Congress Avoids A Shutdown, But It’s Likely To Come Back In December

Congress will get a temporary funding bill passed in time to avoid a shutdown on Thursday, but it may just be delaying the inevitable.

budget-congress-capitol-hundred-dollar-bills

Last night, the Senate moved forward on a bill that will fund the government before the end of the Fiscal Year tomorrow night, but it’s only a temporary fix and we’re likely to face another shutdown showdown before the end of the year:

The immediate threat of a government shutdown is all but gone for now. But it will return with a vengeance soon.

Once a high-stakes confrontation over Planned Parenthood, the government funding fight dissipated with Speaker John Boehner’s surprising resignation announcement Friday, which removed any doubt that he would tee up a clean spending bill on the House floor this week.

But the glide path to avoiding a shutdown this week sets up an even bigger clash in December, when lawmakers have to agree on a new funding bill for the new fiscal year. Democrats at both ends of the Capitol, as well as in the White House, will demand raising the current caps for domestic spending. But hawkish Republicans have long insisted on boosting cash for defense programs, while fiscal conservatives will abhor any additional spending overall.

The outcome of that funding fight is far from certain. House Minority Leader Nancy Pelosi (D-Calif.) said she had no agreement with Boehner in his twilight weeks beyond a short-term funding bill this week.

“Sept. 30, the fiscal year ends,” Pelosi told CNN’s “State of the Union” in an interview that aired Sunday. “We have to have a continuing resolution to take us forward as we prepare for our omnibus bill, which will take us through the next year.”

Congress seems to have avoided a crisis for now. The Senate will make the first move to steer Congress away from a shutdown, with a key procedural vote Monday evening on a bill that would fund the government through Dec. 11 and not strip money from the women’s health group. Senate Democratic and GOP leadership aides said Sunday there would be no issue clinching the 60 votes needed to advance the short-term spending bill.

After final passage of that stopgap measure in the Senate — likely no later than Tuesday night — the House will follow suit and send the bill to President Barack Obama for his signature, just in time to avert the second federal government shutdown since 2013.

For much of the past two months or so, of course, Congress appeared headed toward a budget showdown motivated by efforts of several conservative groups on Capitol Hill to strip funding for Planned Parenthood, which amounts to some $500,000,000 per year including payments made via Medicaid for patient care, This is a battle that has been fought before, of course, but many conservative groups believed that their efforts had better chance of success this time due to the release over the summer of a series of videos purporting to depict Planned Parenthood employees and others discussing the sale of fetal tissue. Despite those videos, though, polling has shown that the American public would oppose a shutdown over the issue, and that the Republican Party would get the blame if it happened. A new CBS/New York Times poll taken just last week has confirmed those numbers, and Congressional leaders such as Senate Majority Leader Mitch McConnell have cautioned Republicans against the tactic.

For those reasons, and thanks in no small part to the fact that Speaker Boehner’s resignation means that leadership currently is much more free to act than it otherwise might have been, a shutdown has been temporarily averted. As budget analyst Stan Collender notes, though, we’re still likely to see a shutdown coming before the end of the year:

The next speaker will be on a very short, exceedingly tight leash when the next funding bill is considered. In the immediate aftermath of Boehner’s decision to leave—which the Freedom Caucus considers the biggest victory of its relatively short existence — it has already made threats about what will happen to the members of the GOP House leadership if Planned Parenthood funding is allowed to continue or if the current caps on federal spending are lifted. If the new speaker is unable to work out a compromise on those issues, a shutdown is far more likely than not.

The Freedom Caucus is proudly pointing to the fact that this is the second senior House Republican leader whom conservatives have chased from office. The first was former Majority Leader Eric Cantor (R-Va.), who lost his primary in June 2014 to a little-known tea party conservative.

What’s more, the GOP’s most conservative members have made clear that the tactics they used to make Boehner’s speakership so miserable can now be used against Senate Majority Leader Mitch McConnell (R-Ky.). The thought seems to be that if McConnell can’t get anything done because of conservative resistance or has to rely on Democratic votes to pass legislation, he may well become a pariah among Republicans and consider following the speaker out the door.

The Freedom Caucus’ message is unambiguous: The next speaker had better beware because we’ve ousted Republican leaders before and, if necessary, will do it again.

