January 31, 2011

Pat Toomey: Hey, I've Got A Good Idea. Let's Not Raise the Debt Limit But Specify That Interest on Debt Must be Paid First, So We Don't Default.
— Ace

Secondary benefit: Since our expenditures would be capped, but money would be directed to keep payments up, this would force reductions in government spending. Like, we've only got a thousand bucks, and we're not raising the limit up to 1200, but we've got 500 due in debt payments and 700 in planned spending. If we force the 500 in debt payments to come first, that 700 in planned spending must be reduced to 500 to stay under the $1000 cap.

Possible? Yes. Likely? Probably not, but it's a good option to have on the table, because the Tax and Spenders can't throw the "but we'll default and it will cause world financial chaos" line at us.

"I think it is a dreadful idea," Sen. Kent Conrad (D-ND) told National Journal.

I have a feeling that Kent Conrad calling it a dreadful idea counts as a virtue among readers here.

Conrad spins out the liberal rebuttal, that this plan is a "Pay China first" plan and what about the American people who need high-speed rail? Are you really so unamerican as to pay the Chinese first?

Posted by: Ace at 08:44 AM | Comments (83)
Post contains 241 words, total size 1 kb.

1 Ace wrote:

I have a feeling that Kent Conrad calling it a dreadful idea counts as a virtue among readers here.

Ayup.

Posted by: Rod Graves at January 31, 2011 08:46 AM (mKMj1)

2 Paying debts?
Sounds old fashioned and reactionary.

Posted by: fb at January 31, 2011 08:47 AM (G60Nl)

3 I think threats to not raise the debt ceiling are just posturing. If I think that just think what all the squishes think.

Posted by: Vic at January 31, 2011 08:48 AM (M9Ie6)

4

In other words, why doesn't Congress cut up its credit card and limit spending to revenues minus interest payments?

This is kind of like saying, "If we had some bacon, we could have bacon and eggs, if we had some eggs."  If Congress had a sense of fiscal responsiblity, they could adopt a fiscally responsible policy, if they wanted to be fiscally responsible.

But they don't, and they don't.

Posted by: stuiec at January 31, 2011 08:49 AM (Di3Im)

5

I have a feeling that Kent Conrad calling it a dreadful idea counts as a virtue among readers here.

Heh.  That was exactly my first thought...although I phrased it a little more like "well if that dumbass doesn't like it, it might be a good idea."

Posted by: NC Ref at January 31, 2011 08:50 AM (/izg2)

6

"I think it is a dreadful idea," Sen. Kent Conrad (D-ND) told National Journal

Thank god he felt the same way about running for re-election

Posted by: Ben at January 31, 2011 08:51 AM (wuv1c)

7

 Are you really so unamerican as to pay the Chinese first?

Answer: Why the hell did you borrow the money from the Chinese in the first place?

Posted by: Ghost of Lee Atwater at January 31, 2011 08:51 AM (JxMoP)

8 I read about this some time ago, but I don't  remember if it was Toomey who advanced the idea then.

The idea, as I heard it, was "We don't want to do this, but it is our starting position, and if you don't give up something, we'll stick to it."  Even its proponent at the time was saying "this would be very, very bad.  It would just be less bad than an absolute default."

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 08:51 AM (8y9MW)

9 Why would the democrats go for this? And if they won't, isn't it just a gimmick? (a gimmick unlike repealing Obamacare since people understand that issue)

Posted by: Dr Spank at January 31, 2011 08:51 AM (45DBC)

10 Hey -- we owe the Chinese a shitload of money, and if we are ethical, we ought to be paying them off first before we run up any more debt. What the Donks are basically saying is that we should try really hard to screw our creditors because, hey, they're foreign yellow devils. Yet somehow we're the racists and they're not.

Posted by: Monty at January 31, 2011 08:51 AM (4Pleu)

11

"Conrad spins out the liberal rebuttal, that 'this plan is a "Pay China first" plan and what about the American people who need high-speed rail? Are you really so unamerican as to pay the Chinese first?'"

The counter to that is, "Are you suggesting that we should not pay the interest on our debt as a means of not running up more debt, or are you just saying it's fine to run up more debt?"

