Debt

(Debt) Deal Or No (Debt) Deal?

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Debt and loving it.

Looks like party leaders may be close to working out the basic shape of a deal to raise the debt limit. ABC News has the rundown:

Sources from both parties tell ABC News that the major potential roadblock in deficit negotiations– the triggers—are now essentially agreed upon. The plan is for the House to vote on this tomorrow, assuming all goes according to plan.

The agreement looks like this: if the super-committee tasked with entitlement and tax reform fails to come up with $1.5 trillion in deficit reduction that passes Congress, the "neutron bomb" goes off—as one Democrat put it—spending cuts that will hit the Pentagon budget most deeply, as well as Medicare providers (not beneficiaries) and other programs. 

If the super-committee comes up with some deficit reduction but not $1.5 trillion, the triggers would make up the difference.

So it's a minimum $2.7 trillion deficit reduction deal. 

And the debt ceiling will be raised by $2.4 trillion in two tranches: $900 billion immediately, and the debt ceiling will be raised by an additional $1.5 trillion next year – either through passage of a Balanced Budget Amendment, which is unlikely, or with Congress voting its disapproval.

There are apparently still conflicts over exactly how the cuts will be structured; ABC reports that Republicans are pushing for smaller defense spending reductions while Democrats want to "exempt programs for the poor." But even if leadership buys in (which seems likely), a deal amongst party chiefs isn't necessarily the same as a deal that can pass the rest of Congress. Leaders on both sides of the aisle still have to sell the agreement to the rank and file, and it's still not entirely clear whether House Speaker John Boehner, in particular, can sell his caucus on the plan. 

NEXT: Reason Writers in the New York Post: Nick Gillespie and Matt Welch on the Debt-Ceiling Debate

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  1. Could that brief have been written any more stupidly?

      1. Why “neutron bomb”? I understand it’s a quote from a Democrat, but still, what the fuck does it mean?

        1. Why “neutron bomb”?

          Kills all life but buildings still standing….as opposed to kill all life and buildings in rubble i guess.

          The “bomb” if it goes off would cut the pentagon’s budget and cut medicare provider payments….

          So I guess the portions of the pentagon and the payments represent life while everything else in the world are buildings…

          Yeah a democrat said it so expect it not to make sense.

          1. “It’s so immoral working on the thing, it can drive you mad. Happened to a friend of mine.”

        2. Lawrence Livermore National Laboratory director Harold Brown and Soviet General Secretary Leonid Brezhnev both described the neutron bomb as a “capitalist bomb”, because it was designed to destroy people while preserving property

          You kids missed a lot not growing up in the Jimmy Carter years.

          1. I always heard it described as a ‘landlord’s bomb.’

            But seriously for the record, all a neutron bomb does is let all the neutrons from the secondary escape the casing instead of smashing up U for more boom.

            You still need half-a-Hiroshima primary atomic bomb to get the whole party started with the way such gadgets work.

            Neutron bombs still blow the shit out of everything. Primary target of such munitions are ‘hard’ targets like mechanized armor which are so much more resistant to heat and shockwaves than, say, a building.

            1. When used as a metaphor the “kills the people but not the spoils” is correct.

            2. Sorta like a “clean out the cage” kind of bomb.

  2. “… spending cuts […] will hit Medicare providers (not beneficiaries) …”

    Only in Washington can people say that with a straight face.

    1. We’ll stick it to the providers, then blame the providers when they stick it to beneficiaries. Then take over the provider-business.

  3. Does it really take days of wrangling, and millions in shrimp cocktails to develop a compromised that cam be summed up in two words – “you’re fucked.”

    1. it’s even affecting my grammar…

    2. They have to keep up the charade that the two parties are somehow different when they fuck you. That takes time and shrimp.

      1. Q.’Why are there only two political parties?’

        A. Because not everyone has three holes.

  4. None of this shit matters. When the only guy at the bond auction is Bernanke, tits up. Nobody in this whole thing considers the customers for this debt. I laugh, for otherwise you can only cry.

    1. Strangely enough, I’ve heard government bonds are doing well of late.

      But then again, I guess people kept buying tulips up till the very last moment.

      1. Look who the biggest buyer of bonds is: The Fed. QEII was convoluted $600 billion dollar loan to the Government with dollars fresh off the Xerox.

        Tulip dealer keeps tulip prices attractive by printing money to buy tulips? Yeah, game over man, game over.

        1. I have this $5 trillion coin you stupid Teabagger!

          1. Suck on my chocolate salty balls, Geithner, and after that, eat my Satan sandwich!

        2. Tulip dealer keeps tulip prices attractive by printing money to buy tulips? Yeah, game over man, game over.

          Love it.