On top of this pressure from conservatives is the strong likelihood that the post-Boehner House GOP leadership will include one or more members of the Freedom Caucus. That will give the group’s members far more direct access and influence than they have had up till now, especially on legislation like the next CR.

There’s also the duration of the next CR to consider. Unlike the short-term funding Congress will be voting on this week, the bill in December most likely will be in effect through the end of fiscal 2016—that is, almost until next November’s election. It will, therefore, be the budget members of Congress have to defend for the next 12 months. It won’t be easy to get conservative members to hold their noses and approve the next CR if it will be the final effective vote on Planned Parenthood and the spending caps all year.

The fact that the next shutdown showdown will be occurring much closer to the 2016 elections than we are now also suggests that the prospects for a real shutdown will be much higher. In addition to the four Republican Senators running for President at the moment, we will also have the entire House of Representatives and one-third of the Senate up for re-election. In the case of Republicans in the House most especially, this will mean that members will be very eager to prove their conservative bona fides in a budget fight that includes within it a battle over a hot button social issue such as abortion. As Greg Sargent points out this morning, Republicans have very little reason to compromise because their base doesn’t want them to compromise, and while this is a position that could end up hurting the party in the long term at a General Election, in December of this year Republicans on Capitol Hill and in the Presidential race are likely to be much more focused on primary battles and taking a position antithetical to the base ahead of a primary election is not something most politicians are likely to do.  Given all of that, and especially given the fact that the new House Leadership is likely to find it hard to really confront the hardliners less than two months after taking office, the odds that the could actually see a shutdown in December seem rather high.

FILED UNDER: Congress, Deficit and Debt, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Todd says:

    I can’t really complain too much about having a “good” Federal job. It really does provide much more security than the average Joe or Jane has out in the “real” world. That being said, my personal budget will feel much less tenuous somewhere down the road when the “Freedom Caucus” no longer has so much power.

    BTW, I place a whole lot of blame for our current predicament on all the petulant liberals who stayed home in 2010, allowing Conservatives to control so many State governments after the census.




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  2. al-Ameda says:

    These days, when it comes to the likelihood of anti-government dysfunction I always calculate the odds to be at least 50/50 that the dysfunction will come to be.

    Afew weeks ago there was an interesting article in the Sunday NYT, concerning Kansas, and the state of affairs in their Republican dominated government. Kansas is undertaking a “march to zero,” that is, an attempt to drastically reduce government and taxation regardless of any consequence. I believe that this is EXACTLY where today’s Republican Congress is, they want to be the avatars of a Congressional ‘march to zero.’

    From the NYT 8/5/15: With Brownback as governor, Kansas is in the midst of a self-described economic ‘‘experiment,’’ a project that, whatever you think of its merits, is one of the boldest and most ambitious agendas undertaken by any politician in America. Brownback calls it the ‘‘march to zero,’’ an attempt to wean his state’s government off the revenues of income taxes and to transition to a government that is financed entirely by what he calls consumption taxes — that is, sales taxes and, to a lesser extent, property taxes.

    These people actually do want to burn it – the federal fiscal structure – down and start over, so yes, they would also countenance a federal default, they would see it a part of a “by any means necessary” approach.




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  3. Mu says:

    What always surprises me it the inability of US parties to protect themselves from people acting against the best interest of the party. Is there any mechanism by which the Republicans could prevent some of the loonier people running in their name? Or do they have to let anybody who pays the filing fee and gets the required signatures compete in the primaries (with the signatures being no real hindrance as everybody can sign up for a party and become eligible).




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  4. Hal_10000 says:

    I’m not so sure that they’ll have the numbers for a shutdown in December. Right now, the Planned Parenthood issue looms large and they still face 70% opposition in general and majority opposition within their own party against a shutdown. I can only think, as the video controversy fades, those numbers will go up. Who exactly are they pleasing by shutting down over Planned Parenthood? Shutting down over spending? Eh. Shutting down over Obamacare? Well … Shutting down over Planned Parenthood? Seriously?




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  5. Tillman says:

    The thought seems to be that if McConnell can’t get anything done because of conservative resistance or has to rely on Democratic votes to pass legislation, he may well become a pariah among Republicans and consider following the speaker out the door.

    And we all thought they just hated Obama. Apparently any reliance on Democrats is a sin worth retribution.