Posted by: stuiec at January 31, 2011 08:52 AM (Di3Im)

12 Pay creditors first to avoid default?? But we can't, that wrecks the bipartisan narrative. This is a radically radical idea.  No wonder Bush and Rove tried to keep Toomey out of the Senate.

Posted by: louis tully at January 31, 2011 08:52 AM (K/USr)

13 I love the my new Senator already, .

Here's a novel way to reduce spending on nonsense.  It is (or it used to be) American to pay off your debts. 

Posted by: Kratos (Ghost of Sparta) at January 31, 2011 08:53 AM (9hSKh)

14 Posted by: stuiec at January 31, 2011 01:52 PM (Di3Im)

And his likely response?  "Yes."

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 08:53 AM (8y9MW)

15 Sounds a lot like a 'lockbox' and a 'trust fund'.

Posted by: t-bird at January 31, 2011 08:53 AM (FcR7P)

16

Hahahahaha

Miss me yet?

Posted by: Arlen Specter at January 31, 2011 08:53 AM (K/USr)

17 So borrowing the money from the fucking ChiComs in the first place wasn't such a great idea? We're paying them anyway you fucking douchenozzle!

Posted by: catmman at January 31, 2011 08:53 AM (DTzwU)

18 Posted by: Kratos (Ghost of Sparta) at January 31, 2011 01:53 PM (9hSKh)

Yeah, but if it hadn't already changed, the Bailout mania of 2008/9 changed that.

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 08:54 AM (8y9MW)

19 Yeah, my 1st thought was lockbox.

Posted by: Dr Spank at January 31, 2011 08:54 AM (45DBC)

20 O/T:  nothing like "fanning the fire"

Posted by: curious at January 31, 2011 08:54 AM (p302b)

21

O/T - to the morons that think they're worthy...

Eva Longoria Parker is officially back on the market.

Posted by: laceyunderalls at January 31, 2011 08:55 AM (pLTLS)

22 Do the Chinese have Batman? I'm thinking he should nab this guy and try him in China for theft. What else do you call a proposal to borrow and then not pay it back?

Posted by: Zimriel at January 31, 2011 08:56 AM (3Z8hd)

23 Kent Conrad is the George Costanza of politics; if he thinks something is wrong, by definition it's right

Posted by: Captain Hate at January 31, 2011 08:56 AM (olKiY)

24 Every time someone mentions China and "they hold so much of our debt" I want to smack people around.  China holds about 6.4% of our debt.  More than 65% is held by U.S. citizens.  This is assuming a total debt of 14 trillion dollars.

Japan and the U.K. combined hold more of our debt than China.

I tried to put in a hyperlink to my source but the frelling editor was too much of a pain in the fucking ass about it.

Posted by: cranky-d at January 31, 2011 08:57 AM (mfszm)

25 I can't wait for the high speed rails. Think of all those trips to Boston I won't be able to afford in a few years. Huzzah funemployment!

Posted by: Techie at January 31, 2011 08:58 AM (PAlxT)

26

Eh...sounds like my mortgage. The banks get all their interest money before much principle gets applied. Like your home's equity you have to be careful not to borrow against it too much. Does any moron here really think the pols. can control their urge to borrow against our house again and again and never pay off the principle?

 

  

Posted by: dananjcon at January 31, 2011 08:58 AM (pr+up)

27 O/T: nothing like "fanning the fire" ... "groups are organizing on Facebook" What's the deal with Facebook lately? At least now we know why it was so prominent in the SOTU and the Pres'ent's demands of Egypt.

Posted by: t-bird at January 31, 2011 08:58 AM (FcR7P)

28 Kent Conrad is the George Costanza of politics; if he thinks something is wrong, by definition it's right I was in the pool!!!

Posted by: Sen. Kent Conrad at January 31, 2011 08:59 AM (4Kl5M)

29 Democrats believe that if you don't your debts no one is hurt. Visa bill too high? Don't pay it. Don't like that mortgage? Default. Democrats do not understand the basic economic principles upon which capitalism is built.

