Except, whether he understands the issue or not, Chambliss is mistaken. If Republicans refuse to allow the nation to pay for the money it's already spent, and in the process push the nation into default by trashing the full faith and credit of the United States, it's not the president who'll "suffer the consequences"; it's the rest of us.

Benen, stop stupidly assuming Chambliss is stupid.

US default means interest rates go up. With higher interest rates, the money that Wall Street rents generates hundreds of billions more in profits. US corporations have $2 trillion in liquid assets on their balance sheets. Minute increases in interest rates generate huge profits.

So what is the political scorecard for a default?

1. Wall street siphons a slim percentage of the hundreds of billions in profits from higher interest rates to GOP candidates.
   QED: DEMs and Obama loses.
2. Chambliss gets millions in campaign cash.
   QED- Chambliss wins
3. The "rest of us" suffers the consequences.
   Irrelevant- GOP wins and DEMS lose.

I always love it when the misinformed complain about misinformation.

There is a difference between authority to borrow and actual borrowing. The government borrows money (sells bonds and other debt instruments) to pay current obligations, not future obligations. Money is not borrowed to pay obligations that have not yet been incurred under appropriations that have not yet been made. The debt ceiling is authority to borrow money when needed to pay obligations as they come due up to the amount of the ceiling.

And, yes, under any common understanding of accounting, finance or the law of debtor-creditor relations, when the amount of money coming in is less than the amount you're obligated to pay during the same period, you have, in fact, run out of money.

Let's try it another way: when the amount you owe is more than the amount coming in--whether as income or draws on credit, the amount coming in isn't your money, it's your creditors' money. So, even though you have income, you are, well and truly "out of money" (or "screwed" to use the technical term).

Try telling your landlord or the bank holding your mortgage that even though you blew threw your paycheck paying other bills and don't have enough to pay them, you've still got a job so you're not really out of money, and see how well that works out for you?

There is indeed a lot of misinformation around the issue. Can someone please explain how Social Security contributes to the deficit, especially since the payroll tax is no longer in effect?

Social Security has its own funding source paid by the employer and the employee. Since the creation of the SS Trust Fund in 1939, surplus SS money does not go into the general fund; it goes into the SS Trust Fund. The Trust Fund is by law invested in special Treasury Bonds, backed by the full faith and credit of the United States. This is not, as widely believed, something that's a recent change in how the Trust Fund exists, with Congress 'raiding the fund and taking the money.'

As Reagan said in 1984, "If you reduce the outgo of Social Security, that money
would not go into the general fund or reduce the deficit. It would go into the
Social Security Trust Fund. So Social Security has nothing to do with balancing
a budget or raising or lowering the deficit.”

http://www.youtube.com/watch?v=ihUoRD4pYzI

Just because that money is owed to the American people has nothing to do with the fact the debt is owed and backed by 'the full faith and credit of the US.' It is as valid as money owed to private investors or other countries.

How did this misinformation get so widely reported/repeated that it's now become a 'truth' in our perception? Yes, we need to tweak it, just as has been done previously, but it's not something that has to be done now, today! The Trust Fund will be able to pay out full benefits until 2037, so there's plenty of time to deal with those adjustments at a later date. No way should this be a part of a debt ceiling fight!

Any consideration of the relative intelligence of the parties concerned without consideration for their motives is about as smart as assuming that default will not be catastrophic.

The motives in this case fall under the "starve the beast" fantasies that the Repugnicon party have been toying with for quite some time. In particular, they believe default will cause exactly what Steve-458256 above details. That the government will have to shutter all the government programs they've been whining about over the years and that the economy will magically get better as a result. Of course what they don't want to tell you is that quite a large number of tax paying citizens will lose their jobs administering those programs and so revenue will drop even further. So yes, Chambliss is stupid, assumptions are not necessary.