        3. Well why don’t you put her in charge?!?

      2. The Fed has purchased about 70% of the bonds in recent auctions.

        1. Link?

          Just curious.

          I mean, I am not doubting it. Im just not sure your information is correct just because you you say so.

          1. I heard the same thing a couple weeks ago, but it was on a talk radio show.

  5. Oh, so we will still be boned, and the Democrats will still refuse to grow up and realize that “Tax the rich” is not a plan to close the budget gap.

    Hey, I’m no fan of the GOP, but at least some of them seem to be starting to wake up to the fact that spending cuts are needed, whereas the Democrats new party symbol should be changed to an ostrich with its head in the sand.

    1. …at least some of them seem to be starting to wake up to the fact that spending cuts are needed…

      But can you say with a straight face that they won’t go right the hell back to sleep as soon as their “team” takes control of the executive?

      1. Exactly this. They’re going to have wars that need paying for.

    2. Oh, so we will still be boned

      Don’t bone me!

    3. …the Democrats new party symbol should be changed to an ostrich with its head in the sand its ass.

      fify

    4. Soon to be ex wife sounds like a better symbol (as far as I know, ostriches don’t ruin families through pathological shopaholic tendencies), but how can you make it easily recognizable?

  6. It is high time we got our financial house in order before it is too late. The issue is already settled economically but the political solution seemed to be impossible to reach. The truth is that Republicans don’t have a strong candidate for the 2012 election and that’s why they need to use every opportunity to show Obama’s weakness.

  7. “the Democrats will still refuse to grow up and realize that “Tax the rich” is not a plan to close the budget gap”

    Well, why does US debt explode when Reagan came to DC and tax cuts became all the rage? Debt seems to have decreased during the supposed hey-dey of big taxing and spending (the Great Society) only to shoot up during the age of supply side economics.

    http://en.wikipedia.org/wiki/File:USDebt.png

    1. The “loyal opposition” always plays the role of the fiscally responsible party.

      But, it is just a role in a passion play, after all.

      1. That was insightful and funny, +1.

        Who in the opposition wants to see the party in charge spend that money? It’s like watching someone else open birthday presents…

      2. It’s not a passion play until someone gets crucified.

        Nominees?

        1. Everyone. And then we can light them on fire to cut back on electric light usage.

          1. “Always look on the bright side of life”

          2. It worked for me!

            We need a small group of people who don’t worship the leaders. Preferebly a group already being maligned as having caused everything to go to pot.

            1. TEABAGGERS !!!

    2. Because, MNG, you will notice this chart:

      http://upload.wikimedia.org/wi….._%_GDP.png

      It shows that our revenue’s rarely pass 20%, even at higher tax rates (in 1971, it was a 70% top rate). Now, in another report, the CBO did estimate that if you let ALL of the Bush tax cuts expire, we could inch up to 18.8% of GDP.

      Tax increases COULD plug our budget hole, but we must be honest about the kind of tax increases: A higher rate on everyone, achieved firstly by eliminating deductions(which means less evasion by the rich, but also a greater burden on the middle class). A lower corporate tax rate with little to no deductions (Sweeden’s corp. rate is 28%). And a VAT, which, even if we exclude “necessities”(Food, maybe clothing or medicine) would still hurt the poor and middle class when they go to buy DVDs and furniture more than it would probably hurt the rich (although, if the rich consume more, they would pay more, but the poor and middle class have less to throw around).

      Oh, and btw, most of this money in service of the the elderly, given that 10% of our spending is Social Security and Medicare.

      1. ” the CBO did estimate that if you let ALL of the Bush tax cuts expire, we could inch up to 18.8% of GDP.”

        Of course, CBO assumes that tax rates have no impact on GDP, and that GDP would be the same under the higher tax rates.

        1. Could they get this nutty assumption from looking at how GDP has gone up, and down, under high and low tax rates in the past?

          1. Could they get this nutty assumption from looking at how GDP has gone up, and down, under high and low tax rates in the past?

            Not at all. The CBO is required to use linear forecasts on tax rate changes.

        2. Of course, the Krugeynsians would counter that spending is also beneficial to GDP.

      2. Something’s up with your link Au H20, but I’d refer MNG to a Google Image search of any graph of “Federal Revenue as a Percentage of GDP since 1950”.

      3. Taxes can’t be raised high enough to get us out of the hole dug by Bush and Obama.

        Period.

