Here's what happens when the debt ceiling is not increased next week

It's about to happen. Next week.

The republicans seem to be unwilling to bring any legislation in the house to raise the debt ceiling.

If they don't raise it, it means that the US government will be forced to live with NO DEFICIT. The alternative would be to print, but let's say they are sane enough not to do that.

Thing is, even if congress would be unwilling to spend, due to the existence of the private federal reserve, outside of congress control, the FED could print by itself. This is what happens when it's not the people who control (anymore) all the money.

The budget would end up like that :

Taxes - Interest on the debt = Budget
2.17 trillion - 250.7 billion = 1919.3 billion

From the 3.82 trillion projected budget, it's a cut of 1.9 trillion +, just shy of a 50% cut.

Those numbers are just projected numbers from the 2011 budget. They most likely will change.

From the 2011 budget :

787.6 billion in pensions.
898 billion in health care.
140.9 billion in education.
928.5 billion in defense.
464.6 billion in welfare.
57.3 billion in protective services.
104.2 billion in transportation.
29 billion in general government expenses.
151.4 billion in other spending.

So... You need to cut 1.9 trillion. Good luck with that. This is what congress is gonna have to do in a week. Or raise taxes and cut. In this economic climate, good luck.


Or like they always do, they'll back down and raise the debt ceiling.

Thing is, AT ONE POINT, they will be FORCED to make those choices. And the interest on the debt will be much higher. So they should do it NOW before the interest on the debt explodes... or it's gonna be MUCH WORSE.

Edit : A bloomberg article related to this.
Rubio’s Demands Show Tea Party May Not Bend on Raising U.S. Debt Limit

The U.S. will breach the limit by the end of May, according to Treasury, and could default if Congress fails to authorize an increase.

Two lies here. By the end of May is a joke. It will hit it within 2 weeks MAXIMUM. And the US will NOT default if they fail to authorize an increase. It will pay the interest on the debt with tax money, which is NOT defaulting.

Democrats, who control the 100-seat Senate with 53 votes, probably won’t need Rubio’s support to raise the debt ceiling, though Senator Jim DeMint, a South Carolina Republican, is threatening a filibuster of any measure unless lawmakers accept a balanced-budget amendment.

A balanced budget amendment would still mean cutting/taxing 1.9 trillion.

I don't know in which world they live, but they seem to really think the debt ceiling is only gonna be reached at the end of may/early june. This is MADNESS.

reply to post by Vitchilo


Slash Health-care and Defense by a minimum of half and we will be at least in a manageable deficit.

They'll do exactly what they've done for the last 10 years to address debt issues.

Absolutely nothing, zip, bupcus, zero, nil, or as politicians like to call it "working on a solution".

It's ok - 'Don't Worry - Be Happy' those nice Billionaires will bale us out - they'll want to return the favour won't they.

You put some work in there OP but I'm feelings a bit despondent - we all talk and talk and talk - does anybody do anything - NO and they know we won't, that's how they have got away with it for so long.

Does any rational, sane, prudent person think shutting down the Federal Government is or could ever be a bad thing?

I wish the SOB's would all go home and never come back to DC.

This shutting down the government is the best thing that could happen. I hope we default on everything, crash the whole thing, and maybe if we get another chance, we could use a bit of sense.

reply to post by babybunnies


Or they could just invade another country, that seems to work well...

reply to post by Seekeye2

You do realize that a trillion is 1,000 billion?

dumdy dumdy dumdy...Sorry to interupt but who got booted from Dancing With the Stars this week?

Originally posted by FarArcher
Does any rational, sane, prudent person think shutting down the Federal Government is or could ever be a bad thing?

I wish the SOB's would all go home and never come back to DC.

This shutting down the government is the best thing that could happen. I hope we default on everything, crash the whole thing, and maybe if we get another chance, we could use a bit of sense.

Wouldn't that be a breath of fresh air?

*breathes deep*

No money from the FEDs : no cops. No food stamps. No medicaid. No medicare. No military.

Also.
As US tax rates drop, government's reach grows

Maybe the era of big government isn't over, after all.

As Americans finish their annual tax-filing flurry to meet a Tuesday deadline, it is true that tax rates are lower than they were a few years ago. But according to a different yardstick, the federal government's reach is expanding.

Slightly over half of all Americans – 52.6 percent – now receive significant income from government programs, according to an analysis by Gary Shilling, an economist in Springfield, N.J. That's up from 49.4 percent in 2000 and far above the 28.3 percent of Americans in 1950. If the trend continues, the percentage could rise within ten years to pass 55 percent, where it stood in 1980 on the eve of President's Reagan's move to scale back the size of government.

The government money stops, people are gonna riot.

Throwing In The Tea Towel: Government Shutdown Averted?

Despite pronouncements by Congressional leaders to the contrary, it appears as though the key parties involved have reached a tentative compromise on a deal to cut $33 billion in discretionary budget authority for fiscal 2011. That $33 billion would include the relatively painless $10 billion of cuts that were already passed as part of the last two continuing resolutions.

A final deal is by no means certain.

The positive outcome of this issue then opens the door to the next strawman catalyst: the proposed increase of the US debt ceiling, which also has no chance of not passing (the alternative is a default of the US), yet a favorable resolution will once again be spun as a market moving event adding another 10-20 points to the S&P.

