What do you guys think about the current problem of the debt ceiling?

Pretty much every economist, academic, whoever, has said that there will be catastrophic consequences if we don't raise the debt ceiling (supposedly by October 18). From Powell to Yellen, it seems to be the universal consensus.

Recently, Republicans have been blocking measures in the senate to raise the debt ceiling. As a conservative, this makes me somewhat uncomfortable because I feel like the consequences of defaulting would be catastrophic, as Brofessor literally just said in another thread today. Even McConnell earlier this year said that "America must never default". So why are we blocking this measure. Yeah, I get that democrats are spending money on BS and that eventually we need to come to terms with debt, but I feel like this is the wrong way to go about it, and many republican lawmakers agree as well. So why are we doing this? What's our strategy here? Would love to hear some other conservative opinions in this thread.

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Comments (100)

Most Helpful
Sep 28, 2021 - 5:34pm

The strategy on both sides is to use the debt ceiling standoff to try to make the other side look bad. It's a farce, and everyone participating (i.e. essentially all of congress) by not eliminating the debt ceiling altogether is sacrificing the good of their country for cheap political points. 

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  • Analyst 1 in IB - Gen
Oct 4, 2021 - 4:18pm

Buying more that's what I'm doing. It'll come back maybe not tomorrow. But it will eventually. I'm guaranteed money and before long I will be like that research analyst guy on here.

  • Intern in IB-M&A
Oct 5, 2021 - 5:36pm

I am also a tech bull, but it'll be a tough few months for tech stocks if there is serious inflation, because it'll affects the value of dollars in the future. Expect to see value stocks outperform for most of this year.

Sep 28, 2021 - 6:02pm

I'm not going to pretend I know the full extent of the data, but I was talking about this in passing with one of my former econ professors who is a lot more left-leaning than I am, and he said that the US is one of few nations that actually has a debt ceiling, at least one set up this way. Makes sense but I didn't know that.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

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Sep 28, 2021 - 6:09pm

COVID has shown that 600k dead, mostly their own voters, isn't enough to make the republicans care.  (Trumps best counties had nearly 5x COVID deaths per capita vs his worst)

https://www.google.com/amp/s/www.marketwatch.com/amp/story/red-covid-co…

Now the default could kill 5 million jobs and wipe out trillions in debt.  Republicans don't care.  They just want to own the libs.  Never vote Republican again.  I know it may hurt because of the radical left and all the cultural baggage but it's for the better 

Sep 29, 2021 - 6:59pm

Fuck, it's 693k, I need to update my numbers.  That's bleak.  Anyways, I'm an optimist and I really hope they'll see what's going on and do the right thing, it's just so depressing the amount of death in this country.

Sep 29, 2021 - 11:14pm

You know that counties that vote more than 70% for Trump are low population counties right...

So even if the death per 100,000 is higher, the absolute number of deaths is lower compared to very liberal populous counties.

Array

Sep 29, 2021 - 11:08pm

I literally pointed out in the other thread how that data was cherry picked and present many well known populous counties that that 32% benchmark conveniently avoids, and not only did you not respond but you continue to push this stat across.

To the point of the debt ceiling, this is political theatre that literally happens every year and then something gets resolved. The MSM might be devoting a bit more coverage to this since there's nothing positive to say about Biden (and Trump is gone), but this issue will end up being resolved.

Also worth noting that those jobs aren't killed, they would be furloughed until the funding comes and again these politicians aren't dumb enough to not get that funding to come.

Array

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Sep 30, 2021 - 11:47am

You do know that anyone who dies for any reason who has any kind of covid in their system is tagged as having died with covid and is included into the count.  This includes vaccinated individuals who get hit by a car who have never had covid.  Just saying.  You might want to look at how the numbers are collected. 

Oct 4, 2021 - 5:40pm

PEarbitrage

You do know that anyone who dies for any reason who has any kind of covid in their system is tagged as having died with covid and is included into the count.  This includes vaccinated individuals who get hit by a car who have never had covid.  Just saying.  You might want to look at how the numbers are collected. 

Please cite.  

  • VP in PE - LBOs
Sep 28, 2021 - 10:28pm

As a fellow conservative, gonna be honest, our legislators are basically holding the debt ceiling hostage to make the dems look bad as long as possible. Just modern politics folks.

Sep 29, 2021 - 11:16pm

I don't think it does. I remember in previous years the same type of doom and gloom was predicted and then everything ended up being fine. Only difference is the MSM has nothing else to cover with Trump gone (and Biden's accomplishments are well...), so there is probably more emphasis on this as the news story.