      4. Oh, and btw, most of this money in service of the the elderly, given that 10% of our spending is Social Security and Medicare.

        Uhh, 43%, not 10%. Medicare/Medicaid is 23% of the Federal budget and Social Security is 20%.

      5. given that 10% of our spending is Social Security and Medicare

        I think it’s more like a third.

    3. Debt to GDP was lower under Reagan than under Clinton. And under Bush it was around 65%, under Obama it has gone up to 100%.

    4. BZZT. Debt also decreased during the early 18th century, which coincided with the end of the second national bank.

      Your chart doesn’t go far back enough, dumbass.

      1. 18th century? What – there was a second national bank in the 1700s? Was this before or after the American Revolution, dumbest ass?

    5. When the gold window closed, the Xerox fired up. And that’s when the debt takes off. Nobody seems to notice – whether their a goldbug (which I am not) or a Keynesian – that the fundamental definition of ‘money’ changed when the gold window closed.

      Everyone looks at charts like that Wiki chart and assumes the ‘dollar’ has been the same thing through all those decades. Nothing is further from the truth.

      I mean, how could scientists gauge something like the height of a mountain over time when the very definition of a ‘meter’ changes over that time, and not acknowledge the change?

      Only amateur economists like MNG and Krugnutz do that shit and not notice, or get called on it.

      1. Paulie may be wrong all the time, but he is definitely a professional.

        1. Sadly, true.

      2. I don’t have access to any chart that measures the debt in gold doubloons but would be happy to see one if you have it.

        1. Ohhh…pwetty pictures!!!

        2. That’s exactly my point. Charts are useless if the discreet underlying bits the charts are built on ‘change’ halfway through the progress on the chart.

          Like, try this: Take Einstein’s infamous equation E = MC^2. Try computing it using ounces, inches, looking for E as horsepower. No worky-work, right? If the definition of the underlying units change, equations don’t work. Even the best ones.

          Now, take a vector over time (use worldspaces and light-cones if you’re REALLY into Einstein but whatever) and swap the metric units for English ones right between t=0 and t=wherever it ends. No worky-work right? Same fucking thing as that chart.

          1. Take Einstein’s infamous equation E = MC^2. Try computing it using ounces, inches, looking for E as horsepower. No worky-work, right?

            Of course E=MC^2 still works. You change the units in an equation by multiplying quantities by 1. I know it’s hard to believe, but you can multiply something by 1 a million times and it does not change.

            take a vector over time (use worldspaces and light-cones if you’re REALLY into Einstein but whatever) and swap the metric units for English ones right between t=0 and t=wherever it ends. No worky-work right?

            No. It still works.

            1. It doesn’t. Try it.

              If the systems used the same base what you say is true, but in the case of English units (1 horsepower = 550 lbs/1 foot, one inch = 12/foot) it doesn’t.

              1. Ounces/pounds are a measurement of weight, not mass, and are the wrong units to use in the equation.

                1. And Gabriel is correct, the units of measurement are irrelevant, as long as they are consistent in the equation.

                  1. By units of measurement, I mean the system used. You could use furlongs or centimeters, it doesn’t matter which, as long as they are the same units used throughout the equation. After reading my above two statements they seemed contradictory.

                2. The original equation uses grams, which likewise, are measurements of weight instead of mass. Which actually are the same thing if you keep your reference frame equivalent (i.e., the fucking Earth).

                  But outside of that, I’m sick of this. I came through this thread to check it out one last time, and here we are again with this shit?

                  I’m going to say same thing I said in original post, which is ‘Try it’ and leave it at that geniuses. When you bust that equation out, into God-knows-what English units of ‘energy’ are (I bet they’re joules like in metric) and get right answers without adjusting for the ratio difference between English computing joules and metric computing fucking ergs in the original, good luck with that morons. Like I said originally, try it retards.

                  1. I have a Ph.D. in physics, but you hardly need it to prove that the equation works no matter the units. You prove that by dimensional analysis. Energy in any system of units has dimensions of [mass][length]^2 / [time]^2

                    Conversions are just multiplication by 1. If you don’t do the conversions, all that happens is you end up with strange units.