Posted by: Dr Spank at January 31, 2011 09:00 AM (45DBC)

30 Congress is just going to spend what they spend anyways. Whether they pay the interest first, or for entitlements first, come the end of the year, they'll still just borrow the difference from China.

Posted by: t-bird at January 31, 2011 09:00 AM (FcR7P)

31 Eva Longoria Parker is officially back on the market. This news sets my slacks all afluster. My restraining order prevents me from appealing to her in person, but could you perhaps put in a good word for me?

Posted by: Monty at January 31, 2011 09:00 AM (4Pleu)

32 So can we sell high-speed rails to the chinese? We could wipe out the deficit that way! Just like we did it in Scranton. Or Wilmington. Or was it Rehoboth?

Posted by: Sheriff Joe, sooooper genius at January 31, 2011 09:01 AM (RD7QR)

33 because the Tax and Spenders can't throw the "but we'll default and it will cause world financial chaos" line at us.

Sounds like you're referring to that weeping SOB Boehner.

Posted by: Barbarian at January 31, 2011 09:01 AM (EL+OC)

34

Even its proponent at the time was saying "this would be very, very bad.  It would just be less bad than an absolute default."

Can you recall his reasoning for that? About the only thing I can think of would be significant and immediate decreases in government spending and the debates battles over what to cut.

Posted by: Ghost of Lee Atwater at January 31, 2011 09:01 AM (JxMoP)

35

Since Democrats are corrupt socialist economic idiots, I say we do whatever it takes to get our nation back on its feet, pay our debts, reform our unfunded entitlement saftey nets with actual reform, and kill Obamacare.

Dang - with democrats still in control that will be next to impossible.

 

Possible? Yes. Likely? Probably not, but it's a good option to have on the table, because the Tax and Spenders can't throw the "but we'll default and it will cause world financial chaos" line at us.

I like the idea.  oh and - Kent Conrad(D-loser)- you're a dumbass.  Get lost.

Posted by: Lemon Kitten at January 31, 2011 09:01 AM (0fzsA)

36 And his likely response?  "Yes."

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 01:53 PM (8y9MW)

Yes to both, sadly.

Posted by: stuiec at January 31, 2011 09:02 AM (Di3Im)

37 cranky-d: And whether China is our biggest creditor or not depends on whether you include our trade-balance or not. In the strictest terms, you are right: China holds less bond debt in aggregate than other foreigners do. But they are the largest single holder (IIRC), and if you include the trade deficit, the contest isn't even close. (And I argue that the trade deficit does matter because it still involves "value" as expressed in real resources and capital, and thus is still "debt" in that sense.)

Posted by: Monty at January 31, 2011 09:03 AM (4Pleu)

38 21 O/T - to the morons that think they're worthy...

Eva Longoria Parker is officially back on the market.

Uh, let me think about it...pass.  Eva is definitely a Geyser of Decadence.

btw Sen. Conrad, do you really want to keep giving the Chinese the capital they need to build up their military for a confrontation with Taiwan and intimate the Pacific Rim? 

/Maybe I don't want to know Kent's answer to that.


Posted by: Kratos (Ghost of Sparta) at January 31, 2011 09:04 AM (9hSKh)

39 Who owns US debt? We do.

Posted by: Dr Spank at January 31, 2011 09:04 AM (45DBC)

40 I see hats are out and the cars look different. But still all this talk about how to get out of debt.

Posted by: rip van winkle at January 31, 2011 09:05 AM (fVwV8)

41 intimate = intimidate.

Ugh, I blame Eva's aura of decadence for my dearth of spelling skillz. 

Posted by: Kratos (Ghost of Sparta) at January 31, 2011 09:06 AM (9hSKh)

42 That would put some teeth in the Kabuki debt ceiling in a hurry now, wouldn't it?

Good on Senator Toomey (can't type that enough) for pointing out the false choice offered by the "raise the debt ceiling or default" crowd.

Posted by: Andy at January 31, 2011 09:06 AM (5Rurq)

43 Posted by: cranky-d at January 31, 2011 01:57 PM (mfszm)

Yeah...  difference being Japan and England don't hate us.  Presumably neither do our own citizens.  So defaulting to any of those groups is bad, but it could be worse.  How could it be worse?  By defaulting on China.  Nations have gone to war for less, and war with the US is a good way to rationalize taking Japan (something China still wants to do) as well as Taiwan, and generally consolidating its power in Asia.

