Key Questions &Takeaways From the Debt Ceiling Deal

https://www.google.com/amp/s/abcnews.go.com/amp/Politics/key-questions-takeaways-debt-ceiling-deal/story?id=99660552

I linked this thread because it is the most current, but I have gathered details on my own, from t.v., & just used this article for corroboration. The big news is that President Biden & Speaker McCarthy hammered out a bipartisan agreement. The reason to not yet celebrate, is that the House & Senate have only a week to approve a bill for Biden to sign. This would not normally be a problem, but there are a couple of moronic Republican lawmakers, who are tough to predict. Numerous Republicans are talking, anyway, as if they would have no qualms with our defaulting on our Debt, if the deal doesn't meet their personal standards because, you know, that's how Congress works: every person gets everything they need, to be perfectly happy with a piece of legislation-- even something mandatory, and with a pressing time limit, like this-- or they stick their thumbs in their... mouths, and just obstruct.

So the plan is to that the House Budget Committee has to first approve this deal, to move it to a floor vote. Then the House has to approve it, with the Freedom Caucus being very unhappy with it. The hope is that all this can happen so that the Senate can take up that bill on Wednesday, and have it to Biden by Friday. There are some Republicans in the Senate who could also use procedural methods to hold this up. All in all, this seems a rather optimistic projection. Luckily, they technically have until next Monday, so I foresee Congress working into the weekend, but ultimately making the deadline, by a hair's breadth.

While progressives, on the Democratic left are also not overjoyed with this compromise, Dems are not threatening to kill it. They understand how bad it would be to default, and that this agreement is far preferable, so they will support it. But that's because Democrats are realistic. The Republican right's Freedom Caucus, OTOH, do not understand compromise, and expect to get everything they want. So hopefully, this is just their manifesting their whiney natures so, in the end, won't try to replace Speaker McCarthy, because of it.

Two in the GOP who are raising the greatest racket, about making the most trouble for this agreement, are Reps Chip Roy, and Mike Lee, both on the Budget Committee. They could hold up this bill for up to a full week in the House, before the Senate could even get it. But I think it's more likely than not, these prima donas just think this makes them look tough in front of their bases (whose competence is questionable), and will ultimately, while naturally voting against the deal, at least let the bill through for a vote. Just Karens, complaining, like Karens do.

Before I go into the actual agreement, I will give myself a little pat on the back for this post, back on May 9th, in the thread "Use the 14th Amendment." While acknowledging it was impossible to know what would happen, I thought that Biden would work for a deal, as long as possible, and leave the 14th Amendment for his last option. The question was would McCarthy be wise enough to be satisfied with whatever concessions he could squeeze out of President Biden, even if these would be far shy of the House Republican starting Budget demand, and brave enough, knowing that his Freedom Caucus members, would be dissatisfied-- IOW, losing their , over how terrible, any compromise agreement would be. To his credit, the Speaker is taking that practical minded path. While saying that 95% of his members are behind this, GOP tweets and Facebook posts, tell a different story. Of his 221 Republican members, I have so far heard guesses that ultimately anywhere from 120 to 150 may support the agreement.

Here was that early prediction of mine:

http://www.politicalforum.com/index.php?threads/use-the-14th-amendment.610447/#post-1074204502

DEFinning said: ↑
Yes, at present, because of our Ukraine assistance, Biden will accept no Defense cuts, at present, either. So either McCarthy settles for whatever cuts he can squeeze out of Biden, or we're f'ed. Actually, I think Biden will try to sell more, the idea of future negotiations, and longer term goals. Impossible to know, for sure, what will happen; the traditional playbook has been somewhat torn up, by the current House.
<End>

Actually, I think McCarthy did do some hard bargaining but that, while most of the concessions went McCarthy's way, Biden kept the damage mostly manageable, and was still able to negotiate an agreement that, provided it passes, will avoid default not only now, but until 2025, before lifting the debt limit comes up again.

