U.S. debt default could wipe out 6 million jobs and $15 trillion in wealth, Moody's says
By - SprinklesFederal7864
Please post all debt ceiling related news to the pinned megathread
Is this any different than the brinkmanship the US experienced during the latter Obama years?
As someone outside the US, it seemed every couple months the flow of US dollars was in jeopardy and we were going to enter a post-USD reserve currency hellscape.
It is not any different really no
This is a terrible time for the cdc to lose half its workforce thougg
Obstruct for 'fiscal responsibility' or some other BS, then use the lack of action as an attack on the other side. Works every time.
Not if you are mad that one president lost an election because they botched the initial response to covid and they want to punish the other side.
In other words. Commit suicide to make a point.
There's a nice japanese word for it. *Kamikaze*
Is that another one of those fancy drinks they have in New Orleans?
In my opinion McConnell is a realist and so is Schumer. They'd be committing political suicide if they tanked the US Dollar on some political theater. So if they do it will have been an accident.
There are a few ways out of this bind and worst case scenario, Biden could always mint the trillion-dollar coin I guess. [Vox](https://www.vox.com/policy-and-politics/22684328/us-debt-ceiling-government-shutdown-biden-democrats) seems to think he could issue bonds that aren't treasuries but that sounds like a bad idea.
>So if they do it will have been an accident.
With both nuclear weapons and political brinksmanship over the debt limit, the real risk is the same: That we'll **accidentally** go over the edge. There will be some miscalculation, and the system implodes right as we're already standing at the edge.
Neither side in a nuclear war wants a nuclear exchange. Neither side in the US default wants a default. In both of these situations, both sides PRETEND like they're willing to go all the way.
The real risk is an accident, when every is playing so close to the edge.
> In my opinion McConnell is a realist and so is Schumer. They'd be committing political suicide if they tanked the US Dollar on some political theater.
But it would be under Biden's 'watch':
> So ask yourself: If a party doesn’t care about the state of the nation when the other party is in power, and it knows that its opposition suffers when bad things happen, what is its optimal political strategy? The answer, obviously, is that it should do what it can to *make* bad things happen.
Sometimes the sabotage strategy is almost naked. Consider Ron DeSantis, governor of Florida.
> DeSantis has done everything he can to prevent an effective response to the latest pandemic wave — trying to block mask and vaccine requirements, even by private businesses. Yet this hasn’t stopped him from blaming President Biden for failing to end Covid.
> And now comes the debt crisis. Nobody has ever accused McConnell of being stupid. He knows quite well just how disastrous failing to raise the debt limit could be. But the disaster would occur on Biden’s watch. And from his point of view, that’s all good.
McConnell is a political nihilist:
> Even during the coronavirus pandemic, Mitch McConnell is laser-focused on one of his top priorities: advancing judges.
> “My motto for the year is ‘leave no vacancy behind,’” McConnell said during an April appearance on The Hugh Hewitt Show. “That hasn’t changed. The pandemic will not prevent us from achieving that goal.”
> It was already becoming clear that, in the political world of Mitch McConnell, convictions and campaign pledges were fungible things, easily tossed aside. Throughout his career, as the Republican Party veered right, and then further right, McConnell moved with it. “It’s always been about power, the political game, and it’s never been about the core values that drive political life,” John Yarmuth, Kentucky’s lone Democratic congressman, told Alec MacGillis, author of the 2014 McConnell biography *The Cynic*. “There has never been anything that interested him other than winning elections.”
>But it would be under Biden's 'watch':
I guess, but I think most people associate government shutdowns with congressional stalemates at this point, not the president. Even the Trump shutdowns got blamed mostly on Congress, not on Trump, if I remember correctly.
> I guess, but I think most people associate government shutdowns with congressional stalemates at this point, not the president.
Debatable. From my first link:
> It has long been clear that voters are far less informed about parties’ policy actions than we’d like to imagine, even when those policies touch their lives directly. Earlier this year most Americans received stimulus checks thanks to the American Rescue Plan, which was enacted by Democrats on a straight party-line vote. Yet a poll of rural voters found that only half gave Democrats credit for those checks; a third credited Republicans, not one of whom supported the plan.