    C’mon McConnell, slither your way out of this one. You built this on the presumption that they’d settle down with you in charge, so what now? Take a bold stand against the furthest right of your base?




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  6. C. Clavin says:

    All this ostensibly over some fraudulent planned parenthood sting videos.
    That tells you how serious the Tea Baggers are about the real world.




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  7. James Pearce says:

    As Greg Sargent points out this morning, Republicans have very little reason to compromise because their base doesn’t want them to compromise

    Their base needs to grow up.

    It’s kind of funny. The leaders of Russia, Iran, and Cuba can humble themselves enough to come to the negotiating table, but the leaders of the Republican party can’t? These guys are more intractable than our nation’s biggest foes. WTF?




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  8. Mikey says:

    @Hal_10000:

    . Who exactly are they pleasing by shutting down over Planned Parenthood? Shutting down over spending? Eh. Shutting down over Obamacare? Well … Shutting down over Planned Parenthood? Seriously?

    It’s just proof the most extreme elements of the base have them in a stranglehold. We’re talking about potentially forcing a government shutdown over an issue about which the great majority of Americans disagrees with them.

    Does anyone else see the additional idiocy of shutting down the government–thereby throwing the finances and general mental well-being of several million federal employees and several million more contractors into chaos–two weeks before Christmas?

    I mean, the campaign ads would pretty much write themselves: “How the Republican Grinch Stole Christmas.”




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  9. steve s says:

    Their base needs to grow up.

    Their base is elderly people with poor reasoning skills.




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  10. Tony W says:

    @Mu:

    Is there any mechanism by which the Republicans could prevent some of the loonier people running in their name?

    Republicans in their unholy trinity of money/racism/nationalism are not really in a position to turn away the crazies. More strategic to simply pander to them and pretend to care.




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  11. C. Clavin says:

    This is a battle that has been fought before, of course, but many conservative groups believed that their efforts had better chance of success this time due to the release over the summer of a series of videos purporting to depict Planned Parenthood employees and others discussing the sale of fetal tissue.

    ~ First, Doug…why do you choose not to state that these videos are patently false? Seriously…what’s your thought process here? Every knows they have been edited in a misleading fashion and depict only complete fiction. I think people should call BS when things are clearly BS. Obviously your ideology prevents this. This article goes back to August…and yet you still support your party on this nonsense? WTF?
    http://www.nytimes.com/2015/08/28/us/abortion-planned-parenthood-videos.html?_r=0
    In addition investigations by six states have found no wrong-doing and yet you still pretend there is controversy here.
    http://www.msnbc.com/msnbc/missouri-finds-no-wrongdoing-its-planned-parenthood-investigation
    So Republicans (and Doug apparently) are willing to burn down the house based on some fake videos.
    ~ Which brings me to my second point; has there ever been a politics more based on mendacity than today’s Republican politics? These people and their supporters (like Doug apparently) are just full of horse crap. Everyone of their positions is based upon falsehood. Demonstrable lies. From economics to foreign policy to the environment. Lies, lies, and more lies. I’m not talking about differences of opinion…I’m talking about provable outright lies.
    Until journalists and (serious) bloggers begin to call them on their mendacity they will continue to lie their way through our political discourse…weakening it and the Republic in the process. So good on you for helping them, Doug.




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  12. Right Wing X-tremist says:

    It depends on whether or not we get a conservative as Speaker. If we get another RINO squish like McCarthy he’ll surrender to Harrison J Bounel just like Boehner always did.

    However, if we get a Speaker with backbone we might be able to shut it down.

    In fall of 2013 we shut it down and the “price” we paid was a gain of nine Senate seats and the largest House majority since the 1920s. All the “geniuses” who predicted electoral doom in 2014 were wrong.

    Aside from the fact that shutting down the government is good policy, generally the right thing to do, and gives us leverage to go after Planned Parenthood and Obamacare, it is also a smart political move because it will benefit us in November 2016 — just like it benefitted us in November 2014.

    If we get a Speaker with the brains to recognize this and the guts to act on it we’ll get another shutdown and God-willing it will last months instead of days. Frankly, I’d shut it down until January 20, 2017.

    Nothing can be accomplished until them regardless so why not just shut the whole damn thing down.




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  13. Right Wing X-tremist says:

    @C. Clavin: The videos aren’t fraudulent – those babies are actually dead.