I'm not so sure on that. Right now the national debt isnt too big of a deal as the money we borrow is actualy at a negative interest rate. That means people pay us to borrow their money. As long as it is this way, we are buying time and no matter what anyone says, it will take time to pay down the debt. It will be much easier to pay it down against a negative interest rate. But what happens if we default? If our credit rating is reduced, then what we borrow will probably be at some positive interest rate. maybe 1%. So now, our debt situation has been made much worse. Even if we totally shut down the government, it would take some time to pay that off and the effects would be serious.

Their fight over the debt ceiling in 2011 added 19 billion dollars to the deficit.

AND we didn't default. These are the idiots who are worried about the deficit?

No, just garden variety idiots, I'm afraid. Somebody better knock some sense into their heads before it is too late.

The notion of a negative interest rate is false. Investors are still getting cash for interest. An increqase in the deficit. Rates are low, but not zero. The real rate is negative because of inflation, but cash is still paid out,

Shooter

You and the rest of the Fox fan boys are the only ones who don't understand just how stupid your claim that the Obama and Benen are trying to scare seniors really is.

NO. Benen is not trying to scare us. America is the dim light shining in a sea of misguided austerity.

I'm totally interested in people like Shooter who think they can use the debt ceiling as 'leverage' but that nothing 'bad will happen' if we default. WHICH IS IT?

See, the thing you self-proclaimed Repbulcan business genius men of millions always seem to ignore when you spew your wingnut talking points is that if you don't pay a bill when its due, you are, in fact in default. Indeed, many creditors explicitly make default on any debt to anyone an event of default under your agreement with the creditor, even if you're current on that particular bill.

And if the reason you didn't pay it is because you can't, credit markets have this inexplicable tendency to consider that default a very serious thing, even if you're keeping current on your debt to them. It's a thing they have a strange tendency to take into account when you want to borrow from them again.

Money owed as salaries to government employees or to benefit recipients or to parties with whom the government has contracted are debts just the same as debts owed to lenders. Lenders will look upon a default on those debts as seriously as they would a default on bond payments because that's how credit works and THEY'D BE @!$%#ING CRAZY NOT TO!!!!

That's an excellent point Mego. How can something be considered "valuable leverage" if there are no negative consequences if it is lost?

Shooter's right. But not for the reason he thinks.

"The country is not going to default" because the financial community that spends billions supporting Republicans would be seriously damaged--and they won't allow that to happen. They'll bring Republicans back into line before this gets out of hand. The losses at all levels in the financial markets would cause some serious reductions in those coveted "performance bonuses" that are so important on Wall Street.

Should the government default, the first group of losers would be those who have purchased Treasury securities, including the vast number of folks who have part of their assets in money market funds--which largely invest in 91-day and 182-day Treasury Bills.

How much money do you think rich Republicans have that is tied to those securities?

IIRC, the debt ceiling got passed in a hurry last time when the Dow Jones dropped hundreds of points in one day.

Steve 458, don't you get tired of being told your analogy of personal finance is a stupid as it is wrong?

Just how is he wrong?

credit markets have this inexplicable tendency to consider that default a very serious thing, even if you're keeping current on your debt to them.

???? You can't be current on a debt if you're in default. Want to try that again? Heh.

You and the rest of the Fox fan boys are the only ones who don't understand just how stupid your claim that the Obama and Benen are trying to scare seniors really is.

???? We can't default. It isn't possible. Benen is yanking your chain. Meanwhile if we do operate without a lifting of the ceiling, it's Obama that decides what gets paid. And here he is saying he might not want to pay the SS checks. http://www.huffingtonpost.com/2011/07/12/obama-social-security-checks-debt-ceiling_n_895831.html

Fact is, the end result of not allowing the president to raise the debt ceiling is so horrible for the country, that all of Wall Street, the business community, and everyone with any knowledge of the consequences of the debacle, will come down so hard on these Republicans that they will be happy to raise the debt ceiling.

