Bloomberg Implores Congress To Raise Debt Limit, GOP Has A Sneaky Plan

Failure to raise the debt ceiling could mean tough times for these two (AP)

Despite ~~Paul Giamatti~~ Ben Bernake warning Congress that the failure to raise the debt ceiling by August 4 would spark a "major crisis" that would send "shock waves" throughout the global economy, Rep. Boehner angrily pulled back from a "grand bargain" and now even the more modest deals pitched by the Biden group seem to be in peril. This has America's Mayor, Mike Bloomberg begging Washington to raise the limit before something "catastrophic" happens. At a press conference in Queens yesterday, Bloomberg said of the DC pols, "The debt ceiling is so important that playing 'chicken with it may be cute and may be good politics but it doesn't leave the rest of the world having a warm and fuzzy feeling about investing in America."

Hizzoner is "100 percent" in favor of lowering the deficit, but unlike Republicans he doesn't believe it should be coupled to the discussion on the debt ceiling. Bloomberg says, "Both sides are going to have to stop all this posturing, and come to the table." That won't happen anytime soon, thanks to an interesting proposal given by one Yertle the Turtle, a.k.a. Senate Minority Leader Mitch McConnell.

McConnell wants to give the president the authority to raise the debt ceiling to $2.5 trillion without Congress's approval. At first glance, it would give Obama an opportunity to save and potentially (in the short-term) boost the economy, without having to concede to slashes to entitlement programs. However, it will also give Tea Party Republicans time to wail and gnash their teeth, casting meaningless votes against pending debt-ceiling limit legislation, allowing them to return to their constituents with their heads held high. If McConnell's plan works, expect the GOP to demand massive concessions from the Democrats and pillory Obama for deepening the country's deficit.

Whether or not the GOP will accept McConnell's move, there's not much time for hand wringing. In two weeks our country will default on its financial obligations if the ceiling isn't raised, and we'll have a lot more to worry about than "Twitter primaries."

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By Christopher Robbins in News on July 13, 2011 2:25 PM

Comments [rss]

Dead Himmler

Thank god we kept in place the tax cuts for the rich.

Roger_the_Shrubber

How else are we going to give money away to bail out Greece, bribe the Palestinians and lavish on Planned Parenthood among so many other wastes of money?

What part of "we're broke" do people not understand.

Politburo

It's the "we're broke" part that people don't understand.

Simply because we're not broke. People *want* to lend the US massive amounts of money, and it really wouldn't be difficult to pay off if we make a small adjustment to our tax system along with adjustments to spending.

Colonel_Ingus

In what way are we bailing out Greece?

Colonel_Ingus

Hint: we're not

Colonel_Ingus

Must be out shrubbing...

Colonel_Ingus

The US will not default on any outside debts. Might screw over some parks... maybe some workers... but not the actual external debt.

LtWorf

Maybe not, but even if it doesn't, during periods of uncertainty, the bond market reacts irrationally. Rates will go up none the less.

Plus not paying seniors, medicare costs, military servicemen, etc etc can be just as bad.

Colonel_Ingus

Uhmmm... no, actually since the talks broke down this weekend the long bond has risen nearly 4 points (that's a drop in interest rates). That's not some kind of irrationality.

BottomlessChips

Doubling down on our debt will somehow prevent something catastrophic?

Do we teach our kids to open a new credit card when they max out another one?

Oh wait, many parents probably did teach that pre-2008.

Repaulsive

Did you even know about, or care about, the last 10 times we raised the debt ceiling over the last 10 years?

S.D.

What's your suggestion?
Default?

LtWorf

Good example, but say you have 100 dollars left on your credit line. You need a cash advance of 500 to pay off other obligations. If you don't get a higher limit, you'll default on those obligations, your debts skyrocket because their interest rates will spike, and now you won't be in any position to pay off any debts because you simply can't afford it. That's sorta where we are right now.

An American default would be a watershed moment. The one thing we have going for us right now is our credit rating. Fuck that up and we'll be up shit's creek. The dollar would tank and no one will finance our debt, even perfectly fine short term obligations. And we get hit as well as consumers as our taxes will skyrocket to compensate for much higher interest rates the gov't will have to pay, as well as our own CC rates. Mortgage rates would spike, every type of credit we take for granted will be far more expensive than it once was.

In the long term, borrowing less would be great, but you cant lop off too much off the deficit in too short a period of time. It's economically irrational & reckless.

BottomlessChips

Your analogy, albeit mine too, is imperfect in that the government has guns and can tell foreign creditors to eff off.

That said, like me and you filing chapter 7, the US can also default.

We've done it a few time before and even changed currencies. You are mistaken to think we won't do it in some way again, either. We simply cannot pay off our debt. We can only have the Fed print money. Bernanke extolled the virtues of the Fed today talking about how they made $180 billion when they purchased $1.4T worth of debt

Where did the $1.4 T come from to purchase those assets?

Answer: Thin air.

Also, many of us welcome interest rate hikes. Those who didn't dive headfirst into credit will benefit. How dare the fiscally responsible ever benefit!

Edit: The dollar would tank and no one will finance our debt, even perfectly fine short term obligations.

Since when have we cared about an honest dollar?