Treasury secretary warns US could default on its debt as soon as June

ThatRobGuy · Jan 13, 2023

https://www.cnn.com/2023/01/13/politics/debt-limit-janet-yellen-letter-to-kevin-mccarthy/index.html

The Treasury Department said Friday the US could default on its debt as soon as June, setting up one of the first major battles on Capitol Hill after Republicans took control of the House.

The US will reach the debt limit on January 19 and then “extraordinary measures” will need to be taken, Treasury Secretary Janet Yellen wrote in a letter to House Speaker Kevin McCarthy. She said that the Treasury Department will pursue those measures, but they will only last a limited amount of time.

It is unlikely that the government will exhaust its cash and the “extraordinary measures” before early June, though she said there is “considerable uncertainty” around that forecast, Yellen wrote. She urged lawmakers to “act in a timely matter” to increase or suspend the debt limit.

While I can certainly understand her concerns in the short term. I have to wonder if the constant urgency around increasing the borrowing limit is creating a bad pattern that's becoming a little "too comfortable to fall back on" in the form of constantly increasing the debt limit by massive amounts.

At a certain point, there really does need to be some sort of limiting principle, or some plan other than "borrow more to compensate for the poor decisions we've made"

If you look at the pattern, it's not one that's sustainable as it just keeps going up and up.

A recent history of the debt ceiling:
1990: 4 Trillion
2000: 6 Trillion
2010: 14 Trillion
2020: 28 Trillion

I think in the immediate near future, the ceiling does need to be increased to get us by, but that agreement to an increase should be attached to some sort of tangible plan to start getting some of the debt under control.

rambot · Jan 13, 2023

Crazy the country can go into debt and major corporations can square off their payments to the government at less than what an individual would pay over a year.
55 Corporations Paid $0 in Federal Taxes on 2020 Profits

And despite increases in pay, people's purchasing power has put them FARTHER behind.

All while the richest in American keep getting more....while paying less taxes.

Arcangl86 · Jan 13, 2023

ThatRobGuy said:
https://www.cnn.com/2023/01/13/politics/debt-limit-janet-yellen-letter-to-kevin-mccarthy/index.html

The Treasury Department said Friday the US could default on its debt as soon as June, setting up one of the first major battles on Capitol Hill after Republicans took control of the House.

The US will reach the debt limit on January 19 and then “extraordinary measures” will need to be taken, Treasury Secretary Janet Yellen wrote in a letter to House Speaker Kevin McCarthy. She said that the Treasury Department will pursue those measures, but they will only last a limited amount of time.

It is unlikely that the government will exhaust its cash and the “extraordinary measures” before early June, though she said there is “considerable uncertainty” around that forecast, Yellen wrote. She urged lawmakers to “act in a timely matter” to increase or suspend the debt limit.

While I can certainly understand her concerns in the short term. I have to wonder if the constant urgency around increasing the borrowing limit is creating a bad pattern that's becoming a little "too comfortable to fall back on" in the form of constantly increasing the debt limit by massive amounts.

At a certain point, there really does need to be some sort of limiting principle, or some plan other than "borrow more to compensate for the poor decisions we've made"

If you look at the pattern, it's not one that's sustainable as it just keeps going up and up.

A recent history of the debt ceiling:
1990: 4 Trillion
2000: 6 Trillion
2010: 14 Trillion
2020: 28 Trillion

I think in the immediate near future, the ceiling does need to be increased to get us by, but that agreement to an increase should be attached to some sort of tangible plan to start getting some of the debt under control.

Honestly, I think the debt limit should be eliminated. I agree that the debt of the US needs to be brought under control, but the debt ceiling is not the way to do it. If Congress authorizes spending, that's the end of it. This ridiculous cycle of Congress deciding to spend some money, and then a later Congress debating if it wants to actually pay what was already authorized to spend is ridiculous. All it does is put the security of American debt into question, which has economic consequences.

Ana the Ist · Jan 13, 2023

ThatRobGuy said:
https://www.cnn.com/2023/01/13/politics/debt-limit-janet-yellen-letter-to-kevin-mccarthy/index.html

The Treasury Department said Friday the US could default on its debt as soon as June, setting up one of the first major battles on Capitol Hill after Republicans took control of the House.

The US will reach the debt limit on January 19 and then “extraordinary measures” will need to be taken, Treasury Secretary Janet Yellen wrote in a letter to House Speaker Kevin McCarthy. She said that the Treasury Department will pursue those measures, but they will only last a limited amount of time.