                    Zeitgeist, I can’t put E in horsepower because horsepower doesn’t measure energy, but will you accept oz, inches, and BTUs?

                    c = 11.7e9 in/s
                    m = 1 oz
                    E = m c^2 = 0.137e21 oz in^2/s^2

                    Now I multiply E by 1, mathematiccaly guaranteed to change nothing:

                    1 = (1.73e-8 BTU)/(1 oz in^2/s^2)

                    E = (0.137e21 oz in^2/s^2)*1 = 2.37e12 BTU

                    1. Oh…my…God….

                      Alright Mad Professor, let’s give this a try…

                      Energy in ergs = 1 gram x ( 30,000,000,000.0 cm/sec) x (30,000,000,000 cm/sec) Pretty basic right? It all converts without accounting for ‘strange units’ as you put it. You end up with 900,000,000,000,000,000,000 ergs right? No tweaks, no 1.73e-8 is actually one bullshit, right? Just spits it out.

                      Now, lets try in BTU’s, inches, and oz. without adjusting for the fact that BTU = (1= 1.73e-8, or in other words ‘one really isn’t one before I multiply it by one proving it doesn’t change the quantity that was not one to begin with…’), or that the speed of light is not ~30,000,000,000 inches/second, but actually a different number (~12,000,000,000 as you correctly point out) but just use the same integers anyways pretending its the same units (my original point way back when about changing definitions of ‘dollars’) and pretend it all just works out.

                      But we won’t use exponents to keep it nice simple non-scientific notation (Mr. Fancy Pants!) = 1 oz x 30,000,000,000 inches/second = 900,000,000,000,000,000,000 BTU’s?

                      It isn’t even 900,000,000,000,000,000,000 ergs either anymore right? I mean the speed of light is way off before you square it, so now its fucked^2 as laymen say, right?

                      Or 900,000,000,000,000,000,000 joules.

                      Or 900,000,000,000,000,000,000 calories for that matter, right?

                      Fuck no. It does not work out that way does it? Correct if me if I’m wrong Mad Professor. ‘Mathamaticcaly’ speaking of course? That’s what I’m saying, if you don’t adjust reality to your units before you dump them in your equation or series, or whatever (or with lightcone example swapping units and pretending they’re still the same half-way through the series) it still don’t work right?

                      In layman’s terms ‘strange units’ that way means ‘wrong?’ Right, genius? Holy shit.

                    2. But we won’t use exponents to keep it nice simple non-scientific notation (Mr. Fancy Pants!) = 1 oz x 30,000,000,000 inches/second = 900,000,000,000,000,000,000 BTU’s?

                      Oh, pardon my mistake… 1 oz x 30,000,000,000 inches/second^2 = 900,000,000,000,000,000,000 BTU’s

                      Nope, still wrong.

                    3. Alright, I feel kinda bad now. Maybe I wasn’t clear enough in my original post, and cryptic in my exclamation regarding irrational base values for Imperial units. But I feel bad going off on what otherwise I’m sure are nice people who just DIDN’T GET what I was saying. I deserve some blame there for not communicating clearly enough about what I was saying…

                      I’m just mad at the original post and point. The fact that people kept coming back to try correcting and cajoling and what not, I understand…but you all misunderstood me and what can I say, that’s my fault. My apologies. Sorry about the vulgarity and all. I just got carried away.

                      END TRANSMISSION

                    4. Damn it, Uncle Mao = me. Sorry everybody. Especially the Professor. I’ve got a degree in physics too, from Boise State actually so I’m not too far off the map from Wazoo. Just a Bachelor’s though. And a physics degree does make one a intellectual snob, you lash out too easily and quickly. Again, I apologize. I really feel bad about my rants here.

            2. I know it’s hard to believe, but you can multiply something by 1 a million times and it does not change

              Oh yes it does, too. Majorities rule. Truth and everything is different when it’s a whole big bunch.

          2. I don’t think any politician has shot their credibility down faster than you have with this nonsense. Units carry thru ALWAYS. You have less clues to reality than Democrats and Republicans combined.

            1. Oh brother.

          3. Oh, and just for record folks you can’t solve E=MC2 using horsepower anymore than you can solve it using watts, given these are not measures of energy, but energy expended over a time period (one second). That part was a joke and no even got it.

            1. Horsepower and watts are measurements of power, not energy, so you are correct. Just as pounds measure weight, not mass. But you can still use imperial, or any other type, units to solve the equation.

    6. Well, why does US debt explode when Reagan came to DC and tax cuts became all the rage?

      Was this before or after Reagan signed TEFRA?

    7. You don’t know how to read a graph, MNG.

      You want to read the RED LINE. The only debt explosion happens twice, only.

      The first explosion happens in 1941 and lasts until 1946.

      The second explosion happens in 2009 and goes through now.

      What defines explosion is a nearly vertical line.

      Under Reagan, debt grows from previous years lows but by no means does it explode.

      Learn to read the slope of the line, son.