When you default on your mortgage, the bank gets to take your house away.  When you default on your credit card, the bank gets to sue you for that money.  When nations default on debt, no one has any recourse.  For a nation riding a bubble like China, it may be enough of a provocation to justify hostilities.

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 09:06 AM (8y9MW)

44 There's a possible Republican candidate out there who TRUMPS all this chit-chat about our Chinese creditors with some bold angry ideas.

yo, citrus feline

Posted by: arhooley, conflicted Californian at January 31, 2011 09:08 AM (fVwV8)

45 The debt limit is our Ace in the hole.  Without any other support, the House Republicans can cut the size of government.  If they have the balls.

Thunderdome.

Posted by: toby928™ at January 31, 2011 09:09 AM (GTbGH)

46 Posted by: Ghost of Lee Atwater at January 31, 2011 02:01 PM (JxMoP)

It was something about the cuts being so steep they'd cut into actual services people use at a rate to which people couldn't adjust properly.  Just like how no one (or almost no one) is saying that Social Security should just disappear overnight- good or bad, too many people rely on it for just removing it without due consideration.

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 09:09 AM (8y9MW)

47 See everyone later. Real life and all . . .

Posted by: arhooley, conflicted Californian at January 31, 2011 09:09 AM (fVwV8)

48

This news sets my slacks all afluster. My restraining order prevents me from appealing to her in person, but could you perhaps put in a good word for me?

I don't know you, Monty. But methinks you're a bit above her paygrade intellectually speaking and all. Oh and she's a complete Obot Moonbat. But if you're cool with that, than sure!

Posted by: laceyunderalls at January 31, 2011 09:11 AM (pLTLS)

49

This makes for a good argument against the debt ceiling as a political maneuver. But all it really does is kick the can down the Eva Longoria boy friend road. Its the money that feeds the monster that is our government, we NEED to starve the monster.

 

Posted by: dananjcon at January 31, 2011 09:12 AM (pr+up)

50 Argh!

Posted by: AARP at January 31, 2011 09:13 AM (Lz//J)

51 How much of that debt is to the Social Security "trust fund"? Spin this as making sure our seniors get "what they paid in (cough, BS)" is a political winner.

Posted by: Jean at January 31, 2011 09:14 AM (7Jipo)

52 AllenG - that debt is also a good reason for China try something silly as well.

Posted by: Jean at January 31, 2011 09:16 AM (G5WHn)

53

Department of Education?  Or SS.

Department of Energy, or Medicare.

NEH, NEA, or foodstamps.

Decisions, decisions.

Posted by: Thunderdome! at January 31, 2011 09:17 AM (GTbGH)

54

I don't know you, Monty. But methinks you're a bit above her paygrade intellectually speaking and all. Oh and she's a complete Obot Moonbat. But if you're cool with that, than sure!

Posted by: laceyunderalls at January 31, 2011 02:11 PM (pLTLS)

Soft, olive skin, a beautiful face and a smokin body trump political loonyness every time...

bunk

 

 

Posted by: dananjcon at January 31, 2011 09:17 AM (pr+up)

55

O/T - to the morons that think they're worthy...

Eva Longoria Parker is officially back on the market.

Posted by: laceyunderalls at January 31, 2011 01:55 PM (pLTLS)

Who think they're worthy???

...smoke meet mirror

Posted by: beedubya at January 31, 2011 09:17 AM (AnTyA)

56 Lock Box?

We don't need no Lock Box, I got a Squeeze box!

http://tinyurl.com/d5qyy4

Posted by: Zombie Ted at January 31, 2011 09:18 AM (JpFM9)

57 The Republicans should stick to this, we really cannot keep spending, and that fact has got to be firmly established sometime soon.

Posted by: KG at January 31, 2011 09:18 AM (DeCj1)

58

what!

... put politicians in a place where they are forced to cut spending?

 

that's just crazy-talk, antebellum, rabble-rouser, crazy talk now stop it before you give ppl ideas.