The end result of this Republican folly will be so bad for the country that the people who want to refuse to raise the debt ceiling should be imprisoned for attempting to destroy the country, the American people, and the world economy.

rchnpdx---People on average are receiving more than they pay in due to longer life spans. Fewer people are working, so their contributions to the system will not cover those already retired. When a person takes out more than they pay in, there lies the problem. SS isn't broke at the moment, but Baby Boomers and lower birth rates will cause it to go broke. Plus, SS was never intended to be the sole source of a person's retirement. The government (or it's citizens) have made it something that was unintended. It has been known for a long time that when the Baby Boomers hit retirement, problems arise. One of the suggestions by Obama is to use a means assessment to determine SS status or qualifications. With the dems viewpoint on SS, the money paid in belongs to the retiree. Therefore, the rich pay in and cannot be denied their benefits. It is their money. With that philosophy, as soon as you have used up "your" money, that you paid in, your benefits should stop. It all boils down to people wanting the government to supply all, meaning the taxpayers supply all. The idea that a person has paid in lets say $50,000 over his lifetime and retires at 62 and is in good health. He could live at least another 20 if not 30 years. Those kinds of numbers don't compute.

Sadly, the same people who want to end social security will just say, save your money in investments and you wont need SS. And the same people will dive the stock market so these people lose all their savings, which has happened in the last 10 years. So we will end SS and by the way, we are going to suck your profits out of your 401ks too.

SS isn't broke at the moment, but Baby Boomers and lower birth rates will cause it to go broke

Jes how many times do we have to go over this? SS cannot go broke. It is funded by the US government. The only way for SS to go broke is for the US government to go broke. What you mean to say is that SS will stop being revenue neutral at some point. Being revenue neutral and being broke are 2 fundamentally different things. Even if nothing is done people will be covered by SS although that's the least preferred method because then that will get tacked on to the US deficit.

Plus, SS was never intended to be the sole source of a person's retirement.

And for roughly 80% of the population it is not the sole source of retirement

jes33 - You have a fundamental misunderstanding of the money paid in and out. The money paid in was in dollars vastly deflated from today's dollar. Adjusting for today's dollar, they have paid in vastly more than your computations reflect. Further, no one has ever gotten out the same money they put in but rather are being paid from the fully inflated dollars being put in in the present.

However, considering that we buy all kinds of insurance, hoping to never collect, we might be wise to remember that SS was initiated by the Federal Insurance Contributions Act (FICA), and reccognizing that means testing does not create a form of welfare, but mearly recognizes that some of the insured are fortunate enough to not need it.

President Obama, falter not in fear,
For we reflect the ideals you espouse.
Your foolish feckless foes don't want to hear
"You have our full support" in deafened House.
You know, full well, that you possess the right,
The duty to extend expended debt.
Though former leaders failed us in foresight,
Your duty lies in paying charges set.
The Taxed-Enough-Already Party hates
The fact that you were chosen to lead this land.
They refuse to care for these United States,
For "united"'s a concept they can't understand.
Invoke the 14th to avoid default,
And don't give in to TEA Party assault.

Yes... break the law Mr President, and fill the coffers with your debt, a terrible president you will set.

The debt ceiling has nothing to do with further spending. If will cause no government shutdown, default hurts the economy. If the ciling is not raised the government does not have the money to pay off any of the debt or the interest on it and thus a further downgraded credit rating will occur as it did the last time the GOP took us to the brink. If it were no big deal why did we get downgraded. Read the S and P report before you pretend to know what you're talking about. But that's neo-cons for you, never learn from any mistake.

The debt ceiling is not constitutional in the first place, it is added to the budget process it is not in the constitution.

We need jobs before deficit reduction, default will not help. The people are fed up with the GOP picking all these pointless fights to further their irresponsible ideology that they now will never pass.

We have raised the debt ceiling dozens of times and only once have we ever argued over it or threatened its passing congress. The one time we did our credit got downgraded. So obviously we should try that a second time when folks all across the nation, corporate finance, and banking worlds have said they really, really are terrified of the consequences and thus have downgraded our credit score to tell us not to do that again. Clearly that's the right course.....idiots......

14th Amendment, Section 4 ...

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The debt ceiling allows the Administration to pay the debt THAT HAS ALREADY BEEN INCURRED BY CONGRESS... It has NOTHING to do with future spending...