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  14. C. Clavin says:

    @Right Wing X-tremist:
    6 investigations by 6 states have found no wrong-doing.
    Ipso facto the videos that purport wrong-doing are fraudulent.
    Clearly you are anti-choice. Good for you. Everyone is entitled to their own opinion. Unfortunately your opinion doesn’t change the facts.




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  15. C. Clavin says:

    @Right Wing X-tremist:

    If we get a Speaker with the brains to recognize this and the guts to act on it we’ll get another shutdown and God-willing it will last months instead of days.

    Shhhh…here we see the Tea-Bagger in it’s natural habitat…the comments section where the real world and facts and figures don’t ever enter into consideration.
    The 2013 shutdown which lasted 16 days cost us at least $12B in GDP and slowed job growth by some 120,000 jobs…now this Tea Bagger thinks we should extend it for months. MONTHS.
    How does anyone this stupid get thru life? Fascinating question…most likely only with with heavy Government support.

    why not just shut the whole damn thing down.

    Brilliant!!!




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  16. C. Clavin says:

    @Right Wing X-tremist:
    I had to look up Harrison J. Bounel.
    So in addition to being stupid you are a conspiracy theorist???
    Awesome sauce.
    http://www.americanthinker.com/articles/2014/04/_barack_hussein_obama_and_harrison_j_bounel.html




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  17. Tillman says:

    @Mu: Accidental downvote, I have giant thumbs.

    @Right Wing X-tremist: Harrison J Bounel?

    However, if we get a Speaker with backbone we might be able to shut it down.

    Boehner had immense backbone. He’s the first (and hopefully last) Speaker in history to endanger the full faith and credit of the United States just to appease blowhards in his own caucus.

    Aside from the fact that shutting down the government is good policy

    lol, you’re gonna need to expand on this. I know it’s bad form to encourage trolls to pontificate, but I have to read the justification for this, if only to live vicariously through the mind of a dullard. (or someone simulating one)

    Nothing can be accomplished until them regardless so why not just shut the whole damn thing down.

    You idiot, if your ilk had followed Boehner’s lead in 2011, you would’ve gotten possible cuts to Social Security and Medicare. Obama was ready to compromise the left’s third rails, and Boehner and Biden had worked out something like $1.5 trillion in spending cuts to $1 trillion in revenue increases. You would’ve accomplished so much, but you mistook a black Eisenhower Republican for a diehard socialist.




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  18. humanoid.panda says:

    @Hal_10000: Totally agree. December, the holiday season, had traditionally been the time when all the deals are cut, because even the most hardcore political junkies don’t want to make the holiday season hostage to politics. The only open question is really the debt ceiling :if Boehner doesn’t get it done, we might have a problem.




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  19. grumpy realist says:

    @Right Wing X-tremist: Those pictures of “a dead baby” were lifted from the pages of a family mourning a miscarriage, you idiot.

    There’s been quite a few reports of such behavior–pro-lifers grabbing pictures of miscarriages from websites and then claiming that they’re the result of abortions. Also refusing to take the pictures down even when the families plead them to.

    Such lovely people you hang out with.




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  20. humanoid.panda says:

    @Right Wing X-tremist:

    In fall of 2013 we shut it down and the “price” we paid was a gain of nine Senate seats and the largest House majority since the 1920s. All the “geniuses” who predicted electoral doom in 2014 were wrong.

    Aside from the fact that shutting down the government is good policy, generally the right thing to do, and gives us leverage to go after Planned Parenthood and Obamacare, it is also a smart political move because it will benefit us in November 2016 — just like it benefitted us in November 2014.

    If we get a Speaker with the brains to recognize this and the guts to act on it we’ll get another shutdown and God-willing it will last months instead of days. Frankly, I’d shut it down until January 20, 2017.

    James P is back amongst us!




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  21. Tony W says:

    @humanoid.panda:

    James P is back amongst us!

    I’ve always been tempted to try out my wingnut voice here, feel like we all would take the bait pretty easily.




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  22. michael reynolds says:

    The anti-choice people have something in common with PETA: they both think gross-out pictures will change everything. And it never quite does. We’re inoculated against tough images. Yes, we know that fetuses get torn apart sometimes, and we know that pigs have horrible conditions. But when our daughters need an abortion (or we really want a BLT) we somehow go right ahead.

