US Bishops' Conference Largely Disappointed by Debt Ceiling Agreement

[ComputerGeek25]

Yet, the simple household budget model is key to the problems with the national budget model. There is no misunderstanding. When one steps back at looks at the national budget from the simple household budget model, one finally can see the forest despite the trees. The simple concept holds true for the national budget.

No. Where I disagree, with spending cuts in general, international charity is fair game for spending cuts. Given that our brand of international charity includes, in good measure, family planning centers, I don’t see how we do any good exporting our immorality.

Sure, if we are not talking about Catholic social justice teaching. Sure, if you want to deny the Real Presence at the table of Catholic dialogue. What rankles - what draws rancour from serious Catholics - is the denial of the real presence of persons unborn in the name of Catholic social justice. The lack of acknowledgement by persons on this discussion thread, purporting to defend the interests of the “poor and vulnerable”, categorically refuses to bring the unborn to the table of their interpretation of Catholic social justice teaching. You want to know the truth? You can’t handle the truth.

 

[ComputerGeek25]

Yep, they’ll raise it high enough until the consumer goes bankrupt. Good point! Oh, wait, you think raising the debt ceiling is a good thing…

 

[qui_est_ce]

No-he is telling other people to go in debt to keep him from having to go in debt.

Maybe he is advocating for a federal government “safety net” for those who go bankrupt from not being able to repay debt?

 

[Ridgerunner]

In that case so are the poor and the middle class tired of the warfare on them.

The poor are neither the target for improvement in their situation or deterioration in it. Not by either party. There is no current war against the poor.

There really is a war on a portion of the middle class; the high earners, in order to benefit another segment of it. So that’s really a “war within a class”, one might say. Or at least some want there to be one.

But I have a feeling this may all be academic pretty soon anyway. An economic depression lowers all boats. This recession has gone on far too long, and it looks like something worse is fixing to happen (or simply become recognized, perhaps).

I see where B of A is going to sell its mortgage portfolio to (gasp) FNMA! The same FNMA that just requested an additional $5 billion in bailout money from the government, and will surely get it, and more. More public losses compliments of the government/financial complex.

The time might not be too far away when all of this “concern for the poor” actually has some meaning beyond theoretical concern. Bishops might find themselves wondering how they’re going to feed large numbers of people who show up at the chanceries for a meal. It won’t be a matter of reviewing projections and commenting on policies then. It will be “up close and personal”.

If this country really does go into a serious depression, those receiving government benefits will be well off compared to their neighbors. It was true during the Great Depression. One wonders how long such benefits will actually last in an environment like that when the numbers of recipients are so much greater now than then. Then, sad to say, we might see a real “class war”.

 

[CMatt25]

Yep, they’ll raise it high enough until the consumer goes bankrupt. Good point! Oh, wait, you think raising the debt ceiling is a good thing…

No if there is enough revenue, or if not, if new revenue is found to pay the bills, and the bills are paid, there is no bankruptcy.

 

[ComputerGeek25]

No if there is enough revenue, or if not, if new revenue is found to pay the bills, and the bills are paid, there is no bankruptcy.

But the problem is we currently need to tax everyone who makes like $75,000 or above at 100% of their income in order to cover the budget this year. Quite simply, this is not feasible. Deep budget cuts need to be made as well as tax hikes.

 

[Scott_Lafrance]

No if there is enough revenue, or if not, if new revenue is found to pay the bills, and the bills are paid, there is no bankruptcy.

The nation spends twice its revenue. This is called “negative cash flow”. We don’t have any mechanism in place to reverse this, outside of entitlement austerity. Bankruptcy is inevitable. We could tax the “rich” to destitute poverty and it still wouldn’t bring us to a neutral cash flow, and the economy would be utterly destroyed. Is taht what you want. Destroy the mechanism of prosperity in the name of social justice? Then everyone can be equally poor?

