US debt-ceiling crisis

[VicHockeyFan]

I think they'll get the ceiling raised rather than defaulting. There is no way they can overnight cut spending by 44%

http://fullcomment.nationalpost.com/...-debt-default/

...Here’s a comparative. In the worst quarter of 2009, American consumers cut their spending by … not 44%, not even 4.4%, but 1.2%. That 1.2% drop in consumer spending helped tumble the economy into the worst collapse since the 1930s.

The U.S. consumer sector is even larger than the federal government sector. But it’s not unimaginably larger. U.S. consumers spend about $10 trillion a year. The federal government spends about $3.4 trillion.

If a cut of 1.2% from $10 trillion was an economic shock, a cut of 44% from $3.4 trillion will be a much, much, much bigger shock...

This is what they'd be up against if they decided not to default and not raise the debt ceiling:

…The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, [BPC's Jay] Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there’s enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion).

That leaves you with about $39 billion to fund (or not fund) the following:


Defense vendors ($31.7 billion)

IRS refunds ($3.9 billion)

Food stamps and welfare ($9.3 billion)

Unemployment insurance benefits ($12.8 billion)

Department of Education ($20.2 billion)

Housing and Urban Development ($6.7 billion)

Other spending, such as Departments of Justice, Labor, Commerce, EPA, HHS ($73.6 billion)

The decision to prioritize payments would fall on the Treasury department, and Powell points out it would be chaotic picking and choosing who gets paid (in full or partially) and who doesn’t…

http://blogs.marketwatch.com/fundmas...ogle_news_blog

[Baro]

I can't remember where it was, was about a year ago CNN or some major US news network had an online "game" where you could play with the actual US's budget / taxes. It was extremely easy to balance the books without any social cuts. I managed to give the US a respectable surplus by cutting a ton of the military, farm subsidies, and tax loopholes for the mega rich. Is it really that simple?

*edit*

Here it is. http://www.nytimes.com/interactive/2...s-graphic.html

[VicHockeyFan]

Originally Posted by Baro

I can't remember where it was, was about a year ago CNN or some major US news network had an online "game" where you could play with the actual US's budget / taxes. It was extremely easy to balance the books without any social cuts. I managed to give the US a respectable surplus by cutting a ton of the military, farm subsidies, and tax loopholes for the mega rich. Is it really that simple?

*edit*

Here it is. http://www.nytimes.com/interactive/2...s-graphic.html

Very interesting. I wasn't so tough on the rich (they can move themselves or their money elsewhere way better than you or I can, so the savings aren't as much as is often estimated).

I found some military cuts, and reduced lots of health spending, cut some foreign aid. I cut the agriculture subsidies too.

I'd say I got there pretty easy too.

[LJ]

I got a $600B surplus, put me in charge right now!!!

[VicHockeyFan]

Originally Posted by LJ

I got a $600B surplus, put me in charge right now!!!

In that case, I think I see the entire Chinese 3rd and 5th fleets on the horizon.