    This is the first picture of American war dead that civilians were allowed to see in WW2. The censors fought it, worrying that it would turn people against the war. It didn’t.

    There are a lot of things we don’t want to see pictures of: colonoscopies, traffic deaths, major surgeries and yes, abortions. They make people uncomfortable, but they don’t change minds.




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  23. Just 'nutha ig'rant cracker says:

    @al-Ameda: For some reason your post reminds me of the old joke where the man finds his wife in bed with his best friend, puts a gun to his own head and then says “Don’t laugh! You two are next!”




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  24. Just 'nutha ig'rant cracker says:

    @Right Wing X-tremist: Your’s does, too!




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  25. DrDaveT says:

    it’s only a temporary fix

    Slight but important correction: it’s not any kind of fix at all, temporary or otherwise. When you are bleeding out, slapping a band-aid on the wound is better than not doing anything at all, but it is not a “temporary fix” either.

    Continuing resolutions damage America less than shutdowns do, but they still damage America. Nobody gets brownie points for choosing to damage America less than they might have.




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  26. PJ says:

    @michael reynolds:

    There are a lot of things we don’t want to see pictures of: colonoscopies, traffic deaths, major surgeries and yes, abortions. They make people uncomfortable, but they don’t change minds.

    I do think that some images like that are able to make people change their minds.
    That is, when it’s images of things that could happen to them.
    So, traffic deaths, photos of lungs of people having smoked for years, etc.
    Not so much fetuses.




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  27. Mikey says:

    So the GOP lunatic base seems OK with shutting down the government and killing cash flow to millions of Americans two weeks before Christmas.

    I can’t wait for the Democrat campaign ads filled with Christmas-present-less children crying and the Grinch (pre-heart-size-increase) cavorting about in all his evil glory, wearing a “Vote Republican” T-shirt.




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  28. anjin-san says:

    why not just shut the whole damn thing down.

    So you are looking forward to China at the world’s leading power, with us gazing up at them?




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  29. Jeron says:

    “Right Wing X-tremist” was likely playing Devil’s advocate here or the official troll in other words. 😛

    What is interesting is how much that line resonates with people, though.

    In some ways they have succeeded in shutting down some government services by starving them of resources, by allowing them to expire, or simply by refusing to improve them. Perhaps this is being reflected in an overvalued dollar that makes importing much more convenient. There are also some companies starting to move some operations overseas in order to take advantage of the dollar or just to mitigate some of the effects caused by those services being shut down.

    Let’s see how lightly the Establishment will take these inopportune, isolationist trends. They need to factor in the possibility of at least 5 more years of these if Hillary wins. ;-P




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  30. Grewgills says:

    @Tony W:
    I’m pretty sure that James P and this new troll are some bizarre comments section performance art. It is rather sad that there is a large enough brietbart contingent that their comments could be real crazy rather than parody crazy.




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  31. Jenos Idanian says:

    Any new arguments from the “we can’t be broke — we still have checks left!” School of Economics?

    I thought not.

    I’ve decided that I no longer care about the debt ceiling. I have no kids, and I’ll most likely be dead before it finally blows up, so it ain’t my problem.

    What’s your excuse? And just how high should our debt be allowed to get, anyway? How much more should we spend than we actually have?

    Just curious. As I said, it’ll be academic to me.




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  32. grumpy realist says:

    @Jenos Idanian: Well, considering that your side’s analysis to balance the budget involves that old chestnut called Supply-side economics, I think I’d rather take my chances with the side that knows SSE is hogwash and that all the tax plans put out by Jeb! and Trump and the other extra-special people on the Right have math that. Just. Does. Not. Add. Up.

    And at least our side puts actual expenses for little things like war on the budget, rather than shove it under the carpet with accounting that would make the guys at Enron blush.




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  33. Jenos Idanian says:

    @grumpy realist: your side

    Did you miss the part where I said I was bowing out of having a side on this? Or where I didn’t argue for a “side,” but asked for your side’s stance?

    Come back after you’ve had your coffee, grumpy. Your decaffeinated reading comprehension sucks.

    Let me reiterate, and clarify: what I was asking was 1) just how high should our federal debt be allowed to go, and 2) do you ever foresee a point where we might actually pay it down, even a little? Note I’m not bothering to ask about retiring it; I already know the answer to that one.