Among the particulars of the deal, however, Biden's only big win is that it leaves untouched, Biden's proposed Student Debt Relief. A feature of the plan is also that it funds Veterans Medical Care (but would Republicans have really cut this? I guess I they'd wanted to. At a minimum, Repubs had demanded deep cuts in all discretionary spending). I suppose, after earlier rumors that $80 billion was being taken away from IRS funding, Biden's having limited it to only $20 billion, taken away, and used for other government needs, could be seen as a kind of victory. In fact, of course, it was a concession won by McCarthy. The only problem is that Republicans initially demanded that all of the new IRS funding be rescinded, and some on that side don't understand the concept of a "negotiating position." And because the GOP asks were so big, those who foolishly believed it possible that they could get everything on their wish list, will see their side as getting less of what they wanted, than did Biden, who'd wanted a clean lifting of the Debt limit.

Continuing: $30 billion of unspent Covid funds are to be clawed black, which was the most agreeable issue, from the start. However, the expanded work requirements, for recipients of SNAP government food assistance, can also be seen as a GOP win. The same is true of the permitting reform agreed to, for the oil & gas industry, and the expediting of the Mountain Valley Pipeline, that McCarthy won.

The biggest Republican win, and toughest pill for the Dems, at least I. my own opinion, is the agreement that the 2024 budget will have no increase over 2023. This represents a cut to every department, equal to whatever this year's inflation rate, turns out to be. Similarly, 2025's budget, will only increase by 1%, from that. So, while, in reality this was a concession to Republicans, it will do little to reduce our national Debt, so, based only on the Republican starting position, it will seem like a Democratic win, to those who'd seen the GOP's demands as reasonable, and attainable.

 

Just adding a couple of more McCarthy wins, in this compromise. Biden's plan (and promise) of $30/mo. insulin, is being scrapped. And so are Biden's proposed tax hikes, on the wealthy.

 

I think there was more wins than that for Biden. The Pact Act, the Inflation Reduction Act, and the Chips Act were basically untouched with only the issue of the starting point in which the budget for both 2023 and 2024 would be finalized. The GOP original plan was to gut all three spending bills that the Dems had. Also, the climate issues also remain intact for the most part. The biggest win for the GOP is the work requirements for those who are on food stamps. It increases a little, but not as much as what the Freedom Caucus wanted. And if you look at the deal, the Freedom Caucus got the very short end of the stick, which will make what happens to McCarthy in the next few months interesting to watch to see if the Freedom Caucus will then vote to remove McCarthy or not as a speaker.

the other group that was thrown under the bus somewhat are the progressives in the Dem Caucus. The main reason is budget cuts to the federal government and to the work requyirements on safety net services. But the climate issues remain in tact. Like the Freedom Caucus, the progressives did not want any compromise generally, and now we have one. Finally, Trump did not get his way in which the debt should have defaulted, and that may show the GOP that Trump is not fit to be president if this is viewed more as a personal vendetta. And yes, Biden is going to have to sell future negotiations on the budget to the Dems for them to get on board, but I think most will. And it will also give both sides the "win" that they can tell their constituents. I also think half in the house in the GOP will vote for this bill, maybe more and the Establishment Dems will also vote for this bill in the House. And thus the two extremes in both parties will more than likely vote no for this. We do know Rep Chip Roy wants to sink this compromise as well as most Freedom Caucus members, but all others, including Dan Crenshaw, are mum at the moment. And if he votes for the bill, then most of the establishment Republicans will too. But the key is going to be the House rules which will allow amendments to come to the floor that may negate the deal as made or the Senate in which a dozen or so may want to filibuster the bill.