    8. Debt seems to have decreased during the supposed hey-dey of big taxing and spending (the Great Society) only to shoot up during the age of supply side economics.

      The US has not paid down its debt since 1957.

      http://www.treasurydirect.gov/…..histo4.htm

      http://www.treasurydirect.gov/…..histo5.htm

  8. MNG:

    The Great Society is largely responsible for our long-term debt situation for the simple reason that LBJ lied about the true long-term costs of Medicaid and Medicare.

    Calculate our long-term budget gap with those two programs zeroed out and get back to me about whose fault this all is.

    I hate W as much as the next person and a lot of the current deficit is entirely his fault. But let’s be real here. The Great Society was cheap when it was passed, but every incremental dollar spent on Medicaid and Medicare NOW gets added to the Great Society’s ultimate account.

    1. It just seems odd to me that debt would explode not during the ascension of Keynes but Friedman…

      Look, there’s two sides to balancing budgets and looking at that graph I see that it’s not times where we were spending a lot that seems to have ballooned the debt (because we were spending a lot at both times, see chart below) but times in which we cut taxes (because that time only seems to coincide with the growth of our debt).

      http://www.usgovernmentspendin…..3&title=US Government Spending As Percent Of GDP&state=US&color=c&local=s&show;=

      1. That’s an idiotic way to undertake the analysis.

        The entire burden of all spending under a program should be assigned to the era in which the enabling legislation for that program was passed.

        Otherwise, if you pass a demographic time bomb program like Medicare (while lying about the long-term costs) it means that when the costs for that program start coming due, some future douchebag can appear on a message board and assign the blame for YOUR spending to some other hapless idiot from a later time.

        1. LBJ didn’t pass a 50 year budget fluffy, later administrations could have changed any obligations. The point is that during LBJ’s administration they spent a lot and taxed a lot, but no debt problems resulted. When did they start? When RR came in and we still spent a lot but did not tax a lot. Not only does that empirically seem to be the case, it’s not counterintuitive (big spenders that make big money don’t go into debt).

          1. [Repeat Fluffy criticism]

            1. [Repeat MNG’s Reply to Fluffy criticism]

              1. The problem is that we have one “absolutely known” fact and one “hypothesized” fact.

                We absolutely know that Medicare and Medicaid spending is a substantial part of our current deficit problem.

                We can only hypothesize what our tax receipts might be under a radically different tax code.

                Remember, tax receipts rose under Reagan in both nominal and real dollars. Therefore, your assertion that Reagan failed to tax enough fails a very basic empirical test. Reagan claimed that his new, lower tax rates would capture more revenue, and the actual tax receipts proved him correct. You (and Krugman) might want to argue that tax receipts would have been even higher under some different revenue scheme, but that is just an empty little whimper of a claim next to the real data we have.

          2. Also, LBJ didn’t bring in big revenue at all. See the revenue chart posted above. And his spending only during the time of his administration was also on the same track with other presidents. Blaming the debt his program caused in the future on others is misleading and doesn’t prove the point you’re trying to make.

            1. You get a debt when you bring in less than you spend, or spend more than you bring in. Look at the chart. We didn’t seem to have this problem until the supply-siders took over. Under Reagan we started to do one of those things.

              Now, either we started spending way more than usual or taking in way less, or both. I don’t see that we started spending way more, but I do see that we radically cut tax rates.

              Look, I don’t want to raise taxes on anyone everything being equal. And from what I understand raising taxes now would not plug the hole we got, and I actually think it would harm the economy. Having said that it seems odd that the debt problem started with the Reagan Revolution and the Tax Revolts…

              1. MNG, this is stupid. You’ve already admitted that LBJ’s social programs caused big debt in the future, yet you continue to scream and point at supply side economics without even the faintest attempt at explaining causation. Fuck off already.

          3. And therein lies the problem, MNG:

            Keep taxes reasonable, and don’t overspend.

            Too bad no one wants to try it.

      2. If you control for GDP, you can see that the debt doesn’t explode at a certain time but is on an exponential curve.

        1. Why should we “control for GDP?” Our debt was much smaller during the Great Society than it was years into the Reagan Revolution. How would “controlling for GDP” address my point about that?

          1. Because citing the amount of debt out of economic context is meaningless.

          2. And as many have already said, LBJ’s programs incurred big debt after he was gone. Your argument isn’t honest.

            1. I didn’t know a 50 year budget was passed under LBJ.

              Talk about dishonest. At any time subsequent administrations could have altered “LBJ’s programs” in any way they wanted.

