DEBT CEILING 101

This is a ckear and simple explanation of something I've seen completely misunderstood in arguments on Facebook recently. Being a musician and a songwriter, I really appreciate these kinds of articles since I, like so many, don't have any background to understand financial matters and the inner workings of our government seems like a matrix made of quicksand.

Mike Patton wrote this article on Forbes:I write for a world filled with confusion and self-interest. If you agree that people search for simple, straight-forward and unbiased analysis follow along as we "Make Cents" of topics ranging from the economy (including a splash of political analysis), the world of investing, and financial planning (ex; estate & tax, insurance, risk management, and retirement strategies).

In this article, we will explain the debt ceiling; examine a few rules that govern it, discuss the current national debt, and reveal what could happen if Congress fails to raise it.

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Re: financial illiteracy

From the American School of Entrepreneurship

We normally don’t write about politics or economics, but the feverish comments about ‘default’ and associated topics by pundits, radio talk show hosts and other are just too much.

We’d like to inject, for our readers at least, some financial sanity into the discussion.

About the only national pundits on this topic who know what they’re talking about on the default topic are Rush Limbaugh, Dr. Charles Krauthmmer and George Will, who have all correctly used the ‘default’ term.

It’s clear that most of the national punditry never took a course in finance.

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Senate leaders race to draft debt-limit bill after House effort collapses

First, Treasury Secretary Jack Lew made up this arbitrary deadline (he felt the children in the government needed some guidelines) and second, we have PLENTY of money coming into the government to pay ALL of our obligations (including Social Security) but a default (which would be the first time in U.S. history and would be an impeachable offense for the president) would only prevent the spend-mad politicians from borrowing more money.

...it was unclear whether an agreement between Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) could pass the Senate before the Treasury Department exhausts its borrowing power Thursday.

House GOP plans Tuesday night vote on latest debt ceiling plan

Situation is very "fluid" and doesn't look all that great for a solid deal at this point...

News from The Hill

"I personally believe the month of October may be a major turning point in America's history."

The Possible Outcomes Of The Shutdown Theater

The right thing to do

We are watching the fiscal destruction of this country. How else can one phrase it? When interest rates return to the mean, the federal government's reckless spending policies will instantly quadruple the amount it must pay to service the debt. What happens then? It's anyone's guess, but one thing is certain: all of the outcomes are bad, ranging from another Great Depression to a complete collapse of the civil society.

Top 5 Reasons the GOP Will Win the Shutdown (Unless They Fold With the Winning Hand)

Who really owns the Long Beach Naval Base in California?

...and the REAL reason behind the Obama administration's big push for gun control:

In 2012, a Chinese Officer was arrested for trespassing. When it went to court, although he was a Chinese Citizen and Officer on American Soil, he had to be acquitted, because he was on Chinese property. There have also been sightings of Chinese Warships in 2013, which were calmly explained away as a joint effort with the Chinese Military. They are parking in the Naval Yard they now own and there is nothing Americans can do about it.

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What Goldman Sachs is saying about the US government shutdown and debt ceiling

Summary:

(1) ...the Treasury expects to exhaust its borrowing capacity by October 17. We expect the Treasury’s cash balance to be depleted no later than October 31 and possibly quite a bit sooner.

(2) After October 17, the Treasury can keep conducting auctions to roll over maturing securities, but it cannot increase outstanding debt.

(3) ...we do believe that the Treasury could ensure that enough cash was available to make interest payments on Treasury securities.

(4) ...fund redemptions might broadly increase due to end-investor concern, prompting liquidations of Treasuries by money market mutual funds.

(5) If the debt limit is not raised before the Treasury depletes its cash balance, it could force the Treasury to rapidly eliminate the budget deficit to stay under the debt ceiling. We estimate that the fiscal pullback would amount to 9% of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly.

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ALAN GREENSPAN: No chance of default...

Greenspan on Meet the Press: No Chance of Default. Really?

Quick: Someone tell the President!

Our crushing national debt comes primarily from costs associated with doing things that the Federal government shouldn’t be doing in the first place!

Liberty Legal Foundation:

The Debt Debate and Why our Obamacare Lawsuit is Critical

They must think we're idiots

Budget Deal Doesn't Cut Spending

Here's how we got screwed

Excerpt from RedState (the most widely read right of center blog on Capitol Hill, the most often cited right of center blog in the media, and is widely considered one of the most influential voices of the grassroots on the right):

What we know about the pending deal is that the Democrats and Republicans are agreeing to a Deficit Commission. Despite the media spin — and the spin of some Republican sycophants — the deficit commission, which will be a super committee of the Congress, will have the power to come up with new tax revenue.

