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Title: Democrats warn of US shutdown over debt
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URL Source: http://www.activistpost.com/2011/02 ... -of-us-shutdown-over-debt.html
Published: Feb 3, 2011
Author: AFP/Activist Post
Post Date: 2011-02-03 19:01:17 by Capitalist Eric
Keywords: None
Views: 6826
Comments: 13
WASHINGTON - Senate Democrats warned Thursday of dire economic consequences if Congress fails to raise the US debt ceiling, saying it could prompt a shutdown of the federal government. "It's playing with fire," said US Senator Chuck Schumer said of the legislative standoff. If a shutdown were to occur, "citizens couldn't get their checks, veterans couldn't get their benefits, military payments would stop," the veteran New York lawmaker said. Congress early in 2010 raised the US debt ceiling to nearly $14.3 trillion -- very near the current US debt of some $13.9 trillion dollars. The government will run out of money in about two months' time, according to the US Treasury Department, unless Congress votes to raise the federal debt ceiling. But while Democrats, along with most Republicans, agree on the need to avoid having the United States default on its debt, which likely would likely trigger a massive economic meltdown, some conservatives remain firmly against increasing ceiling. They insist instead of that it is time for massive spending cuts and belt-tightening, and say that raising the debt ceiling further only forestalls needed austerity moves. Illinois Senator Richard Durbin said a similar curtailment of government services today could "precipitate an economic crisis, driving up interest rates on mortgages, loans, businesses, families across America." Durbin called it a "political tactic could kill our economic recovery and drive unemployment even higher." Democrats noted that the last similar such standoff which led in 1995 to a brief government shutdown that was limited in scope, proved politically costly for Republicans after the public sided en masse with Democratic President Bill Clinton. © AFP [Posters' Comment: Only an opium-smoking FOOL would think that when you've maxed out your credit cards, and can no longer make minimum payments, that raising the limits on the credit is a good idea. Either that, or you're a socialist ass-hat, who thinks "There will be no more money when the U.S. dollar has no value, until that time we can keep printing more." And yes, that IS from LF's answer to Ben Bernanke, go65, our disfunctional, delusional socialist of the forum.]
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#1. To: Capitalist Eric, go65 (#0)
This is actually really simple. If we don't extend the debt ceiling, the government can only spend what it receives in taxes. How much is that? Over $2 TRILLION, which is what the government spent in 2002!!! 2002. Not 1982. Not 1892. 2002. Spending would have to be prioritized. The top priority would be paying the interest on the debt so we don't default. This demonstrates how crazy spending has gotten. It has to end NOW.
How much would tax revenues decline by if the government went into default or tried to slash $1.3 trillion in spending in April? You always ignore that part.
Look, we're talked about taxes before. Since WWII, average tax revenues have been 18% of GDP. Spending was 20% of GDP. During the last year of the Clinton administration, tax revenues were 19% of GDP and federal spending was 19% of GDP. Today, tax revenues are 17.6% of the GDP and federal spending is a whopping 25% of GDP. The government has a spending problem. The best way to recovery is cold turkey. It is not possible to collect 25% of GDP in taxes (plus another 20% at the state and local level). We don't live in a closed world. Capital will flee the country overnight if we try to do that. We have to cut spending. It's the only answer.
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#3. To: jwpegler (#1)
How much is that? Over $2 TRILLION, which is what the government spent in 2002!!!
#11. To: go65 (#3)
(Edited)
How much would tax revenues decline by if the government... tried to slash $1.3 trillion in spending in April?
Replies to Comment # 11.
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