              1. So what that there wasn’t a “50 year” budget. The obligations of Medicaid/Medicare were built in to be there in 50 years. The word for the day is “entitlement”.

                Hell there isn’t even a 5 year budget that means a damn thing.

                1. But there’s no legal entitlement. It can be erased instantly by an act of Congress.

              2. You must be a spoof, because you keep repeating the same meaningless shit after I’ve responded to it.

          3. Why should we “control for GDP?”

            Because, MNGee, the value of money changes over time. A dollar from 1960 does not have the same purchasing power as a dollar in 2011 (because the 2011 is worth significantly less). Therefore, you have to control in order to make an accurate comparison of GDP between two time periods.

            Now put on this dunce cap and go sit in the corner until you learn better.

      3. The US Government got to spend the sixties printing money and offloading it to our original trade-deficit exporter nations: Europe. Since the dollar was theoretically pegged to gold, you could print and print and pretend there was no inflation.

        Beginning I think in 1968 De Gaulle (of all people) called us on it and demanded delivery of dollars in gold, as was his central bank’s right. Three years after that, we admitted the scam, closed the window, and fired up the Xerox. Why? Because all those fiat-money lovers like Donkey Volcker were unwilling to part with the gold (its still Ft. Knox).

        The 70’s was a huge bout of pent-up inflation from 50’s and definitely the 60’s that came due all at once over ten years.

        1. I don’t see how a gold standard protects you from inflation or deflation. What happens if the economy grows by 5% in a year? Did you mine that much gold? If not, the same number of gold dollars are chasing more goods and services. Widdershins likewise for economic contraction.

          The world economy per capita has doubled since 1950. Did the supply of gold per capita double?

          1. Because the supply of any commodity-backed money cannot be manipulated to the extent that dollars can. They don’t even need to “print” it anymore – the Fed “buys” bonds from the Treasury, a ledger line is created, and *poof* ‘money’ is magically created.

          2. First, I’m not a gold bug. But the one thing gold has going for it is you can’t make more of it out of thin air. Until you have a social system that eliminates the abuse of that (something entirely possible) you will always have this problem. Its why every fiat currency collapses and gold (more likely silver in China) soldiers on.

            1. i generally don’t comment on macro shit because i admit i’m not that edumacated on this shit.

              i did manage to start buying gold when it was under $300 and continued to keep buyingh for a decade, so I do feel comfortable in commenting on this

              you don’t have to be a gold bug to recognize that gold is a representation of value that is REAL, not based on the “full faith and credit of the US govt”

              1. Your lack of edumacation serves you well, sir. Well done.

  9. Am I the only one who would be delighted to see the bomb go off?

    Major defense cuts – SOLD.

    Major Medicare cuts – SOLD.

    Thank you sir may I have another?

    1. I’m hoping it will, in fact. And seeing how much trouble they have trimming even the tiniest spending, it very possibly will go off.

      BOOOOOOOOOOMMMMMMMMMMMM

    2. At least 3 of us.

    3. Plus “and other programs.” I’m sold. Let’s blow this MF up.

    4. Make that four.

      And pair it with an actual bomb that will destroy the federal reserve printing press.

      1. Unfortunately, Boehner is caving.

    5. The cuts won’t take effect until 2013.

      Which means congress can let the bomb go off (in theory), and THEN DEFUSE IT.

  10. Instead of jumping through all of these hoops, why not simply freeze spending at 2011 levels, then keep it there until government spending equals 18%-20% of GDP.

    1. Again, look at the charts. We had government spending well above 20% of GDP in, say, the 1960’s but we didn’t have a debt problem then. Our debt problem came when the guys with the Adam Smith ties started calling the shots…

      1. MNG, in 1960, we set up a ticking time bomb called Medicare. At the time, it didn’t look like it would be so expensive, but it has become so.

        Also…

        http://www.cbo.gov/ftpdocs/108…..ter4.shtml

        We tax the middle class more, as I said, and the rich more, then yes, taxes work. Now, the Republicans oppose any tax raises, including on the rich. The Democrats oppose tax raises on the middle class.

        And that is is why we are screwed.

        1. Subsequent Congress’ and administrations have been free to adjust, change or eliminate our Medicare obligations. Every budget they re-set that bomb up, to use your metaphor.

          But more to the point, under LBJ goverment spent a % of GDP similar to what we spent under Reagan, but only under the latter did the debt explode.

          1. “Subsequent Congress’ and administrations have been free to adjust, change or eliminate our Medicare obligations.”

            But they FUCKING DIDN’T DO THAT MNG. Seriously, you can’t focus on the point of this argument enough to see that your response is a total non-sequitur?