> The political scientists Christopher Achen and Larry Bartels like to use the example of the 1916 election, which was much closer than most people expected; in particular, Woodrow Wilson lost his home state of New Jersey. Why? Achen and Bartels make a compelling case that one major factor was the panic created by a wave of shark attacks along New Jersey’s beaches. Whatever you think of Wilson, he wasn’t responsible for those sharks. But voters blamed him anyway.
> More prosaically, many presidential contests turn on how the economy was doing in the few quarters before the election, even though presidents usually have relatively little influence on short-term economic developments, certainly as compared with the Federal Reserve. When people voted against Jimmy Carter, they were really voting against Paul Volcker, the Fed chairman at the time, who pushed the economy into recession to curb inflation — but they didn’t know that.
didnt trump say he was proud to shut down the government?
I see your point about this being under Biden's 'watch', but voters are not blind to the nuances of who does what.
Abraham Lincoln was president when entire states decided to secede. Abraham Lincoln led the Union into a war that cost thousands of lives. But he's a national hero, because we've been able to parse through the nuances of what was right and wrong.
>If a party doesn’t care about the state of the nation when the other party is in power, and it knows that its opposition suffers when bad things happen, what is its optimal political strategy?
2009 Stimulus bill, RRR insisted on one third being tax cuts - money not spent into the economy, no multiplier effect.
Cash for clunkers - RRR insisted it not be restricted to American made cars (then they rally behing Trump's America First, WTF) so fewer possible jobs in US.
Obama gave all wage earners a raise by having a tax holiday for Social Security -2% added to take home up to \~$115K, RRR ended that by putting repeal in a must pass bill.
Republican will cut off you nose to spite you if you get the least bit uppity.
They're old enough and wealthy enough for it not to matter.
Besides some people just want to watch the world burn.
OTOH they would love it. Blame Biden for USAs loss of face with the full support of right wing troll farms and Faux news.
It's exactly the same the gop fucking over the country for political gains.
Europoor here, can someone explain to me how the debt ceiling in the US works legally?
If the legislative body of the USA (congress and senate?) has passed a budget, with expenses and revenues. Surely that is in itself a legal basis for issuing the required debt? Wouldn't it be unconstitutional if the budget passed by both houses were to be blocked by some other legislation? Or rather, wouldn't the passing of the budget be impossible if the debt ceiling forbid it?
How can there be a situation where two legislation are at force simultaneously, that they contradict each other? Has there been a supreme court ruling on the question or something?
It's on that subreddit right now and I saw some pretty good explanations there
More coverage at:
* [What is the debt ceiling? What does it mean and why do politicians want to raise it? (nj.com)](https://www.nj.com/politics/2021/09/what-is-the-debt-ceiling-what-does-it-mean-and-why-do-many-politicians-want-to-raise-it.html)
* [Mitch McConnell says the GOP will not vote to increase debt ceiling (msnbc.com)](https://www.msnbc.com/the-last-word/watch/mitch-mcconnell-says-the-gop-will-not-vote-to-increase-debt-ceiling-121758277513)
* [The US has never defaulted on its debt before. Here's how that would affect the country (msn.com)](https://www.msn.com/en-us/health/ntrition/the-us-has-never-defaulted-on-its-debt-before-heres-how-that-would-affect-the-country/vi-AAOInxT)
^(I'm a bot to find news from different sources.) [^(Report an issue)](https://www.reddit.com/user/MultiSourceNews_Bot/comments/k5pcrc/multisourcenews_bot_info/) ^(or PM me.)
In addition:[The U.S can print money ](https://www.cnbc.com/2011/08/07/no-chance-of-default-us-can-print-money-greenspan.html)
Wouldn’t that increase inflation and cause more harm than good in the long run?
[Data](https://budget.house.gov/publications/report/reexamining-costs-debt-era-low-interest-rates) points to the contrary.
But sadly not value to back that money...