 

Thanks, Alwayssa, for your reply, & your interest in the thread. I am only going to respond, right now, to the subject from your post, quoted above. You are doing the same thing I had been criticizing some Republican Freedom Caucusers of doing: considering utterly ridiculous "offers," as if there was anything serious about them, whatsoever. To be honest, it had not even occurred to me, that legislation passed in stand alone bills, would be considered on the table, in general budget negotiations. Regardless that these are still part of government expenditures, the idea that, just to get the Debt Limit lifted-- that is, to get one of our Parties to agree to pay our bills-- the other Party would be expected to give up much of its legislative accomplishments, for the previous two years, is just too far out of range, of reasonable thought. There is not ANY President, who would EVER agree to such a demand. Why not also include, as one of their conditions, that Secretary Mayorkas must be fired? Or that Hunter Biden has to be locked up and prosecuted?

I, therefore, don't think it is worth counting this, as a "win," for Biden. Under your alternate scenario, I am imagining Pres. Biden announcing their deal to the press, covered in red stains, and explaining that, as part of their deal, the President had to dance Gangnam style, for the Freedom Caucus, while they pelted him with tomatoes. "Yeah, but wait a minute, I won a concession from them, too," adds the President: "they let me keep my pants on!"

If McCarthy had treated those outrageous demands as if they were legitimate, Biden would have gone straight to attempting to use the 14th Amendment. And if that got nixed by the SCOTUS-- all the Democrats in the House had already signed a discharge petition for a vote on a clean lifting of the Debt Ceiling. So the only thing standing between us and default, would be 5 Republican House members signing on. If the cost for the President was giving up his Inflation Reduction Act (which included much of his progress in addressing Climate Change) as well as his Chips and Science Act, I think this would shield him from most of the blame, if 5 Rs, among the 18 who served Biden districts, didn't in fact, probably at the last minute, cave, and sign that discharge petition.

The Pact Act, which I hadn't been familiar with, by name, must be the ambiguous reference I've heard, in the overview, that says the deal funds Veteran's medical benefits. Overall, I'd like to know when in the past, any Party has ever extorted even this level of concessions, just to raise the Debt Ceiling.

No one I've heard report on this has named Biden's not having to toss the Inflation Reduction, or Chips & Science Acts, as a success on his part because, as I said, no rational person would ever believe that this crazy Republican demand, would receive a President's assent.

 

Many in the media, are presenting Biden's negotiated agreement with McCarthy, as cleverly adept of, and a win for, the President. Meanwhile, what seems like many Republican Congressmen, grumble about what a terrible deal this is. I have already opined, that I think McCarthy got a good bit more in concessions, than he was due.

Now, I understand that, even making all these concessions, is still better, from Biden's perspective, than our defaulting-- even briefly-- on our debt. But when one thinks of the precedent this sets, that a Republican House leader can take apart the long fought legislative victories of the current administration, just in order to secure their cooperation in lifting the Debt limit (so to agree to not try to wreck our economy & credit rating), is just an intolerable extortion. In lieu of that, I would have preferred seen the attempted use of the 14th Amendment, contending that 2011 Debt Control Act, was unconstitutional. This would have been a potential way to permanently rid ourselves of this ransome situation. Not that I am against fiscal responsibility-- but this is not the way to get it.

Even had the Court not sided with the President, we cannot forgot the pressure of that would also have been on all 18 Republican Congressman, who won in districts carried by Biden, some quite handily, in 2020. All that were needed were the names of five of these, on a House discharge petition, to get a vote on a clean raising of the debt ceiling.

But, I am at least hoping, Biden's thinking is that Dems only need pick up one more Senator in 2024-- as for example, if Rep. Ruben Gallego is able to defeat Sen. Sinema, in Arizona-- and handful of House members, to be in a position to eliminate this requirement, by suspending the filibuster rule, to get it through the Senate. Of course, this would mean that if the GOP eventually controlled all the levers once more, they could restore it. However, to a Party in power, what that would mean would be making itself vulnerable to the minority Party, should it win control of the House. With the tradition of midterm losses, this is going to seem much less appealing, than it currently would, from the GOP position, of controlling only the House.



https://www.google.com/amp/s/www.br...timony-before-the-house-budget-committee/amp/

<Snip>
Editor's Note: On February 16, 2022, Louise Sheiner presented this testimony to the U.S. House Committee on the Budget, as part of their hearing, "Why Congress needs to abolish the debt limit."
Chairman Yarmuth, Ranking Member Smith, and Committee members, thank you for inviting me to talk about the need to abolish the U.S. debt ceiling.