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  34. JohnMcC says:

    @Jenos Idanian: Here’s the Concord Coalition’s version of the federal debt — over time — as a % of GDP.

    http://www.concordcoalition.org/issues/debt/chart-levels-federal-debt-over-time

    See that spike in the late 1940’s. That period of time in which it is diminishing is the ultimate expression of the NewDeal and WW2 American. Millions of veterans on the dole (the GIBill). Total gov’t control of train, bus and airline schedules. Levittown! and more GIBill give-aways.

    It was also the ‘golden era’ cited by John Boehner in a press conference a couple of years ago as the way a conservative America would look. You remember, doncha? When unions were strong and no one would have thought of reducing some American’s Social Security? That conservative golden era.

    Now that we’ve left all that behind, you ask a pretty good question. How ARE we going to pay down the federal debt when the party that ran it up to no purpose controls the House of Reps at least until the next census?




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  35. Moosebreath says:

    @Jenos Idanian:

    “do you ever foresee a point where we might actually pay it down, even a little”

    Why, yes, I recall that we did start paying it down in the late 1990’s. And that the party you shill for thought that was so much of a disaster that we needed to pass tax cuts for the rich immediately.

    In other words, the GOP has no credibility on debt issues and just uses the issue as cover for its priorities on taxing and spending (a/k/a class warfare in favor of the upper class).




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  36. C. Clavin says:

    @Jenos Idanian:

    How much more should we spend than we actually have?

    Gee…I don’t know…how much do we have???
    How much is the Interstate system worth? Millions of acres of Federal Lands? What’s the Capital Building worth? The White House? Prime real estate in the middle of DC? We have over 3 billion sq ft of real estate total. Oil and gas resources alone are estimated at over $120T you moron.
    So again….any idea of what we have? And have we really borrowed more than that? You don’t know, do you? That’s what I thought. I promise you troll-boy that it’s far more than our debt. But that’s economics…you and the rest of your Republican friends are apparently unable to grasp even the most basic concepts.
    It’s obvious that you don’t own your own house…but a lot of more responsible Americans do…which means they owe a lot more than they have. Oooohhhh the outrage!!!!
    Why not just take your nonsensical right-wing-talking point BS back to troll-ville, where you’ve been hiding.




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  37. C. Clavin says:

    Poor Indiana Jones boy…pops his head up and is instantly reminded of how stupid he is.




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  38. Tillman says:

    @Jenos Idanian:

    I’ve decided that I no longer care about the debt ceiling.

    Well sure, once it was no longer useful as an extortionary political tactic I imagine no conservative gave a rat’s ass anymore. And why would they? The whole thing is a legislative gambit and a redundant waste of bureaucracy, the sort of thing any fiscal conservative would detest.




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  39. Neil Hudelson says:

    @Jenos Idanian:

    Any new arguments from the “we can’t be broke — we still have checks left!” School of Economics?

    Is that similar to your “There’s still snow, so how can there be global warming?” school of science?

    And just how high should our debt be allowed to get, anyway? How much more should we spend than we actually have?

    You know, it might help if you understood what the debt ceiling actually is. I’ll give you a hint: despite it’s name, it’s not a function that limit’s our ability to have debt. It limits our ability to PAY for debt. What actually limits debt is the annual budget. Which is written and proposed by the House of Representatives. Which is controlled by Republicans.




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  40. James Pearce says:

    @Neil Hudelson:

    Which is written and proposed by the House of Representatives. Which is controlled by Republicans.

    Controlled by Republicans who care more about crossing names off their enemies list, and don’t care at all about getting this nation’s finances in order.




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  41. al-Ameda says:

    @Jeron:

    In some ways they have succeeded in shutting down some government services by starving them of resources, by allowing them to expire, or simply by refusing to improve them. Perhaps this is being reflected in an overvalued dollar that makes importing much more convenient. There are also some companies starting to move some operations overseas in order to take advantage of the dollar or just to mitigate some of the effects caused by those services being shut down.

    Interesting comments.
    I’m still appalled that many conservatives have adopted the position that the effects of a possible default on federal debt securities are greatly overstated, an amazing and completely ignorant position to take when you consider that trillions of dollars in federal debt securities are held in America by institutional investors and individual investors, and by banks and governments around the world.