Good and services matter more than printed paper, and much like colonial spain we're about to learn this lesson the hard way.
This is the interesting question we should ask:Why do humans put the belief in imaginary entity and can share with others.
It's a little more complicated than that, but yes. It's also because bitcoin keeps an incorruptible ledger anyone can verify and is protected by the diversified sum of the computational power of the network. Until those things change it, it has value that we can determine with markets through supply and demand. Bitcoin goes up long term because its deflationary, but it doesn't mean that will always keep its value high. Other factors are at play and this is not an endorsement of any crypto as an investment.
>Money is nothing more than a really weird religion
Don't confuse Money and Currency.
Money has intrinsic value. Gold conducts electricity great and \*never\* rusts.
Currency we agree to \*represent\* money, because it's convenient. Let me write you a check, give you a paper bill, send a wire to your bank, or send you crypto from my phone.
I’m gonna claim my money as my religion for the next round of taxes so I don’t have to pay them.
Well money used to have real intrinsic value. Now it might as well be toilet paper.
Ease of trade... People just formed a cargo cult around money because we forgot it represents shares of goods and services produced rather than being wealth in and of itself...
That's 100% true.
Imagine going to work every day and just talk about doing your job. But never actually doing it. And getting paid 100k per year to talk about doing your job, but never doing anything.
This is us politicians.
$220k not $100k
The extra $120k is for doing things that solve nothing but create new messes to talk about...
$30 million if you’re Nancy Pilosi or Mitch McConnel
Sounds like congresspeople shouldn't be allowed to trade stocks
That’s just their take home pay... We should mention more about the kick backs, percs, and off the books cooks. They got that 4D chess- side hustle.
Well being that this is a country “of, by and for the people” we should have no trouble voting out elected leaders who don’t perform for us, the people, right?
We get the chance to do that every other November.
Keep voting progressive, but make sure you get actual progressives and not the Sinema types. A good litmus test is Marijuana legislation and their personal history with it. I trust stoners, but I keep an eye on people who use or push amphetamines, opioids, and benzodiazepine's. I wish more people would understand this and actually pay attention to who they are voting for and their habits.
And getting full coverage Universal Healthcare on top of it
And getting to vote on giving yourself a raise on top of it
They are on the same health care as any government employee
I can guarantee you all government employees do not actually have the same healthcare options.
I definitely phone it in every now and then, but yeah that wouldn't fly for very long.
Plz vote for me. I apparently am qualified for this job and I would like a 6 figure salary.
Nancy pelosi has 100 million dollars I’m sure they pay a lot more in favors
Their wages should be the as minimum wage.
Imagine your group is trying to do your work, but the other business unit won’t stop throwing feces at the wall and overturning desks.
This is US politicians.
That is their job. Not doing anything
>This is us GOP politicians.
Don't forget one side actually wants to improve infrastructure and provide support for people during the pandemic.
GOP/republicans (if it wasn't clear) want to burn it all down because it makes "the other side" look bad and makes people hate all politicians. Seems like it's working, too.
During shut downs, politicians still get paid. Not sure how that works with the debt ceiling.
Long story short, it’ll all get sorted out at the buzzer.
*as is tradition*
Can we start by firing government officials.
Maybe make being a politician akin to jury duty, everyone has a random chance of serving for a few years; can even keep the over-paid salaries and benefits for the service.
$15 trillion in wealth is a hugeee number. That’s scary
But an I the only one getting tired of seeing the media freakout over the debt ceiling? We all know it’s gonna get raised, and easily once congress stops playing games. They need to go ahead and do it though instead of just talking about it everyday
It’s weird that you are blaming the media and not the politicians who play this game of chicken every two years. They are the ones that need to get their shit together.
The media enable the "both sides" BS, they should be calling out the arsonists.
It's mutual; politicians wouldn't put this dog and pony show on every two years if everyone just rolled their eyes and ignored it
You think the solution is to *roll your eyes and ignore it*?