I would like to make three points today.

1. The debt ceiling does not serve any useful purpose. It has not imposed any fiscal discipline on Congress.
2. We don’t know what would happen to interest rates and the standing of the U.S. if Congress someday failed to raise the debt ceiling, but we do know the effects would be negative. This is not a risk we should take.
3. Our country faces a lot of long-term economic challenges— high levels of inequality and limited economic mobility, slow productivity growth, climate change, high health care costs, and an unsustainable trajectory for the federal debt. We should address those directly. Bickering over the debt ceiling is a waste of time and energy, creates unnecessary uncertainty, threatens the benefits of issuing the world’s safest asset and undermines public confidence in our political institutions.

The debt ceiling is a legal limit on the total amount of outstanding U.S. Federal debt. When the U.S. reaches that limit, the U.S. Treasury no longer has the authority to increase its net borrowing and can only make payments on its obligations out of incoming revenues. The debt limit does not govern the revenues and spending obligations of the federal government—those are governed by legislation enacted by current and previous Congresses. Instead, the debt limit is a political roadblock that, when reached, prevents the federal government from fulfilling its already-incurred obligations. It is like spending money and refusing to pay the credit card bill.

The debt ceiling would only be a nuisance if Congress lifted it as a matter of course whenever the need arose. However, that has not been the history in recent years. Instead, the debt ceiling has become a political weapon used to try to extract concessions or, more recently, to simply score political points. Indeed, just last fall we came within weeks of Treasury having to default on some of its obligations—before Congress acted at the last minute. That potentially included not making interest payments to debt holders on time.

Using the debt ceiling as a political weapon or as a way of trying to impose fiscal discipline is not a wise choice. At a minimum, the possibility that the federal government will not honor its debt obligations undermines confidence in the U.S. economy and in our political institutions. It also creates completely unnecessary economic stress for people, as federal employees, contractors, Social Security beneficiaries and the like have to worry about whether the government will pay them what they are owed on a timely basis. A protracted standoff in which the debt ceiling actually binds–which we have thankfully thus far avoided—risks wreaking havoc on global financial markets and permanently higher borrowing rates for the U.S. government.

Some might argue that the debt ceiling is a “necessary evil” because it provides a measure of fiscal discipline to the budget process. I think that view is misguided. First, there is little evidence that debt ceiling impasses have led to any long-term fiscal restraint. Indeed, the debt rose from 70 percent of GDP in fiscal 2011, the year the Budget Control Act was passed as part of the resolution of the 2011 debt ceiling crisis, to 79 percent of GDP in 2019, the year before COVID. This increase in borrowing reflects in part the tax cuts enacted in 2017. Second, and more importantly, the questions of how to address our long-term fiscal sustainability problem—when changes should be made, what is the mix of spending cuts and tax increases we need, which specific policies are best—are complicated and require careful deliberation. These types of fundamental policy decisions shouldn’t be made in a hurry because the economy is being held hostage. Instead, Congress should confront tax and spending issues directly, not as a byproduct to lifting the debt ceiling.