          2. Subsequent Congress’ and administrations have been free to adjust, change or eliminate our Medicare obligations

            YEAH RIGHT! DON’T TOUCH MY MEDICARE, MOTHERFUCKERS! I’M OLD AND I VOTE! AND MY KIDS LOVE ME AND SOMETIMES THEY VOTE TOO!

      2. come again? When was government spending well above 20% of GDP? You do know the difference between debt and deficits, right?

        1. Click on the governmentspending.com link dude.

          1. Last balanced budget United States had was 1968. And it was last year we could offload printed money and not get called on it for what it is.

            LBJ was literally smacking Fed Chairman Burns around to keep interest rates low, because he ‘needed’ Medicare AND Vietnam (Iraq 1.0) fully funded. Look it up.

          2. click on the wolframalpha link dude

            1. The Wolfram link is telling: When economy grows faster than govt, people remember those times as ‘good times.’

              When govt. spending rises faster than GDP does, those are what people remember as the ‘bad’ times.

              What the Wolfram chart doesn’t show, and MNG’s happy chart does show, is that the government grows every year whether GDP does or not.

              1. It’s probably the reverse for federal employees.

                “Hey, remember the early 2000’s when Bush & Obama added over 10 trillion to the national debt? Good times, man, good times.”

      3. Adam Smith ties? WTF are you talking about? The monetarists? They are just the bastard children of the fucked up Keynesians. Now, we have neo-Keynesians, which are the inbred children of Keynesians and monetarists.

      4. Your right, we didn’t have a debt problem in the 1960’s. Our debt problem began when the slope of federal spending took a large, positive increase.

        1. And you want to argue that the Great Society did not entail a large, positive increase in federal spending?

          1. The biggest financial hit on LBJ’s watch was Vietnam. Going from 10,000 ‘advisers’ in 1965 to maintaining 500,000(!) soldiers and God-knows how much military junk fighting a war that in April 1968 wracked up 1,800 KIA – in one fucking month – ain’t cheap.

            1. It’s amazing to me, I look back on the manpower and equipment needed to fight in WWII, Korea, and Vietnam and it blows my mind.

              It took the Taliban and the insurgency in Iraq, what, 6 years (?) to equal the number killed on the beaches of Normandy?

              The difference in how wars were fought and how they’re fought now is stunning.

          2. The trend line changes soon after 1965, but I’m sure that has nothing to do with the Social Security Act of 1965.

            1. Gulf of Tonkin resolution = 1965. In that Congress 84 out of 87 bills originating passed.

              Fuck I love divided government!

          3. Yeah, it did. It was paid for with money we did not have a la the printing press. We almost lost our entire gold reserves. Which is why Nixon unilaterally broke the Bretton Woods agreement.

      5. Again, look at the charts. We had government spending well above 20% of GDP in, say, the 1960’s but we didn’t have a debt problem then.

        Welfare programs have a tendency to grow over time.

        Our debt problem came when the guys with the Adam Smith ties started calling the shots…

        You need to stop this armchair historian/economist nonsense.

        First and foremost, in his younger days Milton Friedman was very much a statist. He wanted the government to intervene to correct what he perceived as positive spillover effects and negative spillover effects, wanted to close tax loopholes to maximize government revenue, supported inflationism as a means of countering depressions, and was methodologically a positivist (i.e. an intellectual Keynesian). I can find backlogs of his essays to verify all of these claims, so you need only ask.

        Second, it was only in his later years that Milton Friedman began to drift away from his earlier positions and towards “free-er” markets. Overtime he wanted the Federal Reserve replaced with a machine, and finally he wanted the Federal Reserve abolished altogether. I don’t even know if Friedman could properly be called a monetarist in his later years.

        Third, I’d like evidence that Milton Friedman ever “called the shots” on anything. He was one of a host of economists that was advising Ronald Reagan at the time, and at most he shook Keynesianism but never overthrew it.

      6. Again, look at the charts. We had government spending well above 20% of GDP in, say, the 1960’s but we didn’t have a debt problem then.

        We didn’t have the Great Society programs then, either. Have you actually seen a breakdown of spending from the year 1960? Over 50% of all government revenues was spent on defense.

        You can whine all you want about LBJ not making a “50-year budget,” but that’s fundamentally dishonest. What would our budget and our debt actually look like if Medicare and Medicaid (the 3rd and 4th largest federal spending items) didn’t exist?