 

[Ridgerunner]

No if there is enough revenue, or if not, if new revenue is found to pay the bills, and the bills are paid, there is no bankruptcy.

A 5% tax increase on the upper middle class sure won’t do it. Nor will piling new entitlements on top of old ones (yes, I include Bush’s “part D” in that, along with Obamacare) do it.

 

[ComputerGeek25]

The nation spends twice its revenue. Bankruptcy is inevitable. We could tax the “rich” to destitute poverty and it still wouldn’t bring us to a neutral cash flow, and the economy would be utterly destroyed. Is taht what you want. Destroy the mechanism of prosperity in the name of social justice? Then everyone can be equally poor?

People don’t seem to understand simple math.

 

[CMatt25]

Yeah…I don’t think he thought his response out very well before he made it.

He thought it out very well before he made it. You just missed his point. Which was if you are going to say a government is comparable to a household, then you have to at the same time recognize since households have debt, thus so it is with government.

 

[ComputerGeek25]

He thought it out very well before he made it. You just missed his point. Which was if you are going to say a government is comparable to a household, then you have to at the same time recognize since households have debt, thus so it is with government.

No, you missed the point. Most reasonable people in debt control their spending and pay off their debt. They don’t simply increase their spending or debt limits. They take out new debt when they absolutely need too, within reason of course.

 

[CMatt25]

Are you seriously telling people to go into debt to pay debt?

No but spending spurs the economy. While cutting spending derails the economy. Basic economics 101. People and governments spending on products and services increases demand. Which requires increased productivity. Which translates into an increase in jobs. Unless of course the wealthy declare class warfare on their workers and expect who they already have in their hire to do more of the work without corresponding wage increases.

 

[qui_est_ce]

Certainly there is a collective responsibility. I have to say that the collective responsibility is best met by groups such as those under the umbrella of Catholic Charities, or by Catholic and Christian international charitable groups. The Missionaries of Charity, founded by Mother Teresa, for example, does great good and is never bogged down by needless bureaucracy or regulation.

In my own area, the diocese operates a diner which is open to anyone who comes for a free meal every day of the year. There are something like 6,000 volunteers who assist in its operation. No overweening bureaucracy there either.

I am continuously astonished, however, by the overall impression I often perceive from those advocating for more governmental benefits: the idea that the debt doesn’t matter, that unfunded liabilities don’t matter, even that government actually knows how to solve serious economic problems. Mostly, it doesn’t. Because really, bureaucrats are no smarter than the rest of us, and make just as many bad decisions.

Sure, governments can print money, or create it from the computer. So can banks. The total wealth of a country, however, is simply it’s gross national product, and if there is more money than needed to represent those goods and services, inflation must result. And inflation hurts the poor much more than it does the rich.

Bernanke and company think they are helping by keeping interest rates near zero. But that hurts—and is an injustice to—widows who are trying to live on insurance proceeds.

Not only that, but the deficit has now reached an unsustainable tipping point, and not only in the U.S. but in many European governments. Centralized federal welfare programs are at base supported by a dwindling share of workers. That’s partly a result of depopulation policies which have been pursued, to the national detriment, over the past sixty or seventy years.

Governments have only two sources of income—taxes and borrowing. Sure, we can tax the rich all we want, but no amount of taxing the rich and printing money will get us to the point of a balanced budget, nor will it make a dent in the unfunded liabilities overhanging the future economy. And at some point it will become counterproductive.

How much economic destruction are we willing to risk for the sake of our entitlements?

In my opinion it may already be too late.

This is an awesome post. Thanks for taking the time to put this together.

 

[Scott_Lafrance]

No but spending spurs the economy. While cutting spending derails the economy. Basic economics 101. People and governments spending on products and services increases demand. Which requires increased productivity. Which translates into an increase in jobs. Unless of course the wealthy declare class warfare on their workers and expect who they already have in their hire to do more of the work without corresponding wage increases.