It is unlikely that the government will exhaust its cash and the “extraordinary measures” before early June, though she said there is “considerable uncertainty” around that forecast, Yellen wrote. She urged lawmakers to “act in a timely matter” to increase or suspend the debt limit.

While I can certainly understand her concerns in the short term. I have to wonder if the constant urgency around increasing the borrowing limit is creating a bad pattern that's becoming a little "too comfortable to fall back on" in the form of constantly increasing the debt limit by massive amounts.

At a certain point, there really does need to be some sort of limiting principle, or some plan other than "borrow more to compensate for the poor decisions we've made"

If you look at the pattern, it's not one that's sustainable as it just keeps going up and up.

A recent history of the debt ceiling:
1990: 4 Trillion
2000: 6 Trillion
2010: 14 Trillion
2020: 28 Trillion

I think in the immediate near future, the ceiling does need to be increased to get us by, but that agreement to an increase should be attached to some sort of tangible plan to start getting some of the debt under control.

That would be bad. I recall not long ago personalities like John Oliver acting as if anyone concerned we cannot just borrow more is dumb.

We're being robbed.

Ana the Ist · Jan 13, 2023

Arcangl86 said:
Honestly, I think the debt limit should be eliminated. I agree that the debt of the US needs to be brought under control, but the debt ceiling is not the way to do it. If Congress authorizes spending, that's the end of it. This ridiculous cycle of Congress deciding to spend some money, and then a later Congress debating if it wants to actually pay what was already authorized to spend is ridiculous. All it does is put the security of American debt into question, which has economic consequences.

Removing the debt ceiling would almost certainly remove the US dollar as the standard global fiat currency.

Ana the Ist · Jan 13, 2023

rambot said:
Crazy the country can go into debt and major corporations can square off their payments to the government at less than what an individual would pay over a year.
55 Corporations Paid $0 in Federal Taxes on 2020 Profits

And despite increases in pay, people's purchasing power has put them FARTHER behind.

All while the richest in American keep getting more....while paying less taxes.

Why is that crazy?

These people aren't anyone's first through 10th choice....yet we're told to vote for one of then.

They are selected for us....corporate shill #1....and corporate shill #2.

Unqualified · Jan 14, 2023

I guess we haven’t paid China either.

ThatRobGuy · Jan 14, 2023

rambot said:
Crazy the country can go into debt and major corporations can square off their payments to the government at less than what an individual would pay over a year.
55 Corporations Paid $0 in Federal Taxes on 2020 Profits

And despite increases in pay, people's purchasing power has put them FARTHER behind.

All while the richest in American keep getting more....while paying less taxes.

Corporate taxation is certainly something that can be part of a reasonable larger conversation.

But I think to tackle this problem correctly, people (across the political spectrum) need to steer clear of scapegoating and putting all the blame on the one or two aspects that align with their ideological viewpoints. Meaning, one side has to stop pretending that "corporate greed" is the only culprit, and the other side has to stop pretending that entitlement spending is the only culprit.

Two things can be true at the same time.

'Joe Smith' can have a greedy boss who doesn't value his labor enough and doesn't pay him a fair respectable wage for his labor... Joe Smith can simultaneously have the bad habit of splurging too much on fine dining and new tech gadgets with his credit cards. Both aspects share some responsibility for Joe Smith's financial situation.

The proper solution is neither to cut up all of Joe's credit cards, nor is it to force Joe's boss to overpay him whatever it costs to satisfy all of his indulgences or force American Express to keep increasing his credit limit. A solid solution would involve tackling it from both sides.

ThatRobGuy · Jan 14, 2023

Arcangl86 said:
Honestly, I think the debt limit should be eliminated. I agree that the debt of the US needs to be brought under control, but the debt ceiling is not the way to do it. If Congress authorizes spending, that's the end of it. This ridiculous cycle of Congress deciding to spend some money, and then a later Congress debating if it wants to actually pay what was already authorized to spend is ridiculous. All it does is put the security of American debt into question, which has economic consequences.

I would agree with your description of the ridiculous cycle.

But with regards to eliminating the debt ceiling...that's extremely risky. Just as risky as taking a person who already has $70k worth of credit card debt (on a $60k yearly salary), and removing the credit limit from their cards or giving them a hefty credit limit increase. For a person/entity who's already demonstrated that they have trouble "coloring in the lines" with regards to borrowing and repayment, removing the limit on that is removing the last safeguard against runaway spending.