  11. Why does everyone insist on using the word “cuts”, when describing a reduction in the growth of future spending?

    1. Those “cuts” are literal slashing wounds to women, minorities,the poor, the disabled, elderly, children and the LGBTG Community!

    2. What would you call it if your boss told you were to get a 5% raise and then came back the next week and told you it was going to be a free toaster oven instead?

      1. “Gee, thanks for this nice $1 trillion toaster oven, boss”!

      2. “What would you call it if your boss told you were to get a 5% raise and then came back the next week and told you it was going to be a free toaster oven instead?”

        My boss doesn’t tell me how much of a raise I will get 5 years from now.

        If the company is struggling, I don’t get a raise. My pay stays the same until the company gets back on it’s feet.

        1. If you’re lucky and they don’t cut your pay or lay you off.

      3. “At least my current pay wasn’t CUT.”

        1. but STICKINESS! Your employer would probably fire you instead.

      4. What would you call it if your boss told you were to get a 5% raise and then came back the next week and told you it was going to be a free toaster oven instead?

        MNG: “My boss cut my pay by 5%!”

        HR: “He’s not authorized to do that. However… we’re showing here that you’re making the same amount.”

        MNG: “Yeah but he said I would get a 5% raise! That’s a pay cut!”

        HR: …

        MNG “IT’S OBVIOUSLY A PAY CUT! WHAT’S WRONG WITH YOU PEOPLE!”

        1. you asshole. You made me side with HR, if a fictional one.

          1. Tell Department of [insert some bullshit government agency] they’re getting 4.5% instead of the full five, and watch Dems slice each other in the back of the knees to get to the microphones to scream about how children will be falling from the sky or Grandma will be forced to eat her support hose… happens every time.

      5. 5% raise? Jeezus, wouldn’t that be nice. Well, I mean, getting a raise would be nice, but damn, 5%? I’ve heard some people even get this thing called a “bonus”, whatever that is.

      6. MNG falls on his own sword for us.

      7. What would you call it if your boss told you were to get a 5% raise and then came back the next week and told you it was going to be a free toaster oven instead?

        I’d call it a lie or a bait-and-switch. The word “cut” wouldn’t even cross my mind.

        1. so it would be like the private sector? Hey, remember those raises (even cost of living) we give company-wide every year? This year, we have to skip ’em.

          And that has been company in a nutshell for the previous 3 years. This year where we got a minimal raise.

  12. (Debt Dope) Deal Or No (Debt Dope) Deal?

    http://www.youtube.com/watch?v=05AeeEIbnsM

    1. “Well, who got mo’ money than they know what to do wit’?”

      “The. Gub. Mint!”

  13. Could the Reason staff please stop using that terrifying Loughner pic!?

    1. I see what you did there.

  14. We’ll pass a new bill at the last possible minute (really, what’s the big hurry? — this is the Obama method — shove it through so no one can read it) that ass-fucks and impoverishes working American citizens and their children and we’ll call ourselves Saviors and Heroes of the Republic.

    1. The funny bit to me is all this hand-wringing and garment-rending and the screams of horror aren’t due to NOT raising the debt limit, because no rational human can even conceive of that, nope, all the drama is merely over how much to raise it and when. And yet these idiots say they’re going to balance the budget some day? Yeah, OK buddy…

    2. “this is the Obama method — shove it through”

      RACIST!

      1. Um.

  15. I have given up on sanity. Now I just buy gold and vote for whomever I think is going to spend the most (harder then it sounds, they are all soo good at it.)

    1. Wow. Gold is so expensive. If anything I have to stick with silver, the poor man’s gold.

      1. Yah, that too. But, silver is scary to own. It is more volatile then gold and can keep you awake at night. For instance the 50% drop this spring. Silver is back up now and silver will undoubtedly make you money in the end (maybe more then gold). Still, if your the nervous type, you are better off with gold.

        1. Still, if your the nervous type, you are better off with gold.

          That’s why I own it.

        2. try trading silver futures. those are “fun”

          granted, the minis are pretty fun!

  16. Welp. Looks like it may be a done deal. Why do I feel like quoting the last lines from Planet of the Apes?

  17. the gold price is keeping increasing now! I prefer to buy some gold

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  20. It’s bullshit.
    The automatic spending cuts in the plan (if they fail to get 1.5 trill by nomember …. won’t take effect until Jan 1. 2013.

    That means there is plenty of time after the bipartisan committee fails to find a solution, for congress to cop out of actually making the “automatic” spending cuts.
    They can wait until after the election and then cancel them for example.

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  22. That actually makes a lot of sense when you think about it. WOw.

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  23. The debt will never be paid off

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