    That attitude, if acted on and forced into effect by Congressional Republicans will have a deleterious effect on the value of portfolio and investment holdings of millions of Americans and institutions around the globe.




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  42. DrDaveT says:

    @Neil Hudelson:

    You know, it might help if you understood what the debt ceiling actually is. I’ll give you a hint: despite it’s name, it’s not a function that limits our ability to have debt.

    This.

    I am open to any and all discussion of how big the debt should be allowed to get, best mechanisms for controlling the size of the debt, political viability of various revenue-increasing and spending-decreasing measures, etc. None of that has anything at all to do with the debt ceiling.

    If your bank account has a rule that you can’t write more than $25,000 worth of checks in any one month, that does not in any way prevent you from going more than $25,000 in debt. It might, though, make it awkward or impossible to PAY those debts, leading to annoying consequences…




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  43. C. Clavin says:

    Meanwhile Trumps new Tax Reform Plan will raise the debt by $12T in the next 10 years…even when you accept rosy growth projections at face value.
    So Trump really is a Republican!!!!




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  44. Just 'nutha ig'rant cracker says:

    @grumpy realist: And there is also the problem of the portion of THE DEBT [TM pending] that is actually held by the US Treasury (as in quantitative easing, among other devices for so holding). I may be wrong, but my understanding from the few econ classes that I took is that the only way to reduce that debt is taxation for the purpose of removing money from circulation (aka deflation). Don’t know the exact numbers anymore, but some sources have set this part of the debt as high as half of the total.

    It seems Galbraith may have been right–the debt (or at least some of it) doesn’t need to be repaid because it isn’t actually owed to anyone.




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  45. al-Ameda says:

    @James Pearce:

    Controlled by Republicans who care more about crossing names off their enemies list, and don’t care at all about getting this nation’s finances in order.

    All stereotypes concerning fiscal responsibility aside, the fact is that, at least since 1992, Democrats have been and are more responsible on fiscal issues than Republicans




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  46. anjin-san says:

    @Jenos Idanian:

    do you ever foresee a point where we might actually pay it down, even a little?

    Democrats have a history of actually doing this in recent memory. All the GOP does is blow up the budget and vastly expand deficit spending.




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  47. anjin-san says:

    @Jenos Idanian:

    “we can’t be broke — we still have checks left!

    Do you know what a balance sheet is?

    Spend a few minutes thinking about the assets of the US Federal Government. Then compare them to debt. Do you think you can manage that?

    In other words, the government has a lot more than checks to work with…




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  48. KM says:

    @Just ‘nutha ig’rant cracker:

    It seems Galbraith may have been right–the debt (or at least some of it) doesn’t need to be repaid because it isn’t actually owed to anyone.

    Not as up to date as I should be on these things but are there definitive numbers on that? Ballparks maybe? If it’s essentially money we owe ourselves, why are we still listing it as debt and not forgiving it on an annual basis?




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  49. gVOR08 says:

    @JohnMcC: Don’t forget the 90% top income tax rate.




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  50. C. Clavin says:

    @gVOR08:
    @JohnMcC:
    Note too how the debt takes off under Reagan/Bush41…then drops off under Clinton…and takes off again under Bush43.




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  51. grumpy realist says:

    @KM: The economists don’t like forgiveness of gov’t debt because they claim it causes inflation.

    I just find it hilarious that the WSJ screams about the dangers of inflation in one article and then right next to it screams about the low, low rates banks are paying on CDs and bonds. They haven’t yet figured out that you can’t get low inflation without having a low price of money (which is what the interest rate on bonds actualy is.)

    And assuming the US government were to cut spending as much as the Republicans claim they want to do–we’ll have to get rid of a large chunk of the military budget as well as Medicare, probably–we’d be taking that much more money out of the circulation of the economy, meaning even less demand, meaning even less growth (if any).

    And these are the same people who clapped and cheered when Cheney said “deficits don’t matter.”




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  52. Grewgills says:

    @KM:
    Part of it at least we owe to Social Security and other programs that need to be paid at some point.




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  53. al-Ameda says:

    @grumpy realist:

    I just find it hilarious that the WSJ screams about the dangers of inflation in one article and then right next to it screams about the low, low rates banks are paying on CDs and bonds. They haven’t yet figured out that you can’t get low inflation without having a low price of money (which is what the interest rate on bonds actualy is.)