We still project that Treasury will hit the debt limit on May 16, if it doesn't resort to the tools at its disposal to create room under the debt ceiling. Of course, we expect Treasury will use all means available to avoid breaching the debt limit. We still expect that Treasury will have exhausted those tools and hit the debt limit on June 30. The forecast is subject to more than the usual amount of uncertainty, as we head into the all-important April 15 tax date (April 18 this year.) We expect Treasury to provide an update to its own forecast for hitting the debt ceiling sometime next week.

As we indicated earlier, on a purely technical basis, the US total debt already surpassed the ceiling, although loopholes such as incremental maturities of debt, bill redemptions, the "debt subject to ceiling" definition and other semantics will likely push D-Day until mid-April, ultimately depending on the dynamics of tax refunds and revenues over the next two weeks.

That said, look for both of these events to be consistently spun as key positive outcomes, even though the chance of these things actually not transpiring in a non-favorable light is non-existent.

This is gonna be fun.

Just took a look at the Fed Bond auction Calendar. Looks like April 7th should be telling, they will be selling 3 yr note, 10 yr note and 30 year bonds. Is the Fed still buying back billions of dollars worth of bonds?

Seems like that would add to the national debt? Not only is the Fed buying back the bonds and not receiving income from the sale, they have to resell them at some later point. Actually the economic numbers are so cooked these days its difficult to guess what strategy will be used. If they want to make the point that the debt ceiling is to be taken seriously they won't just print money without announcing it as a large Bond issue package.

Any kind of further QE2 loosening strategy would make US bonds about worthless. Those lower than expected unemployment rates last week sound like an awfully tempting lead in for a rate hike.

One can only hope that SOME in DC have the stones to do what needs to be done and cut.

Stop the madness and DO NOT RAISE THE DEBT CEILING!!!!!!!

No, by all means, let's just continue to raise the debt ceiling and then spend even more time on ATS griping about taxes, inflation, the lack of jobs, and the ever growing deficit.

It's time to put up or shut up.

Until we actually refuse to increase their line of credit, the government will continue to spend and spend and spend....knowing that the all powerful taxpayer will bail them out...AGAIN.

You know who needs the biggest bailout? The government. Unfortunately, the bank of the US taxpayer is not only unwilling, but unable, to provide anymore bailouts. The last few debt ceiling raises did that.

Worried that the government will then just continue to print? Then riot about that. It would be one of the best reasons for a revolution I've seen mentioned.

When you max out your credit card, and begin having trouble making the interest payments, think you'll get a credit increase? Thought not. Neither should the government.

Stop agreeing to debt ceiling increases, stop watching as the Fed prints more money and devalues the dollar even more. Stop listening to the fear that the government has instilled in us about the dreaded shutdown...about how it has to be increased -- otherwise they'll come after your social security! There's a thread on here about brainwashing....read it. It most certainly applies here.

reply to post by beezzer


Kind of quiet today on Wall street ahead of Thursdays bond sales. Dow closed at 12400.03. This
is still over 7 months before the elections so they could go against the stock market and boost interest rates short term without it effecting the general elections in January. That would accomplish two things, first it would show the world the US is serious about its debt commitments and second it would stop this crazy oil price spiraling we have seen lately.

If they don't do something now our debt rating and the dollar are going to take a plunge. Inflation would get the upper hand and the Democrats would not be in a very good position by November.

reply to post by Seekeye2


Absolutely correct my man and when the SHTF instead of going after those responsible we will be fighting each other to grab whatever scraps we can! The American public are the most ignorant, pathetic and afraid people in all the world. We have failed to defend our freedom time and time again. Instead of rebelling when our governments started war after war that we did'nt want and again when our economy was heisted in 2008 and again when they used tax dollars that we did'nt even have to bail out corrupt buisnesses. How long will this go on before we realize our lack of action is whats causing a lack of accountability, before we decide noone can save us but ourselves. I really can't believe we have an armed public and we're scared to act, i can't believe we're the one's with the power but wont unite to unify that power. WTF people are we all just corporate zombie slaves cause if thats what we are then we have allready lost and may god have mercy on us all for not standing up to the evil that has truely enslaved us all!

reply to post by nosacrificenofreedom


Very true.

In other news, about 3 weeks left before total kabooooooooooom... America won't default on foreign creditors (they can't due to the 14th amendment and there's enough taxpayer money to pay for it)... but they sure as hell will default on the American people.

Originally posted by Rockpuck
reply to post by Vitchilo

 

Slash Health-care and Defense by a minimum of half and we will be at least in a manageable deficit.

OMG, slash, take out, cut military and you will end up worse. You think the unemployment list% is high now, just wait till alot of military are out of a job. you could see a 40% instead of a 9%.

Originally posted by Seekeye2
It's ok - 'Don't Worry - Be Happy' those nice Billionaires will bale us out - they'll want to return the favour won't they.

You put some work in there OP but I'm feelings a bit despondent - we all talk and talk and talk - does anybody do anything - NO and they know we won't, that's how they have got away with it for so long.

your right, but. The chinese will not back down, they want it back. They stated that they did and if we raise the cieling, it would be an act of aggression on china.

Originally posted by Vitchilo
America won't default on foreign creditors (they can't due to the 14th amendment and there's enough taxpayer money to pay for it)... but they sure as hell will default on the American people.

You know the domino/riot scene in V for Vendetta?

settle down doomers, whenever there is a lot of money on the line and a real deadline, brinksmanship negotiating is the flavor of the day

both sides want to inflict some stress and panic on the other side to see who will blink first

just look at the NFL

look for a midnight deal that is more or less a compromise