 

1. If we don't have a debt ceiling, then any fiscal deficiencies will be resolved in said bill like it was prior to the 1917 law. The other problem is that every politician wants to fund their pet peeve projects but not someone else's, which is why we are in this mess to begin with. In the end, it is pretty much a tomato or tomato sort of thing.
2. Actually, we do have a pretty good idea of what will happen to interest rates. The FED controls the interest rates, and those rates may drop, which has both benefits and consequences. However, that is not thte real problem. The real problem is that the United States government will not honor its debts, which means those T Bills and T bonds will now become worthless. Enter the Yuan as the "savior" to the world. China will dump its T Bonds and T Bills, the dollar will depreciate in value and we will become the next Turkey Lira or the old Mexican Peso to the rest of the world. Not a good thing. GDP will also fall since no bank will loan money. No construction of homes, apartments, business buildings, complexes, or even building military equipment, just to name a few. It won't be instant, but it will be a slow drip like Chinese water torture. Consumer confidence will dwindle, and unemployment will rise sharply putting pressure, a lot of pressure on state governments. Not a good thing. The question is are you willing to risk it?
3. A lot of the economic inequality and limited economic mobility has to do with how our economy is run. We are in a monopolistic competition-free market economy. The very few big corporations in every industry control price and distribution whereas the small businesses are more niche to the customers but rely on the big corporations for demand. In other words, the few big corporations in every industry control the output based on economies of scale whereas the small businesses control most of the hiring for their niche market share. And given the law, patents, ease of lack of true competition on a national scale, and a few other things, that is the reason why. People and businesses have to become more creative with a consumer that has an ever smaller net income because we as consumers are far too leveraged, and online consumer shopping by consumer demand has pretty much dwindled the economic mobility.

 

To me, anything that throws the hardliners in the GOP under the bus is a win for me. And the hardliners are the ones who are complaining the most about this deal and trying to flood the airwaves to get their message across.

 

Curiously, for all the breast-beating over the national debt and the doom it allegedly represents, neither party has even suggested, much less 'demanded', that we as a nation take the necessary step to deal with it and raise taxes to at least cover the projected deficit.

Now, that would take real courage as well as a sense of responsibility.

Regards, stay safe 'n well.

 

No need for the insulin plan the vast majority of insulin users already pay $30/mo. as was shown back when he proposed it. Taxing the wealthy can mean taxing people with low income, retired people. We DO NOT have a revenue problem we have a spending problem.

But here is the key takeaway. Once again history proves it is the Republican side that wants fiscal restraint and responsibility and Democrats who want unlimited spending, higher deficits and debt. The resident leftwingers have no further ground to stand on complaining about Republican spending and deficits.

 

The key takeaway is that, once again, history proves that the Republicans are only concerned about fiscal restrain and responsibility when Democrats are in office.
When they're in office they borrow, explode the debt, cut taxes on the rich and tax the middle class to pay for it.

 

“We don’t manage the money we take from you very well, and spend well beyond what we take from you, so we are just going to take more.” No thank you.

 

False they did so under President Bush43 bringing the deficits down to a paltry $161B why do you ignore that?

Bottom line is who are you supporting here the Republicans or the Democrats?

 

True. ( You are wrong about the Shrub(43))
Reagan took the deficit from $70 billion to $175 Billion. The national debt went from $995 billion to $2.9 trillion.
When George Bush(41) took office in 1989, the annual deficit stood at $152 billion. When he left office it was $290 Billion.
Clinton got it to 0 with an $182 Billion surplus.
Bush(43) left office with a $1.4 Trillion deficit.
Obama left office with a $665 Billion deficit
The Orange Stain left with a $2.7 Trillion deficit

I'm supporting Democrats.

 

What have you been smoking? The proposed taxes on the wealthy, had begun with incomes over $400,000. How many people with those, are eating from cans of cat food?

LOL!! That is an utter travesty. *The health of a government's finances, just like with any company's, is not determined on only one side of the leger. If Republicans were serious about fiscal responsibility, They would not be dead set against all new taxes. Period. And, if you didn't see it, I posted a Brookings article, in post #5, which mentions that the Trump/Republican Tax Cut, of 2017, added to our Debt. So "responsibility," has nothing to do with it, for Republicans; their main objective, is to cut taxes for their wealthy donors, and to balance that on the backs of the less affluent, and the poor, in terms of cutting social services. It is a regressive view, for our country, and our society. It will only add to the already dangerously high income equality, in the U.S. And the thing is, there isn't enough fat to cut, in simply the programs that Republicans are willing to cut. They are all talk, with a good dose of callousness, and shortsightedness, about our future.

http://www.politicalforum.com/index...the-debt-ceiling-deal.610900/#post-1074243475

 

Income tax is one of many taxes fyi.

