conservatives. It's a very important book for capitalists to be very familiar with, along with his website. Duncan's points and analysis need to be a part of the Conservative conversation, as we need to take a very long term view of the Economy and the future of the Republic.