Posted by: GOP Establishment at January 31, 2011 09:18 AM (3yT2W)

59 Posted by: Jean at January 31, 2011 02:16 PM (G5WHn)

Not as long as we're paying it.  Creditors make much more money off the interest than they do off the principal (in general).

Now, if we then tried massively to devalue the dollar, that might be a different discussion, but I think everybody's on-board the "no hyper-inflation" bandwagon.

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 09:18 AM (8y9MW)

60 Pat Toomey: Hey, I've Got A Good Idea. Talk about being "chicken". Cut the spending already.

Posted by: t-bird at January 31, 2011 09:19 AM (FcR7P)

61 If they do raise the limit - only up the ante a little - with a piece of liberal ass for each chunk: Davis-Bacon Act, the right of Federal Employees to unionize, etc.

Posted by: Jean at January 31, 2011 09:20 AM (judfL)

62

Who think they're worthy???

...smoke meet mirror

Posted by: beedubya at January 31, 2011 02:17 PM (AnTyA)

Damn you!!

un-bunk...

 

Posted by: dananjcon at January 31, 2011 09:21 AM (pr+up)

63 AllenG - I mean in terms of the US repudiating the debt, if China makes a military move.

Posted by: Jean at January 31, 2011 09:22 AM (xkJak)

64

Eva Longoria Parker is officially back on the market.

Uh, let me think about it...pass. 

Good call

Makeup artist??

...makeup magician is more like it

Posted by: beedubya at January 31, 2011 09:23 AM (AnTyA)

65

Who owns US debt? We do.

Thanks; that was informative.  I had assumed that foreign countries held a lot more than that.

Of course 7.5% (China) of an enormously big fucking number is still quite a lot of zeros.

Posted by: Hollowpoint at January 31, 2011 09:23 AM (SY2Kh)

66

Posted by: dananjcon at January 31, 2011 02:21 PM (pr+up)

Such are the wages of admiring decadence, dananjcon.

Come into the Light, and forget this business. 

Posted by: Kratos (Ghost of Sparta) at January 31, 2011 09:23 AM (9hSKh)

67 Eva Longoria Parker is officially back on the market.

Meh. The big unobtainably-single news these past few months is still Mila Kunis.

Posted by: Waterhouse at January 31, 2011 09:23 AM (3YYhR)

68 Posted by: Jean at January 31, 2011 02:22 PM (xkJak)

Well, if you mean as a deterrent to them doing anything expansionist, I'd have to agree.  We hold a lot of their cash (because they hold a lot of our debt), and us repudiating that debt could hurt them enormously.

Which is actually an argument for continuing to borrow from them, but I think we're all agreed that's a bad idea, on balance.

Posted by: AllenG (Dedicated Tenther) at January 31, 2011 09:29 AM (8y9MW)

69

Posted by: dananjcon at January 31, 2011 02:21 PM (pr+up)

Such are the wages of admiring decadence, dananjcon.

Come into the Light, and forget this business. 

Posted by: Kratos (Ghost of Sparta) at January 31, 2011 02:23 PM (9hSKh)

Not until I defile Miranda Lawson, Mass Effect 2.

 

Posted by: dananjcon at January 31, 2011 09:30 AM (pr+up)

70 I've been screaming for the Republicans to dismiss this premise of "We've got to raise the debt ceiling or the world will implode". That's so not true. Republicans have to start making the case that you can just as easily avoid default by not spending more money as by raising the debt level. And they should point out the liberals are opposed because they can't stop spending.

Posted by: Iblis at January 31, 2011 09:31 AM (9221z)

71

Hey -- we owe the Chinese a shitload of money, and if we are ethical, we ought to be paying them off first before we run up any more debt. What the Donks are basically saying is that we should try really hard to screw our creditors because, hey, they're foreign yellow devils.

Foreign yellow devils.  Heh, that's good.  Mind if we use it?

Posted by: Your Openminded Friends At The Democrat Party at January 31, 2011 09:31 AM (QKKT0)

72

Its NOT a TOOOMEY!!

sorry, someone had to do it.

 

Posted by: The Governator at January 31, 2011 09:36 AM (pr+up)

73

So while they simultaneously plan to borrow another trillion and a half dollars for FY 2011 the send the message paying creditors is something we might, or might not, get around to?