    Part of what the WSJ does is cynical – they play to their preferred political party too, that’s why we get dissonant noise about the coming high inflation and whining about low interest rates at the same time. There are enough smart people at the WSJ who know better, but ….

    Also, people can’t even get their analogies right when it comes a household and federal government long term debt. The issue is not whether we have too much debt, it’s whether we have the capacity – the ability – to pay for the debt we have now, and clearly we do. A typical example might be, a family with annual income of $100,000, and they owe $300,000 on their house – oh my god, 3 times their annual income! Are they on the verge of bankruptcy? Most likely not, because their mortgage is about $1600 per month, might be about 30% of take home. I never assume that people understand the difference between a household finance system, and the federal fiscal system.




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  54. Lenoxus says:

    @al-Ameda:

    A typical example might be, a family with annual income of $100,000, and they owe $300,000 on their house – oh my god, 3 times their annual income! Are they on the verge of bankruptcy? Most likely not, because their mortgage is about $1600 per month, might be about 30% of take home.

    But what if the bank suddenly asks for all the money back right away or else they’ll reclaim the house? For no reason?

    … just to continue where the “but oh my god 18 trillion dollars” train of thought seems to lead, to hear politicians talk about it.




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  55. DrDaveT says:

    @grumpy realist:

    They haven’t yet figured out that you can’t get low inflation without having a low price of money (which is what the interest rate on bonds actualy is.)

    I agree with you in general, but not in particular.

    As I pointed out recently in a different thread, for decades prior to the 2008 crash the return on safe and easy investments (like bank CDs) was consistently higher than inflation, so that people who put their savings into those instruments were making money, even after inflation.

    Since the crisis, the return on all of the safe investments available to unsophisticated investors has been well below inflation. People who buy those instruments are losing money — though not losing as much as if they had simply put it in a savings account or a mattress (same thing these days).

    There have been stretches in those two epochs when inflation was basically the same, but return on safe investments was wildly different. So no, it’s not true that inflation rate determines or sharply limits return on bonds or other safe securities.




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  56. al-Ameda says:

    @Lenoxus:

    But what if the bank suddenly asks for all the money back right away or else they’ll reclaim the house? For no reason?

    … just to continue where the “but oh my god 18 trillion dollars” train of thought seems to lead, to hear politicians talk about it.

    Many politicians are just as ignorant concerning finances as the people they represent. Add to that the natural tendency of many people to freak-out when numbers are expressed in trillions, and you have a built-in constituency who will not accept an interpretation of public debt in any form.




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  57. Just 'nutha ig'rant cracker says:
  58. Just 'nutha ig'rant cracker says:

    @Just ‘nutha ig’rant cracker: Forgot to note, of that 66% 20 is held by the social security trust fund, and 17% by the federal reserve.




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  59. Barry says:

    @Hal_10000: “Who exactly are they pleasing by shutting down over Planned Parenthood? Shutting down over spending? Eh. Shutting down over Obamacare? Well … Shutting down over Planned Parenthood? Seriously?”

    Seriously – The Base. And I’ll bet that a number of elite economics interests are figuring that f*cking the operations of the federal government will yield rich opportunities.




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  60. Barry says:

    @steve s: “Their base is elderly people with poor reasoning skills.”

    And a very large number of 40-60 year old a-holes who threw a tantrum the minute that they lost the White House.




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  61. Barry says:

    @anjin-san: “So you are looking forward to China at the world’s leading power, with us gazing up at them?”

    I wonder just how much of China’s governmental and elite corporate long-term planning involves the question ‘what do we do if the USA actually blows its own brains out?’. Along with ‘how can we take advantage of the USA cutting itself to a slow death?’.




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  62. Barry says:

    @Jenos Idanian: “Any new arguments from the “we can’t be broke — we still have checks left!” School of Economics?”

    ‘Reagan proved that deficits don’t matter’ – Dick ‘the Lich’ Cheney’

    ‘(crickets)” – the Tea Party, at the time.




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  63. Barry says:

    @Jenos Idanian: “Did you miss the part where I said I was bowing out of having a side on this? Or where I didn’t argue for a “side,” but asked for your side’s stance?”

    No, we missed the part where you were *honestly* bowing out – we spotted the part where you make a partisan argument, while disclaiming partisanship.




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