There is literally nothing we can do at this point. We vote, and will vote people in/out next chance we get, but what could Joe schmoe on the street *possibly* do about it other than send a message to a politician that some intern will read and just reply with a generic letter about caring.
When push comes to shove the issue can by bypassed by labeling it a matter of national security. Biden could simply instruct the Federal Reserve to keep operating as if Congress had voted to pass the debt limit (even though they hadn't).
From what I've learned over the past 5 years or so, many of these "rules" have literally zero physical enforcement component behind them. The US government has simply been following the rules in good faith.
If the Federal Reserve kept operating as if Congress approved the debt limit increase, there are zero physical avenues that Republicans could use to stop them. There are no law enforcement agencies overseeing something like this, for example.
Republicans keep playing this game because they are hoping that the Democratic party continues to follow otherwise unenforceable institutional rules in good faith. And to be honest, so far they have been right.
They have a field day, every day, no matter what. They had a field day when Obama where a tan suit and when he used the wrong kind of mustard. Right wing media and the right in general are addicted to outrage and it is destroying the country.
Damned if you do, damned if you don't on that front.
At this point it doesn't matter. The right wing propaganda machine is going to do what they need to do, including outright fabrication of news stories about Biden, to drum up anger in their base.
Democratic politicians really ought to not concern themselves with optics, real or fake. They need to stop playing these stupid games. At some point in the future demographic changes are going to happen in the Democratic party, and Democratic voters are going to vote for someone who refuses to play these stupid games with McConnell (or whoever takes his place).
"The debt limit and the filibuster? Seeing how there is no actionable measures you can take if we ignore those things, we're going to exactly that."
Didn’t the last guy spend four years arguing that the executive has “absolute power” to do just about anything they want?
Hell, call it financial terrorism and send the GOP legislators to gitmo
Gqp. Not all politicians. Just social parasites.
Oh I agree. It’s just that we all know the limit is going to be raised, and it seems the media keeps sensationalizing the issue for clicks
You again mean the politicians who needlessly threaten defaulting in order for political points.
The media is only reporting what the retards are doing.
The media chooses what to report, how often to report it, and how much emphasis (i.e. what goes on the front page) each issue gets.
They have their shit together , you think they mismanage their lives as good as our government?
It is derelict by design. They know that. They are just greedy assholes playing a game of corruption.
You have one side always using default as the stick to make the other side do something and it’s rarely the same side back to back.
Republicans haven’t used the debt ceiling to try and ram anything through. I don’t know if their too stupid to find a way or just like being whipped every few years by the DNC…
Gotta keep the domestic audience distracted by nothing-burgers so they don't rally around real issues that might inconvenience the rich.
>In an interview that aired Sunday on ABC's "This Week with George Stephanopoulos," the show host cited a recent study from the University of California, Berkeley, that found 95% of income gains from 2009 to 2012 went to the top 1% of the earning population.
Old news, but something that should have really been a rallying cry for a massive bi-partisan grassroots movement. Instead, the media focuses on divisive issues (Trump, BLM, etc) to keep the people fired up about partisan wedge issues and safely distracted from the systemic issues effecting them all.
You realize the media is all owned by the 1%, of course they aren't going to talk about real issues. It's not even the 1% really more like 1% of the 1%. The top 1% is going to have highly paid lawyers, doctors, successful small business owners etc. The real problem is probably about 50-100 people.
I think he meant in general they blow up every little story to distract us
Which I think they do but I think they do it unintentionally, they just want ad revenue.
I doubt many of them (except for the few who know who they are) actively try to obfuscate the political picture in america
What you just said is the core of Manufactured Consent.
Noam Chomsky saw it coming
Yeah, I'm talking about the last 13 years specifically. Over on the right it was all about Obama's birth certificate and Pizzagate, while on the left we had Jussie Smollett and the Covington Kids. Sometimes there is actual meat to the story, but the choices the media makes on what to report and how frequently they blast us with the same narratives clearly indicate that they don't want people focusing on their patrons (be they political or corporate).