Array

Sep 29, 2021 - 4:38pm

It has never happened and it is not going to happen. 

Oct 4, 2021 - 5:55pm

trustmeimanengineer

Both parties suck. Holding the debt ceiling hostage sucks. Democrats 3.5T bill sucks. Idk. I get it from both angles

Wait... do you seriously think these are equally egregious actions?  One of these is proposed legislation that is open to comment and compromise and the other is a refusal to meet pre-existing obligations... and the country's inability to do that is due in large part to previous Republican-led legislative efforts (not all, of course, merely saying that this isn't a "Democrats spend and Republicans pay for it!" situation).

The fact that you think this is a "both sides" issue is exactly why we can't have nice things anymore.  This kind of false equivalence is murdering public discourse.  Of course there is both a practical and ethical difference in, to use your words, "holding the debt ceiling hostage" in order to scotch legislation that a majority of Americans are in support of, instead of actually engaging in the legislative process (you know, Mr McConnell's actual job).  Same thing happened with the Affordable Care Act - Democrats actually bother to work towards bipartisan legislation, which the American right refuses to engage with in bad faith.  And when the shoe is on the other foot, Republicans ram through legislation in the most egregious manner and then claim Democrats are obstructing the political process.

Oct 5, 2021 - 8:48am

If you think the country's problem are because of Republican-led legislative efforts.... oh boy. Do I have some oceanfront property in Oklahoma to sell you! You just continue pushing your party line blaming Republicans for the horror of existing. Democrats are just as disgusting. If you can't see that, then you're just a moron

Sep 30, 2021 - 11:48am

People don't seem to realize that not raising the debt ceiling doesn't equal a debt default.  It just limits the amount of deficit spending.  To have a true default you need to you know actually default on an interest payment. 

  • Associate 2 in PE - Other
Oct 1, 2021 - 6:18pm

We haven't had a balanced budget since Clinton - unless we can walk back to that, then hitting the debt ceiling is functionally equivalent, because we won't be able to deficit spend to service the debt.

Oct 1, 2021 - 6:21pm

No again, you do not seem to understand that the national debt and the current liabilities are not the same thing.   They are both a bad look, but the government still brings in well over a trillion dollars per year in tax revenues and they can easily float the interest payments on that.  Not paying other obligations will casue issues but it is not a debt default.  

Oct 1, 2021 - 7:29pm

We haven't had a balanced budget since Clinton - unless we can walk back to that, then hitting the debt ceiling is functionally equivalent, because we won't be able to deficit spend to service the debt.

Yeah, if you do not pay interest or do not repay principal on debt outstanding, it is called default. None of this is going to happen, though. 

Oct 6, 2021 - 12:36pm

Paying down the debt? 0%.  Servicing the debt? Well that depends on what the debt service is for that time period.  According to the FY 2021 budget the debt service is 378B, per month that would be 31.5B.  So that is comfortably within the tax recipets for that period.  However, much of the other government spending would be either not paid out or significantly reduced.   It is the follow on effects from entitlements and human capital costs that are the real problem.  Those can create significant default risk for the those receiving those payments.  

  • Analyst 1 in Research - FI
Oct 1, 2021 - 1:35pm

Correct me if I'm wrong but isn't there a limited amount of times that reconciliation measures can be used? Dems already used it once to pass the Covid-19 bill earlier this year and want to use it again to pass the $3.5 trillion package. So it seems that the conservatives strategy is to force the dems hand by either using reconciliation on the $3.5 trillion package or raising/suspending the debt ceiling. Conservatives hopes is to delay the dems from passing the $3.5 trillion until 2022 which is an election year. But like comments above it's definitely a political play and a risky hill to die on imo.

Oct 1, 2021 - 6:24pm

That is likely to get removed from the bill.  The reconciliation bill is jam packed with shit that violates the rules of what can be done in reconciliation.  The whole thing is a moot discussion and both sides are playing pure politics to try and make the other side look bad. 

Oct 1, 2021 - 1:58pm

We will raise the debt ceiling, we will continue to service our debts (notice I did not say pay our debts) and this will pass, coming up again probably pretty quickly at the rate we are spending. 

It's a great example of a decent high minded idea - a nuclear option, if you will, to void irrational increases in spending with no ability to control it - but one that in practice is simply a pointless, handwringing charade as another poster indicated is quite embarrassing at this point. 

I am no fan of massive government spending, but it is beyond shameful that we are passing trillions of dollars and thousands of pages of spending with absolutely no real accounting for where or what it will go to. I'm part of the problem, as I've not read it but it's insane. Ceilings like this are at least an attempt to force us to stare into the mirror - one that really doesn't work with consequences so dire at this point no one would dare actually let it happen. 