It is writing the 'monthly check to the credit card company' to keep them from nagging you with endless phone calls, demanding you pay up or else...

This is VALID DEBT, AUTHORIZED BY THE LAWS ALREADY WRITTEN BY CONGRESS... Republicans who argue against it are VIOLATING THE CONSTITUTION!...

Exactly...if the House doesn't want the debt ceiling raised, why do they pass spending bills that aggregately exceed the debt ceiling? They act like a teenager with his first checking account - writing check after check without bothering to worry about whether there's enough money in the account to cover them.

Yes, exactly, IAHBD. The antidote to this ridiculous march toward the Big Showdown is to make sure enough people get the message that the credit card was ALREADY USED and the goods purchased.

In order to reduce spending (which is what most people believe this is), Congress will have to scale back on budgeted items in future. Oh, wait. That's what they're trying to do with "entitlement reform." It's a little sleight-of-hand to put the debt ceiling and entitlement reform into the same bargain. Heads I win, tails you lose. Sounds fair, don't you think?

Congress can also defund anything it likes. In the end this is an execise in showing people what happens when Govt. lives within it's means. Just like they have to.

The Democrats greatest fear is that taxpayers won't notice any decrease in service. Tax takers on the other hand will find out why living on someone elses promises is risky.

BS!

Shooter you are either very young or have a bad memory. The last time the Republicans shut down the government, voters screamed loud and long about their lost government services. Of course, nobody except Fox News failed to notice the down grade of our credit rating the last time those clowns threatened the debt ceiling.

No, Ron. He's an idiot. An old idiot. An old disabled idiot. An old disabled idiot that did very poorly in economics. And you should stop replying to the Hemorrhoid.

DWIA, The 2011 debt ceiling crisis raised the deficit by 19 billion dollars.

This by the party who is sooooo worried about the deficit.

And we didn't even default that time. We'd better not play with that baby again. Chambliss belongs in jail. Oh, ......wait......being an idiot isn't a crime.

In this case, it could be. It very well could be.

The republicans aren't worried about spending or the deficit, they want to get their hands on and destroy SS and Medicare. They want to fund the DOD at levels higher than DOD wants. There are so many ways to cut spending, one is to cut tobacco subsidies. There are many more subsidies that we don't need.

In my opinion Chambliss is not a nice person.

Take a look at this HuffPo article. In it, you will see something curious. Sen. Chuck Grassley (R-Iowa) and Reagan/HW Bush advisor Bruce Bartlett argue that the President should respond to the debt ceiling threat with the 14th amendment option, which requires that the debt of the United States not be questioned. So is the 14th amendment option some sort of GOP trap? Opposing the argument is none other than Barney Frank. Barney's point was that using the 14th amendment would allow GOP representatives to avoid the consequences of their irresponsibility.

Today, this is the essence of the progressive political argument against use of the 14th amendment. "By gawd they will pay for it in 2014"- or such is the fantasy that is being peddled.

Why is it a fantasy? Look at the date of the article: 7/7/2011. How many GOP congresspersons were ejected from congress in the 2012 elections over their handling of the debt ceiling?

Zero.

The administration has already said (months ago) that the 14th Amendment option was not constitutionally sound.

Obama will never use the 14th Amendment option because that would take two things he doesn't have in order to accomplish: balls and a backbone.

John Messerly,#5.1

ZERO? you are really scaring me.

Now the T-Party has a hostage they can't shoot, get paid for, or set free:

Us.

Obama will ignore Boehner's refusal to raise the debt limit. Congress will let it run to the 11th hour and be surprised when the Bankers not only does not lean on the republicans, they give them a wink and a nod.

At this point it will dawn on Obama that Wall Street is interested in the profits they will receive due to a damaged US credit rating and the consequent higher interest rates bankers will receive.

After getting over his shock at Wall Street's cynical self interest over patriotism, he will use the 14th.

Just as Reid, Pelosi, and Clinton are urging him to do.