>I doubt many of them (except for the few who know who they are) actively try to obfuscate the political picture in america
Yeah. Most journalists are just looking for a sensational scoop to further their careers. It is the owners and the senior management (who have cozy ties with the political establishment) that are responsible for guiding the popular media narratives.
It isn't just raised or not. It's a negotiation over everything else that goes along with it. You're right that it will most likely be raised. But the odds of another government shutdown are very real.
Everyone on this thread is conflating the government shutdown with the debt default. They are two completely separate issues. The reason the media (and people on Reddit) are conflating them, is because democrats are trying to pass both the budget and debt ceiling bill in one go.
It’s ok if the budget is delayed and the government shuts down, it has happened before. But defaulting on Us debt? That is a separate issue. The Democrats could easily vote to raise the debt ceiling separately, but then they lose leverage over their $3.5T budget. They are literally holding the US economy hostage to pass a massive spending bill that even members of their own party disagree with.
You seem to be conflating "Republicans are trying to force the Democrats to include this in their reconciliation bill" with "nobody understands the difference between the budget and the debt default." [Everyone understands the difference and the default is 100% the fault Republicans who are holding the country hostage](https://www.google.com/amp/s/www.businessinsider.com/mcconnell-senate-gop-national-debt-ceiling-default-government-shutdown-2021-9%3famp)
>McConnell has insisted since June that Republicans will not sign onto a debt limit hike — or a an increase of how much the US government can pay back its bills — even as he said earlier this month it was a necessary step because "America must never default."
The Democrats can pass a standalone bill to raise the debt limit and avoid a default/economic collapse. Explain to me why they don’t this. Please.
Considering half the country doesn’t want to raise it, probably a good idea to report what will happen if we don’t do it.
15 trillion is 9 months of production in the US... roughly $45k per man, woman, and child.
No you are not. At this point its just a bluff, I wouldn't mind letting it happen if I could take down the politicians and crony capitalism down with me but we know that's not happening.
Edit: I meant that crony capitalism and the politicians won't go down, but I probably will.
Its theatre, plain and simple.
It is until it’s not.
Every move the GQP makes is to see how hard they can own the libs. Meanwhile, our great nation becomes less and less great. I’ve watched the country take a serious downturn in the last decade. Not to mention that when one party is actively trying to destroy the country, it prevents democracy and the will of the majority from progressing. We are really looking at a Roman Empire falling in real time.
I don't understand this debt default - if I'm going to default on my loan, I go talk to my bank and they advise on the next best options. From what I've seen, gov has been able to raise this limit every couple years. Who do they need to negotiate with? If they can arbitrarily increase it, then what is the point of it? How much can they increase it by?
The stupidest part of the whole thing to me is the debt limit isn't to pay for new policies, it is to pay for what has already been passed into law. Yes it will include new spending but even if nothing new was added, the limit would still need to be raised. Couple that with the fact it would be economically disastrous to not and the entire thing is just asinine.
The party appearing to be a debt hawk is the one deciding not to pay back debt lol
Asinine? I completely agree my friend
> The party appearing to be a debt hawk is the one deciding not to pay back debt
No one has viewed the GOP as debt hawks since the George HW Bush administration.
This has never been about deficit spending which no one gives a shit about. This is about an opportunity for Republicans to stymie policy they and their constituency and plenty of independents don't like. Along with that comes the opportunity to ask Dems throughout the next election cycle "You could've done this without our help, you had the votes. Why didn't you get on with it if it was so critical?"
This is what happens when you politicize procedure.
We are watching Republicans, who voted to raise the debt ceiling with no issue during Trumps admin, refuse to raise the debt ceiling for a budget they voted for. Because yes, the debt ceiling is for past spending. Which means that Republicans voted for the previous budget (under Trump) knowing they would eventually have to vote to increase the debt ceiling, and are now refusing to (under Biden.). It's pure cynical politics.
They need 60 votes in the Senate to approve a new debt limit increase easily, but they can pass it with 51 votes it just takes more work and doesn’t follow the normal rules of the senate. Republicans have decided to become anti debt so they have to negotiate with them to try to get the 60 votes. But most likely the Democrats will end up going the 51 vote route and have to deal with the politics of a bunch of anti debtors. There is no limit on the debt limit, but they keep only increasing a small amount and end up in the same situation year after year. So they really should just increase to some insane amount to avoid these pointless FUD in the economy.
