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I appreciate, The legislation would allow the Treasury to borrow more than allowed by the statutory debt ceiling to make these payments.
The GOP could selectively ignore either the debt ceiling, or the balanced budget, so all we'd get for the trouble would be an even more disfunctional form of gridlock.
Onward! Elections in 18 months!
Today in "Economist are NOT Totally Clueless"?
Come on, Ken. You know that budget resolutions don't raise revenues and aren't covered by Article 1 Section 7.
"The ultimate irony here is that congressional Republicans have been complaining about Senate Democrats not producing a budget between 2009 and 2012."
Article I, Section 7:
"All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills."
May is not must, is it?
A confluence of temporary factors are helping to reduce the deficit:
1. Fannie Mae's "profits" (debunked by James Hamilton over at econobrowser and others in the blogosphere as an accounting trick)
2. Higher tax revenue due to seasonal and other factors (some took capital gains last year in anticipation of higher taxes, and the bill just came due.)
3. Some dodgy accounting on the part of the treasury ... the DTS "debt to the penny" shows a much higher deficit than the monthly report
No doubt there is some real effect of reducing the deficit via higher taxes and reduced spending (sequester.) That should be celebrated not ignored.
However the fact that we can't account for things in an honest fashion without resorting to the kind of tricks that got Jeffrey Skilling a long jail term doesn't help things either.
It could be argued that the deficit reduction spin is typical hand waving / smoke and mirrors. Did anyone do any diligence in reviewing the actual numbers from Treasury?
To these eyes, the deficit for this year will be over a $trillion....same as last year.
http://www.treasurydirect.gov/NP/debt/current
If a pol brags about cutting the deficit, someone will ask how. Nobody wants to brag to voters that they cut the deficit by raising FICA taxes on their wages and implementing the imbecilic sequester.
The projections are always done as line graphs, but would there be value (or it is even legal) in having CBO to show their projections as ranges of possibilities. For example, projection A has an x% probability while projection B has a y% probability.
Pardon the old joke, but the hard part about predicting the future is that it hasn't happened yet. Looking back these projections are always off for some reason and are based on predictive models where a tenth of a percent here or there had enormous impacts over time. So would showing these as likely ranges be helpful or hurtful?
I agree with your read of the partisan dynamics, Stan, but it's too bad that we can't acknowledge this as a positive development. For those who are truly fiscal conservatives (and not just political "deficit hacks"), it should be good news that we have reversed the longer term trajectory of deficits without killing the recovery. For people who want the Federal government to have some room for infrastructure development, research, or jobs programs in the medium term, it takes wind out of the sails of the austerity crowd. Those who think we've put too much pressure on an accommodative monetary policy, this gives the Fed some fiscal space to pre-empt potential future inflation. And even the long term bulge in entitlement spending is less daunting if we are in a stronger fiscal position 7-10 years from now. To me, this is a pragmatic, "good government" result that has a lot of benefits, even if it is far from optimal policy.
... that's what I heard the bill called on the radio. Let the Republicans vote for the bill and let then discuss why we want to pay China but not American contractors who do work for us.
Why are Treasury bills and bonds more "full faith credit" than other Federal obligations? It seems to me that the full faith and credit clause of the Constitution requires all legally enacted obligations to be honored. That's the absurdity of debt limit legislation, which Stan has repeatedly noted.
I know this is just tilting at alternative energy installations, but "full faith and credit" does not refer to any assurance that the federal government will pay its debts. It refers to individual states giving full weight to the laws and judicial acts of other states. As Wikipedia will tell anyone who cares to use the phrase correctly:
Article IV, Section 1 of the United States Constitution, known familiarly as the "Full Faith and Credit Clause", addresses the duties that states within the United States have to respect the "public acts, records, and judicial proceedings of every other state."
Of course, asking that our lawmakers be familiar with the Constitution is asking too much...
Your comment regarding the Fed and Treasury is puzzling. The Treasury disburses the funds. The Fedm among other tasks, has certain responsibilities for overseeing and running parts of the payments system, but that's not the same as paying the bills.
Why are Republicans so interested in figuring out who they will stiff? It is a trait also apparent in the recent municipal bankruptcy discussions.
One could make the same argument about several legislative exercises in futility coming out of the Senate. Like the "gang of eight" immigration bill.
Unlikely to ever become law, more posturing then anything.
In the copious reporting on previous debt ceiling crises I got the impression that the 14th Amendment to the Constitution could easily be construed as requiring the prioritization of Treasury debt versus other government obligations. It is silent on whether fresh debt ought to be issued to service current debt, but, as an accounting exercise only, that would seem a remote possibility 100% revenue dedication to debt servicing would be insufficient, until, of course, the full chaos of no Federal government hits about 4 hours into the experiment.
That's the kind of important thing I really should have known. Thanks much.
Treasury writes the checks. The Fed is the one that pays them.
No need to publish this comment but a small typo might be abused by critics and conspiracy theorists. You write, "The the agency that actually pays the government's bills -- the Federal Reserve...." In addition to the doubled "the", I believe you meant to say "Treasury" rather than Fed.
A simple fix would make it very valuable. Instead of allowing the Treasury to go beyond the debt limit to pay bond holders, extend that allowance so that the Treasury can borrow beyond the debt limit to pay any valid claim.
One might reasonably expect the businesses who paid for the plowing to pass those costs along to their customers, who I believe are somewhat "captive" in that there is not much choice or competition in the vicinity. It might be argued, then, that the users of the park, who presumably comprise the vast majority of these business' patrons, will ultimately pay for the plowing. It's a nifty way to shift costs to the users, who may presume their tax money is paying for it, without saying so. As for the foregoing comment asking why a Floridian should pay taxes to maintain a park in Wyoming that he might use once in a lifetime (a really tired sort of argument), he might consider the degree to which the taxes paid by all are subsidizing his environment and lifestyle in ways of which he may not be aware. Personally, I loathe Florida, but that really does not matter if one acknowledges any concept of the common good.
Okay Mr. Collender posts thoughtful and readable blogs, no argument about that. What bothers me is that anyone could even reasonably argue that the government should pay for snowplowing at all without it being directly paid by citizens that directly benefit from it. I live in Florida I have been to Yellowstone one time. Why should I pay to snowplow its roads. This is the entire problem with Federal spending. I pay to subsidize postal service in Jarbridge, Nevada. Well those people should have their stamp cost doubled. Most of my taxes go pay for government services that dont benefit me or my family. This is what the 65% to 70% of us that are demanding budget cuts are thinking as we read Mr. Collender´s very thoughtful tripe
Well, the National Park Service may well be the next reversal if furloughs cause the parks to close one day a week or month as has been rumored.
If this weren't times of austerity I agree that taxes should decrease when gov't services also decrease. In our case, however, we have a huge federal debt that has to be paid for so it would be irresponsible to cut taxes.