And if the Congress rejects the Commission’s demands for new tax revenue, there will be a trigger that cuts both medicare funding and defense funding.

Except, the defense funding cuts will be much more massive than the medicare cuts. And the GOP, in addition to seeing defense cut, would be hacking off seniors right before an election.

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The Debt Ceiling and Obama's Totalitarian Temptation

Before saying anything else about the debt ceiling crisis, let's confirm one thing: Obama does not like you, the demcratic process or Congress. Democracy is just too cumbersome for a man so lofty as the president of the world.

He wants, more than anything else, to be our Dear Leader, Uncle Ho (or Uncle Joe, or Uncle B.O.), Il Duce, Der Führer, El Presidente (all crackpot socialists and Communists, by the way). And he has been leaving us breadcrumbs for the last two years.

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The ceiling that never was

The One Thing the National Debt-Ceiling Has Never Done? Put a Ceiling on the Rising National Debt

Will they kick the can?

RedState: The Absolution I Cannot Give

You went to Washington to change Washington. You went to Washington because you said it was broken and you worried about the future for your children and grandchildren.

And now, at the moment of crisis you are worried and second guessing yourself and looking for alternatives, ways out, and most of all a clear conscience. . .

Budget reformers need to remember three things...

First, this is not a political fight between Republicans and Democrats; it is a fight against 50-year trends toward statism. Second, it is a moral fight, not an economic one. Third, this is not a fight that anyone can win in the 15 months from now to the presidential election. It will take hard work for at least a decade.

Consider a few facts. . .

CARPE DIEM: AEI's Arthur Brooks on the Debt Ceiling in the WSJ

Destroy the McConnell-Reid-Pelosi "Cut, Run, and Hide" Plan!

Go to CutRunAndHide.com now!

GOP Sens. Crapo, Coburn & Chambliss are the GOP chumps enabling Obama's "Gang of Six" farce

Attorney William J. Dyer of Beldar Blog has a very important message for these Republican senators:

You think you're being public servants who are negotiating in the interests of your constituents. You're not.

You've become pawns for Barack Obama's 2012 re-election campaign. . .

You're not only being chumps, you're being suckers. It's not excusable, and everyone in and out of Washington except you can see how you're being used.

Please read the whole thing!

“No man knows the day or the hour.”

Washington is currently borrowing about 43 cents out of every dollar it spends, and is close to maxing out its credit limit.

Current law says Uncle Sam cannot borrow more than $14.3 trillion. A few months back, the Obama Administration demanded that Congress increase the national credit line by $2.5 trillion by May 16, or else, it warned, the United States would default on its debts, causing an “economic Armageddon.” ($2.5 trillion is just enough to aver the need for another debt hike until after the 2012 election.)

When May 16 came and went, and nothing happened, the Obama team set a new “Armageddon” date: August 2.

Unfortunately, a lot of folks in Washington and Wall Street – including some who should know better — seem to be taking this new deadline at face value. While it’s true that, at some point, the government will hit the ceiling and have to reduce spending by about 40 percent, exactly when that day will arrive, nobody knows for sure. And don’t believe anyone who tells you he does know. “No man knows the day or the hour.”

Maxed Out Day could be August 2. It could be August 22. Or it could be in September. The exact date really depends on whether the President is willing to tap certain reserves available to him, or decides to force a political crisis.

I cannot tell you when Maxed Out Day will be. But I can – and will — prove to you that August 2 doesn’t have to be it. Before I do so, here are three key numbers to remember:

1) We are projected to take in between $170 billion and $200 billion in August, in revenues.

2) We will likely spend about $300 billion in August.

3) Therefore, we face a gap of somewhere between $100 billion and $130 billion.

So what will happen, come the August 2 deadline?

Find out here

Dean Clancy is FreedomWorks’ Legislative Counsel and Vice President, Health Care Policy.

When did it become the primary function of the federal government to send millions of Americans checks?

For this, in essence, is what the debt-ceiling fight is all about -- the inexorable and ultimately fatal growth of the welfare state. If you don't believe it, just look at President Obama's veiled threat to withhold Grandma's Social Security benefits if Congress doesn't let him borrow another $2 trillion or so to get himself safely past the 2012 election.

Uncle Sam, sugar daddy