But then the minority party would lose the best leverage they have in their whole term.
nicely summarised in this [post] (https://old.reddit.com/r/StockMarket/comments/py1ddp/previous_debt_ceiling_suspensions_2015_to_today/?depth=4) credit /u/lyanni
Funny how most people are being so casual like this isn’t a big deal. Yes it will likely be resolved but our credit has been downgraded before over this shit. Given the division and animosity in our current government it wouldn’t be surprising to see it happen again. Considering the state of the market near ATH after a massive runup for a decade, and seemingly looking for a reason to crash, this could be just what the doctor ordered.
The annual Government shut down and debt ceiling debate is back on. They won. The GOP normalize domestic terrorism threats and has been numbing the public for years on this debt topic. Now barely anybody care.
They will obviously raise the debt ceiling at the last second as they have always done historically. In the meantime, the markets won't care, the DJI is actually up higher than it was a week ago.
Keep doing what you are doing.
Many people on this thread are conflating the government shutdown with the debt ceiling/ looming default. They are two completely separate issues. The reason the media (and people on Reddit) are conflating them, is because democrats are trying to pass both the budget (which would prevent a government shutdown) and a bill to raise the debt ceiling at the same time.
It’s ok (certainly not ideal) if the budget is delayed and the government shuts down, it has happened before, essential services stay open and the rest of the federal government is furloughed. It will not crash our economy.
But defaulting on US debt? That is a separate issue and could end US economic dominance forever, let alone a massive recession. The Democrats could easily vote to raise the debt ceiling separately, but then they would lose leverage over their $3.5T budget. Progressives are literally holding the US economy hostage to pass a massive spending bill that even members of their own party disagree with. Time is running out, this is not a game anymore, I know Progressives think they have some sort of moral high ground trying to make our economy more equal/equitable, but if the don’t capitulate there won’t be an economy to go back to.
Progressives and republicans are holding the US economy hostage.
Okay just had to confirm, this is US wealth built upon
...the dollar, now I get annoyed with reality here but why the fuck not at this point. This wealth is so highly concentrated and dependent on the US dollars control of commodities. I feel that wealth was and is stolen, 15 trillion dollars of value assumes there is someone willing to pay that much, which is why the great state of the US is unsustainable. I read most of my libertarian friends shit they don't follow but maybe this would put the pain curve against the American taliban. Why would I say that, the trght has given fuck all about fiscal responsibility and prefer to pay off contributors through MLM.
For the mods; this is about economics, if you fail to understand that politics in the US are bought and sold then you've lost all credibility. They effect micro and macro economics and break all the rules or make their own.
While the richest would be hit hardest due to their shares collapsing, a bunch of other Americans would be fired from their jobs, lose retirement income, etc
EDIT: the govt defaulting on $15T of debt doesn’t redistribute it, it just goes away because they don’t have it. But also, we the taxpayers would actually lose money to the government who will need to come up with the cash to repay its lenders
This whole discussion is absurd. The debt ceiling is just some stupid arbitrary number that means nothing. It was routinely raised without fuss up until a few years ago when it became a political stunt used by both parties. They should abolish the whole concept, but then politicians lose their chance at more opportunities to grandstand for no reason. The US will not default. It is all accounting bullshit like "The Coin" solution. Both sides have used it equally bad. But it is easier to focus on fake issues than to solve real problems.
>became a political stunt used by both parties
The democrats never threatened to nuke the US credit rating lol
>Both sides have used it equally bad.
If only wishing something were true made it so. Citation needed.
If this article had said S&P, that would have made sense. But Moody's? Moody's isn't stupid enough to think that a government which owns its own printing presses can possibly default on a debt. So I'm calling bullshit.
Of course it can. It's never forced to. But it can choose to. It's even remotely possible that it could be a good choice!