-----

PS: Fr: re-read the Carney statements about the White House position. There is plenty of room for reversing. He can say the White house lawyers gave the best advice they had and didn't see a strong legal argument but have since come to the conclusion that... etc etc. The President has not himself ruled out the 14th- he has only stated "I have talked to my lawyers... [and] they are not persuaded that that is a winning argument.” Plenty of wiggle room there.

India: I watched quite a number of congressional races- mostly swing type elections where you would think the behavior on the debt ceiling vote would play a decisive factor. It barely registered as an issue. So my opinion is based on anecdotal experience rather than a comprehensive study. I would find such a study very interesting, but I am not sure that the necessary polling data was collected, so perhaps it is impossible to make firm conclusions.

Obama had better spare the country and the world from this disaster they want to inflict on us. I was looking at the fourth article of the 14th amendment a bit ago, and am pretty certain he could do that.

With a host of Saxby Chamblisses out there governing this country, he'd better do something. The last debacle raised the deficit by 19 billion dollars just because we looked so disfunctional. We didn't even default.

This time, if we default, that will look like a walk in the park. Check out the five things Ezra Klein found out about what will happen this time.

How are you going to be hurt?

Shooter, you do realize that US Government paper underlies the entire world economy? The promise that the US Government will pay its bills is vital to everybody who doesn't live on a self sustaining farm.

Shooter-

well, in my case, should the GOP 'get their way', I won't get a Veteran pension and my roommate might lose her SSI (bad knees, 22 years working in a hospital). Between us, we barely get by now. My brother-in-law is a DOD scientist w/24 years.. he deeply sweats these proposed cuts.

Yes, Shooter, the GOP hurts 'real' Americans every chance they get.

We are extremely annoyed that the GOP holds up our ONLY INCOME as hostage every darn time they want to 'get back' at our President.

It's shameful....

As I pointed out in another comment today, the primary reason for declaring "nationhood" for an otherwise disparate group of people is for the purpose of borrowing money. In fact, borrowing money to be used for providing for the common good (infrastructure projects) and defending its borders ought to be seen as a hallmark of fiscal soundness and power, rather than an inability to handle money responsibly as it is now represented. Think about Alexander Hamilton and the Federalist Papers.

Our good credit is probably the single most valuable asset of the United States, and threatening to spoil it is maybe a more serious crime than anyone has mentioned so far. Hm. . . .

JL, People are still blissfully unaware of the consequences of not raising the debt ceiling. Especially those in Boehner's caucus.

I just hope they find out in time to spare the country and its people. Not to mention the global economy. They're walking on the razor's edge and don't realize it.

It is congress's responsibility to raise the debt ceiling, they were to ones to start it and they appropriate the money. What would really help is to have a line item veto.

Saxby Chambliss, the lying product of too many Georgia hillbillies fornicating too many sheep, the sack of crap draft dodger who went after Max Cleland as a "traitor" in 2002. It's too damn bad white people were left alive in Georgia in 1864.

No, Ron. He won't. He won his last election 57% to 43%. Like most Republicans, he's more worried about a primary challenge from the right. He also knows that most Americans have a very foggy understanding of how policy is made and what powers different elected offices possess, but that they know the name and party of the President very well. He understands that most Americans think that if things suck in the country, it must be because that's how the President wants it, and they will pull the lever for the opposition.

The nuances of global finance are complex and opaque. 'Obama ruined the economy with his socialism to give your money to lazy brown people' is simple and easily grasped. I guarantee you that if we default, the right will carpet-bomb the country with that message, and I guarantee that it will be the Democrats who get blamed.

The teapubs are too stupid to know that SS doesn't have anything to do with the debt. They only know that people get checks. If it doesn't affect them, they don't care. They see the people on SS as moochers, taking something away from THEM even if its not true. Also, the republicans have been gunning for SS since its inception in the 1930's.

Because everyone is aware that at a certain point, SS will no longer be self sustainable and will have to incur debt in order to pay retirees. If we are looking at getting our fiscal house in order, we need to look at how to keep SS sustainable over time.