TLDR - wake me up in December at S&P 5k to ring in the new year. 

  • Associate 2 in PE - Other
Oct 1, 2021 - 6:16pm

It's like playing chicken with a nuclear-armed opponent. Sure, we hope that everyone is rationale enough that MAD is a deterrent, but if that barrier fails even once, the brinksmanship will push us over the edge. We shouldn't have to threaten the collapse of the global financial system to compromise on spending

Oct 4, 2021 - 2:54pm

Know you are getting old when you see the younger generation freak out about things that have been happening for decades.

The more things change the more they stay the same. Keep calm and carry on lol

Oct 4, 2021 - 4:50pm

MonkeyNoise

Know you are getting old when you see the younger generation freak out about things that have been happening for decades.

The more things change the more they stay the same. Keep calm and carry on lol

Except this type of mindset is precisely what will lead to an accidental default one day. The law of large numbers dictates that if you run to the edge of a cliff enough times, eventually you will accidentally slip and fall over. 

Regardless of how minute the probability is of defaulting, the disproportionately grave consequences of doing so still make this issue a big deal, and human error, however small, is still a possibility. 

Oct 4, 2021 - 7:55pm

I don't think it fundamentally matters. America is so far gone that we can't even begin to right things for future generations (I'll expect we'll start seeing emigration from the United States in the future). Might as well just run it up as far as we can and enjoy the music before it stops. 

In the meantime, our debt limit fundamentally doesn't matter as long as our military is capable of upholding the neoliberal order (because assuming people want to collect on our debt, what are they gonna do about it when we can just bomb them?). Granted, once images of US carriers being sunk to the bottom of the sea by Chinese surface-to-air missiles start making front-page news this will all be called into question. But that won't happen until like 2035 or something, and by then it won't even matter.

"Work ethic, work ethic" - Vince Vaughn

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Oct 4, 2021 - 9:50pm

This guy is a right wing nationalist, and he uses the typical "America's going to collapse" rhetoric that they always use in order to take power.  But what do right wing nationalists do when they get to power?  Run the country into the fucking ground.  

The answer is to vote out him, and anyone like him who jerk off about collapse.  The only thing holding America back is the right wing.  Yes, there are crazies on the left, and I don't support AOC.  But they're the ones who will cause tens of millions of jobs to be lost to own the libs with the debt ceiling.  They're the ones killing their own base with with anti-vaccine propaganda to own the libs.  They're the ones stopping infrastructure and education from being funded in this country.  They're the ones who made a massive tax cut that somehow ended up raising middle class taxes especially people in HCOL areas. 

I know the whole social justice thing is a little off putting to many but why would anyone support a right winger?

Oct 4, 2021 - 10:03pm

It wasn't "right-wing nationalists" who started an unjustifiable global war on terror, enacted an unconstitutional surveillance state, sent income inequality to third world levels, got half the country hooked on opioids, and nearly started World War III against Russia.

The decline of America is entirely the fault of the neoliberal establishment that has been running the country for the past 70 years. Right-wing nationalists have not seriously held power in this country since Andrew Jackson. We didn't outsource the jobs, militarize the police, increase the divorce and suicide rates, nor turn America into an international bully.

And no, George W. Bush is not a "right-wing nationalist". He is an internationalist warmongering neocon who has more in common with fellow warmongers like Biden and Clinton than he does with any "nationalist".

"Work ethic, work ethic" - Vince Vaughn

  • 1
Oct 5, 2021 - 9:50am

I think you're wrong, while our military is important and powerful in that we can uphold international law.  Making people accountable for upholding trade agreements, just like when we seized an Argentine cruiser after they defaulted on their debt.  For any of the nuclear powers, we are engaged in an economic war.

Oct 5, 2021 - 1:12pm

These GOP Senators voted 50-1 to pass the 2017 tax cut that added $2 trillion to the national debt. The US is still on the hook for that. Now the bills are coming due and they are refusing to pay them. Like clockwork, Republicans only care about fiscal responsibility when Democrats are in power.

Sen. Collins just proposed that the Republicans MIGHT agree to raise the debt ceiling if....Democrats agree to drop their entire $3.5B legislative spending proposal. (!!!)

The GOP's outright distain for, and self-sabotage of government is tyrannical. I don't know how any unbiased adult could continue to support what the party has become.

"I don't know how to explain to you that you should care about other people."

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Oct 5, 2021 - 2:14pm

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"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Oct 6, 2021 - 12:54pm

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