So, people should spend money they don’t have, or go into debt just to “keep the economy moving”? Did you take the same economics class as George W. Bush?

 

[CMatt25]

No, you missed the point. Most reasonable people in debt control their spending and pay off their debt. They don’t simply increase their spending or debt limits. They take out new debt when they absolutely need too, within reason of course.

Whew then I am extremely reasonable by your definition of reasonable. But that said, that’s me. I know many other reasonable people however who carry debt. Just as it should be reasonable then for government to carry debt if we are going to equate government to a household. God bless!

 

[qui_est_ce]

No but spending spurs the economy. While cutting spending derails the economy. Basic economics 101. People and governments spending on products and services increases demand. Which requires increased productivity. Which translates into an increase in jobs. Unless of course the wealthy declare class warfare on their workers and expect who they already have in their hire to do more of the work without corresponding wage increases.

This is flat out wrong. Government spending does not spur the economy. Tell me where the the TRILLIONS of increased spending by the Obama administration has fixed the economy??? Maybe you think the government is spending enough??

Raising the debt ceiling plain and simple was to “avoid default” which means not paying your debts or the interest on your debts. Good economic policy does not borrow to pay off debt. Can’t you see this is a vicious circle leading to bankruptcy?

That’s common “cents.” I don’t need econ 101 to figure that out.

 

[Scott_Lafrance]

Whew then I am extremely reasonable by your definition of reasonable. But that said, that’s me. I know many other reasonable people however who carry debt. Just as it should be reasonable then for government to carry debt if we are going to equate government to a household. God bless!

The only time that it is acceptable to carry debt is if that debt is part of a positive cash flow strategy. I.e., leveraging 10% equity and financing 90% on a block of apartments, where the incoming rent covers the cost of the payments, insurance, repairs, etc… The government doesn’t do this because the government doesn’t produce anything. Therefore carrying a negative cash flow is fiscally irresponsible and intrinsically immoral when it is perpetuated by an elected representative.

 

[wynnejj]

This is an awesome post. Thanks for taking the time to put this together.

Ditto.

 

[qui_est_ce]

Or if you’re a good customer, pay your bills on time, your banks can choose to increase your debt ceiling… uh… I mean credit limit… in the meantime.

Whew then I am extremely reasonable by your definition of reasonable. But that said, that’s me. I know many other reasonable people however who carry debt. Just as it should be reasonable then for government to carry debt if we are going to equate government to a household. God bless!

Carrying debt on an asset is not a bad thing until the asset loses value and is worth less than what is owed on it. That’s what is the cause of the housing crisis today. How did that happen?

Borrowing to pay living expenses is never a good idea. Do you see how this just leads to more debt?

 

[Orleans_Attny]

This is flat out wrong. Government spending does not spur the economy. Tell me where the the TRILLIONS of increased spending by the Obama administration has fixed the economy??? Maybe you think the government is spending enough??

Raising the debt ceiling plain and simple was to “avoid default” which means not paying your debts or the interest on your debts. Good economic policy does not borrow to pay off debt. Can’t you see this is a vicious circle leading to bankruptcy?

That’s common “cents.” I don’t need econ 101 to figure that out.

I’m not sure I agree with you here. First, government spending in terms of government employment is an absolute economic pillar. If I recall correctly, the draw down in government employment is believed to have significantly excaberated the great depression. Also, numerous industries owe their modern existence and structure to direct government payments (farming, airlines, ports, passenger trains, education, medical research, etc.) and many others rely heavily upon implied government spending in the forms of tax structure.

That doesn’t mean - of course - that every tax dollar spurs the economy. But I can’t accept the theory that private industry alone is responsible for economic growth and health. We can’t be willfully blind of the impact that government expenditure has on the economy. By far, the federal government is the biggest employer in the country. And the downstream effects that exists as a result of the government’s status as employer can’t be ignored.

Pax,
OA