The correct handling of the Debt Ceiling

[cthulu2016]

The majority of the US House of Representatives has the Constitutional power to destroy the American economy. Nobody can question that. I appears that the Republican majority in the US House of Representatives wish to destroy the US economy, and it is their call to make. I join almost all Americans is requesting that Congress not destroy our economy, but until the elections of 2014 there is nothing any of us can do to stop them.

That's the entirety of it.

Rather than trying to find a unilateral Presidential power to authorize/accomplish higher debt, the President should acknowledge he has no unilateral power to authorize debt. Period.

There is no argument to be had.

If Congress wants to wreck the world then that's just what Congress wants to do.

[dkf]

1. Rampant spending with inadequate taxing can also destroy the economy.

So yes congress has the power to destroy the economy and is doing it regardless of the debt ceiling.

[TheProgressive]

2. No, that is incorrect...

An economy is only destroyed if too many people are not working and
earning an income...an this not buying things and not paying income taxes...

[dkf]

3. High debt to GDP restrains growth.

We study economic growth and inflation at different levels of government and external debt. Our analysis is based on new data on forty-four countries spanning about two hundred years. The dataset incorporates over 3,700 annual observations covering a wide range of political systems, institutions, exchange rate arrangements, and historic circumstances. Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies. Second, emerging markets face lower thresholds for external debt (public and private)—which is usually denominated in a foreign currency. When external debt reaches 60 percent of GDP, annual growth declines by about two percent; for higher levels, growth rates are roughly cut in half. Third, there is no apparent contemporaneous link between inflation and public debt levels for the advanced countries as a group (some countries, such as the United States, have experienced higher inflation when debt/GDP is high.) The story is entirely different for emerging markets, where inflation rises sharply as debt increases.

http://m.nber.org//papers/w15639

[TheProgressive]

4. Take our current situation...

And this is what I am basing my post on...

You state that rampant spending and inadequate taxation (and therefor large deficits) can destroy the economy. And you state that 'yes Congress has the power to destroy the economy'. You imply (and correct me if I am wrong) that our large deficits are destroying our economy.

I base that assumption on my post.

Large government deficits and debt has no bearing on our current economic situation. No one, including me, likes deficits and our debt. However, large deficits are more an indication of bad government policies.

Yes, inflation and government monetary policies do effect the economy however it is not the major factor.

These are the components of a thriving economy: many people working (low unemployment) and earning a decent wage/salary enough to live on and beyond (vacations, toys, college, etc.).

Today, we find high unemployment, low wages, and a barely limping-on economy. It is because corporations outsource good jobs and the jobs that are here pay crap.

Nothing to do with government deficits and debt.

[dkf]

6. At some level it will.

If debt depresses growth, that means less employment which means less taxes. It feeds on itself.

But the biggest problem is when no one wants to buy your debt, then there is no source to fund the deficit spending and that is where the potential collapse comes.

The Fed has been buying so much of our debt I am not sure where the natural demand is.

[TheProgressive]

7. And to be clear...

I am not saying that a continuous downward spiral of less taxes and more spending is
what we strive for... Of course, eventually, this kills the government. To do this
is to have our government purposefully destroy itself.

To emphasize and clarify the points I made - America needs to employ more
Americans at decent wages. America has to redo our trade policies and tax laws
to re-implement tariffs and insure corporations cannot outsource our jobs.

And since economies are like an engine that requires 'priming', our stagnate and sputtering
economy requires our government to invest heavily in stimulus programs.

I just makes so much sense: take on additional debt to hire Americans to rebuild our infrastructure.
The result - Americans earning money to buy things, paying taxes, and America gets something in
return, namely, an infrastructure in which to build upon.

[RomneyLies]

5. "He who can destroy a thing has the real control of it." --Frank Herbert

The Republicans have found they can destroy the global economy and have decided that means they have the real control of the global economy.