If we are looking at getting our fiscal house in order, we need to look at how to keep SS sustainable over time.

Lift the cap, wait for Boomers to die. We've already known this solution and it's been proposed time after time. Lifting the cap will fund the program for the next 80 years and by then the Boomers will have died the program will no longer be in danger of running a deficit. That's all you have to do. That's it. Republicans refuse to acknowledge this solution because it doesn't get them closer to their ultimate goal of eliminating the New Deal programs and thus we keep pretending like there's some complicated solution to this when there isn't one.

You're assuming that the GOP see themselves as servants to the public. That would be incorrect, they see themselves as Roman patricians, free to act as they like because they have money and power and cronies who need favors in return for more of the first two. Any consequences of their actions will be roundly blamed on anyone but themselves, especially since they have a news outlet to blare their innocence loudly to the heavens.

Yes mp Pres.Obama cut 716 bil. from medicare via the AHCA and the repubs blasted him for it. It was a big reason why repubs did so well in the 2010 midterms. But the gutless wonders wo'nt tell us where they want cuts from medicare now. What a bunch of chicken shi*s.

The difference is that Obama wasn't cutting seniors' benefits. He was reducing payments within the medical system--though that certainly affects many doctors and other employees within that system.

Republicans want to cut the BENEFITS. That's a whole different discussion.

Why does a scene from Footloose suddenly come to mind?

The congress did the spending. It was they who authorized it. The debt ceiling pays for what CONGRESS authorized.

Congress does not spend money. The Executive Branch spends money, through the US Treasury. Congress authorizes expenditures.

And passes the bills that then must have funding. And allocates how much funding must go to each area. Heh.

Stupidity explains it pretty well for me.

Too many people are willing to dismiss the raw malice of the right as "stupidity" or suchlike.

I'll be happy to add racism to stupidity and ignorance.

OK, add hatred....Oh, and projection.

How's your blood pressure? Gotta watch that.

Not to mention, Congress approving 3 wars, 2 tax cuts and a prescription plan for seniors that were all kept off the books illegally, only to be acknowledged by the new black guy in office, so Republicans can blame it all on him...

Hey, moron, 1994 was a budget battle that didn't have anything to do with the entire world economy. Go back to fornicating sheep in WackoWorld, turdbrain, it's what you're good at.

William Star, You couldn't be more ignorant of the facts. It will be a disaster, even for you, if we default. It will be a GLOBAL disaster and may be irreversible as all these payments are now computerized a certain way, and may not be able to be paid after they are not paid, if you follow me. The computers may not be able to function properly. There are not a lot of bureaucrats sitting at tidy little desks writing out these millions of checks.

It is the height of idiocy to do this. It is tragic and unbelievable that they would be stupid enough to WANT to do it.

And no one in the government can make you buy insurance from Aetna.

And no one in the government can legislate against stupidity, as is abundantly clear from your comment and from the people who want to prevent the debt ceiling from being raised.

Dixon,#23

Or the terminator.

We aren't repeatedly borrowing 40 cents for every 1 dollar. You're confusing the state of money that has already been borrowed for services already rendered or promised to be rendered with the idea of continual funding. The two are not the same. The debt ceiling doesn't contribute to the continuation of funding money already committed. You are also aware that you could cut spending 100% now and you would still have to raise the debt ceiling in the future, yeah? The two aren't directly correlated in the way that you are thinking they are correlated. Whether we spend too much or too little, whether we are running a surplus or no surplus, does not directly contribute on whether or not we will have to raise the debt ceiling in the future.

Sorry, you can't have your cake and eat it, too!

Yes, programs can be cancelled and monies authorized to be spent can instead be sequestered. To do that however, would mean that Republican Representatives, a controlling majority in the current House, would have to meet in their committees and decide which programs/funding to cut, then announce those cuts to the public and finally create legislation to enact those cuts.

So tell me, who are the Republicans in the House who have proposed exactly which programs/funding are to be cut/reduced, because I haven't heard diddly squat!