I see a bit of a problem with this cunning plan.  

Posted by: Beagle at January 31, 2011 09:45 AM (sOtz/)

74 Mark Steyn points out that if we keep borrowing at our current rate, we're on track to covering China's entire military budget with nothing but our annual maintenance interest payments.

Either we accept that, or we bite the bullet and pay the Chinese first now.  (Or we default, or else inflate our way out, but the last two do as much or more harm to us and the world economy as to them.)

Posted by: Dave R. at January 31, 2011 09:47 AM (Qi93s)

75

Ultimately we never have to default.  The Treasury can create as many dollars as needed to meet any and all debt obligations.  We could pay off all outstanding debt today if we wanted, but there's no reason to do that.  The problem is simply that at some point inflation sets in.  We want to have as little of that as possible without going into deflation.  By the same token, the government doesn't need our taxes to spend.  It's not like we hand over gold or labor or goods like in ancient days.  Electronic numbers change in our accounts, but nothing physical takes place.  The government taxes us for two reasons - to create demand for dollars, and to control the money supply.  And, of course, to punish rich/productive people.

Not raising the debt limit doesn't eliminate the government's ability to spend.  It's a nice hurdle to throw up in the way, and certainly anything to help push bad spending back down is desireable.  But this is because the government is sucking up resources that should belong to the private sector, and also wasting a major portion of those resources or using them to further enslave us.   

Here's the biggest problem.  If we manage to force those bastards to rein in spending, they'll cut the good stuff first.  They will not cut waste.  They will not slash salaries of federal workers.  They will instead cut the military, or federal highway budgets, or other useful things that the government is actually supposed to do, or that people enjoy.  Just like government at every level.

 

Posted by: Reactionary at January 31, 2011 09:56 AM (xUM1Q)

76

Oh and she's a complete Obot Moonbat. But if you're cool with that, than sure!

Well, if she starts spouting off leftwing prattle, I'll just have to remind her that it's not polite to talk with your mouth full...

Posted by: Alex at January 31, 2011 09:59 AM (J2ejK)

77 I see your point, Monty, though I'm not sure I agree about the trade deficit.  However, there is still the meme out there that China "owns" us which is pure BS, and it is spread by way too many people who should know better.

Posted by: cranky-d at January 31, 2011 11:03 AM (mfszm)

78 Pay the Chinese first?  No, pay the bond holders whose bonds are coming due first.  If it is a US pension fund, pay them if it is due.  If it is China, pay them if it is due.  In other words, pay the debt owed on time.

Posted by: Mikey NTH at January 31, 2011 11:17 AM (O9Cc8)

79 Several of my senior-citizen senior-debtholding friends, who still get out at all, would have been thrilled if GM had adopted this strategy, back when they were a private firm and all.  Shows who the US Govt's real enemies are: not the ChinComs, but US pension funds.

Posted by: comatus at January 31, 2011 12:03 PM (hrwMe)

80 Conrad shows how sorry our political class is. He's literally saying we MUST borrow money pay our debts.

Posted by: Dr. Heinz Doofensmirtz at January 31, 2011 12:15 PM (KEMgn)

81

Yeah...  difference being Japan and England don't hate us.  Presumably neither do our own citizens.

Helloooooo?!

Posted by: 52% who voted for a Marxist retard who can't throw a baseball at January 31, 2011 02:40 PM (HzhBE)

82 Conrad spins out the liberal rebuttal, that this plan is a "Pay China first" plan and what about the American people who need high-speed rail? Are you really so unamerican as to pay the Chinese first? I'm tired about this China/Debt stuff. China owns less than SEVEN PER CENT of US debt.

Posted by: Comrade Arthur at January 31, 2011 03:29 PM (sQWnH)

Posted by: kuyu at February 05, 2011 12:38 AM (45SgX)

Hide Comments | Add Comment

Comments are disabled. Post is locked.
114kb generated in CPU 0.05, elapsed 0.0708 seconds.
62 queries taking 0.0284 seconds, 270 records returned.
Powered by Minx 1.1.6c-pink.