As I mentioned earlier, this "urgency" "emergency" context with which these conversation take place is quite frustrating, as it's a self-created emergency situation.

It'd be like person who bought a bunch of frivolous stuff with their credit card for the first 11 months of the year and ran it up to it's limit, then in December, the furnace breaks (which would be an actual emergency), and that emergency is used as the justification for pleading with the bank for a credit limit increase...when, in fact, had they been a little smarter with the credit card throughout the year, there would be plenty of available credit left on the card to fix the furnace.

rambot · Jan 14, 2023

ThatRobGuy said:
Corporate taxation is certainly something that can be part of a reasonable larger conversation.

But I think to tackle this problem correctly, people (across the political spectrum) need to steer clear of scapegoating and putting all the blame on the one or two aspects that align with their ideological viewpoints. Meaning, one side has to stop pretending that "corporate greed" is the only culprit, and the other side has to stop pretending that entitlement spending is the only culprit.

Two things can be true at the same time.

'Joe Smith' can have a greedy boss who doesn't value his labor enough and doesn't pay him a fair respectable wage for his labor... Joe Smith can simultaneously have the bad habit of splurging too much on fine dining and new tech gadgets with his credit cards. Both aspects share some responsibility for Joe Smith's financial situation.

Yes Joe Smith can.
But have you seen the stats on wealth desparity?
To say nothing of the decreasin purchasing power of the few dollars they DO make?

im all for ensuring decent budgeting....but think about every server in a major city. The rent they have and their cost for necessities is becoming untenable.

I just saw a Stat that 96% of workers plan on applying for a new job next year to get more money.

That is NOT the sign of a healthy economy.

"Choosing between paying for heat and electricity" should not have to be a budgeting choice. If you don't make enough money to survive it doesn't matter how you budget. Like asking for someone on income assistance to just make a better budget

ThatRobGuy said:
The proper solution is neither to cut up all of Joe's credit cards, nor is it to force Joe's boss to overpay him whatever it costs to satisfy all of his indulgences or force American Express to keep increasing his credit limit. A solid solution would involve tackling it from both sides.

I mean America is going through boom times but the only people moving forward and getting ahead through it already are doing well. There are many many people who are experiencing NO, or minimal.

Ana the Ist · Jan 14, 2023

Unqualified said:
I guess we haven’t paid China either.

We should see if they accept Bitcoin.

morse86 · Jan 14, 2023

The alarmists have been warning for "default on debt" since the 2000s. At the end of the day, the Bible is what matters. The US won't default on the debt, just read the book of Revelation.

As Christians, we need get out of this "debate" system. The bible doesn't say to lay up treasures for ourselves.

ThatRobGuy · Jan 14, 2023

rambot said:
im all for ensuring decent budgeting....but think about every server in a major city. The rent they have and their cost for necessities is becoming untenable.

I just saw a Stat that 96% of workers plan on applying for a new job next year to get more money.

That is NOT the sign of a healthy economy.

"Choosing between paying for heat and electricity" should not have to be a budgeting choice. If you don't make enough money to survive it doesn't matter how you budget. Like asking for someone on income assistance to just make a better budget

Applying for a different job that pays better seems like the sensible thing to do in a market economy. As server shortages increase, so will the wages offered for those jobs.

Part of what you describe touches on another aspect. Which is that this desire to live in "the big city" (particularly the big cities that people feel have some cachet when they tell people they live there)

If people are desperate to tell other people "I live in Chicago" or "I live in NYC" or "I live in San Fran", they know the cost of housing in those places.

If someone makes the choice to live in one of those cities, playing the sympathy card doesn't work. "I'm a server, and I shouldn't have to choose between paying heat and electricity"...they wouldn't have to if they bailed on the city that has 800 sq. ft. studio apartments for $2500/month. A server or retail worker living in "the big city" could greatly improve their situation by moving 20 minutes away.

That's another "tackle it from both ends" issue. Yes, it's a problem if the companies aren't paying them a fair wage, but on the flip side, "Target should have to pay me $80k/year to stock shelves because I want to be able to tell people I live in San Francisco or Manhattan" isn't a reasonable expectation either.

And it's certainly not fair to expect tax payers (individual or corporate) to pay more than they should just to prop up failed city housing models because someone who lives there says "living in NYC is my dream and I deserve to live comfortably here".

Always in His Presence · Jan 14, 2023

How about stop spending so much?

Hey, honey, or credit card is maxed and we are only making minimum payments.

No problem, I’ll just get a credit limit increase.

Treasury secretary warns US could default on its debt as soon as June

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