 

is higher priced insulin really a win for McCarthy though?

 

And it is the one that we are discussing, in the concession made by Biden, who had proposed increased income taxes, FYI.

 

If it makes Big Pharma donors happy, I'm sure Republicans see it as a "win." I mean, McCarthy was the one who pushed for it, & forced the Biden concession. So he obviously viewed it as worth fighting for. I guess one could speculate that he viewed whatever this saved the government, as a win. But my assumption is that this would really amount to no more than a hill of beans, relative to other government expenses. I'm sure that a greater amount could be cut just out of overcharges to government, from the Defense Budget. But Defense Contractors are big donors, as well, and trimming fat there, would be taking money from their pockets.

 

Looks as though this deal is going to sail through the House, despite the loudness of, what may turn out to be, a smaller number of Republican derailers than feared. McCarthy had only been promising a "majority" of Republicans, supporting the bill. It will be interesting to see how many Republicans vote against the Speaker's deal (beside the Freedom Caucus).

Final vote: 314 in favor; 117 opposed.

By Party: Republicans, pretty much as originally forecast. Though I'd heard the range extended from between only 110 Rs, up to as high as possibly 180, it seems the expected number had always been at about 140 to 150. And 149 voted yes, 71 voted against it (& 2 abstentions). So Kevin got just over two-thirds.

Democrats: 165 in favor, 46 against (& 2 "present").

https://www.reuters.com/world/us/us-debt-ceiling-bill-faces-narrow-path-passage-house-2023-05-31/


Both Senatorial leaders, seem intent on quick passage, in their chamber.

 

An unfortunate, but necessary compromise. What we need are spending cuts, and not little ones. I'm not talking about a cut to the previously expected/planned increase, which is still an increase, I'm talking about massive, 10%, 15%, 20% or more cuts to the bone in our Federal spending. Cut until it bleeds, and then cut some more. The only reason we even have a credit rating is because of our superpower status, and that does deserve special treatment, but an ordinary country with our complete lack of fiscal restraint would be unable to borrow a wooden nickel from a blind squirrel.

Single subject bills.
Line Item vetos.
Eliminate departments that are not Constitutionally autorized.
All bills must contain documentation of their Constitutionality, and explain precisely where and how the proposed spending is legal to begin with.

And let's take the budget from, say, 1980, and index it for inflation and population growth and go with that!!!!

 

Wealth /= income

LOTS of older people with LOTS of wealth and little income.
LOTS of younger people with little wealth and LOTS of income.

And all in between.

Why don't we just tax everyone and every business at 100%? Or how about 80%. Let's just do that and we can balance the budget and increase spending and debt all we want.

It's NOT a revenue problem we are taking in RECORD revenue.


Data: OMB Historical Tables

Tell me if we take in double the revenue at a 15% rate than at a 29% on capital gains where should the rate be set?

 

Oh, so that is the limit of your conceptualizing of things-- zero, or 80%? Then there's no point in discussing with you, anything that requires more subtlety of apprehension than that.

 

Fiscal policy is not the sole purview of the President. Merely listing deficits and who happened to be President, leaving Congress entirely out of the equation, is folly it tells you NOTHING.

I am right, you are attributing FY2009 to Bush43 instead of Obama who signed it into law with HIS additional spending. Bush43 was cut out completely by the Dems.

 

Dodge noted. I didn't say I want 100% or 80% and I can tell you why can you? But if not 80% they why not 60%? You answer to raise revenue is more taxes well how much more?

 

YES the Reps continue to fight against this exploding debt and deficits while the Dems continue to fight for even more spending and higher deficits and debt.

Which side do you support?