Debt ceiling - what are they thinking

[jeff eelkema]

Sitting on the other side of world I'm intrigued by the saga of your political standoff over the debt ceiling. I'm not interested in the merits or otherwise of tax cuts vs spending cuts vs tax increases etc.

What I would like is an insight into the strategy behind the brinkmanship currently on display. Given that every President from Regan onwards has basically doubled the national debt, it would appear both sides are guilty of creating the problem. So you have a problem that needs solving and you have a Presidental election next year where people can decide who has the best longer term solution.

The whole world is just recovering from the GFC and a default in the US is likely to have significant global impact as well as downgrading the US credit rating. You need to raise the debt ceiling by next week or you default. So I'm wondering why, from a politcal strategy point of view, would any politician risk so much just to score a political or ideological point?

I follow our local politics closely and enjoy what I call "intellectual sport" but I'm really having trouble getting my head around the game being played in the US.

regards

[advtracing]

The're just making obama sweat to the 11th hour and then do the deal . politics ......who invented it

[Bullethead]

Jeff, just as in other societies, the United States is host to ideological struggles that involve money or power or cultural purity. To make sense of the political brinksmanship being played in the US, one needs to connect a series of dots going back several decades. A study of that confluence of money, power and cultural identity illustrates how such a large percentage of Americans have been inculcated with beliefs directly contrary to their collective interests. The result is what passes for our general electorate... and since money is what drives political careers, pandering rather than statesmanship prevails.

Part of that false narrative has been to connect the "debt ceiling" with the general budget. But it is somewhat complicated and since people in general can be easily distracted and (for Americans in particular) demand immediate gratification, attempts to educate the public of how our (and the world's) economy actually functions are drowned out by juicier confrontations and fodder for the world-wide 24/7 infotainment news machine. Witness recent hand-wringing comparisons with Greece... but little grasp of it's root problems, or potentially more serious issues with Italy, and the rest of Europe.

Politically, the unintelligable machinations of a small group recently brought to power here will undo them. It's highly unlikely they'll succeed in capping the US debt ceiling, bonds and faith in US credit will stabilize, and slowly... very slowly we and the rest of the world will drag ourselves out of this economic morass. The alternative is unthinkably chilling.

[jeff eelkema]

Thanks Russ

I understand the issue of money and power etc and ill-informed electorates. I also have a reasonable grasp of economics. I have just been rather surprised by the level of brinkmanship given the situation. We get to see the "expert" commentators on TV but there seems to be little coverage of what the average or interested American thinks of the whole situation, hence this thread. I just like to understand how the world works and we get to see bits of news from all over the world but it's sometimes diffcult to understand the local political games or how they are played. Your guys/gals seem to play hard ball!

I can't help but conclude that some legislators are so obsessed with their own ideology that they are prepared to significantly damage the entire western world's economies. Political point scoring is one thing but wrecking the economy in the process seems like madness. Chilling indeed!

cheers

[peekaboo]

It's all theater. In the meantime a distraction from the wars...and some other BS I hear their working on in the back rooms other than this debt (watch this hand......while the other is up to no good). NOTHING that is released in the news is accurate (what it is said to be).

I don't think the date everyone is talking of is even accurate. More like the date they want to leave for vacation.

[jeff eelkema]

I don't rely on the media, particularly News corp and don't rely on what politicians say. BUT, the issue is generating lots of global discussion and most markets have fallen signifciantly this week largely due to uncertainty. I also haven't heard a single international economist suggest that this isn't a real issue or that the date isn't real. Money talks and billions have been lost! This certainly isn't inspiring confidence.

The only upside is our $ is at 30 year highs against the greenback. I need to order more stuff!

[PeterM1965]

What makes this rise in the debt ceiling different is the fact that it is now pushing at the GNP of the United States. Government spending while always profligate has become ruinously so.

Also a significant number of new congressmen owe their seats to constituents who believe in smaller government and no deficit spending.

It also seems that while there have always been idealogues in both parties, they are now the leadership rather than the fringe. This has lead to a worsening in political discourse both in Washington and around the nation.

One thing is for certain. Government needs to stop spending like a bunch of drunken sailors.

[advtracing]

The only upside is our $ is at 30 year highs against the greenback. I need to order more stuff!

+1 to that

[Dmill]

+1 for Russ...That is about as eloquent a way to present the current stalemate as I have read and cudos to you for doing so without lighting a fuse on either side. Living in the Nations Capital, we live with these power struggles every day, this one is just a little bigger than most.

[Chuck Miller]

Gentlemen,

My complements on this apartisan informative conversation ...to an extremely frustrating and timely issue……