Sunday, July 24, 2011

Historical Debt Limit Increases

The debt limit has been raised routinely and without controversy often in the past. Below is a chart showing the increases since Carter. Why the sudden controversy now? Data via the LA Times. Click to enlarge.


Vinny said...

Why now? For the exact same reason Saddam Hussein suddenly became an intolerable threat in 2003. Rich pricks saw the opportunity to exploit the American people's insecurities (and ignorance) in uncertain times by scaring them with phantom threats so that they would support government policies that are manifestly not in their best interests.

Jon said...


One other factor I think. The tea is a political force and they won't be happy with Republicans that extend our debt. I'm not sure if Congressional Republicans actually agree with the tea party or if they more fear them and are willing to pretend that they are right.

If that's true they may actually try to fail to bring about a deal. Obama will just ignore the law because he's not going to allow the havoc that would follow a default. He'll pay our bills. Then the Republicans can talk about how they stuck to their guns to their tea party constituents. Maybe they can beat on Obama for violating the law.

As I recall Bush did something similar. The House initially rejected his banker bail out. But Paulsen and Bernanke basically said you keep AIG afloat or everything stops. So I think they kind of paid out anyway, then passed a bail out finally a little while later.

Vinny said...

I think there may be a division among the rich pricks. The really reactionary ones who back the Tea Party want to gut the social safety net so badly that they are willing to risk the disruptions of a default to do so. The merely conservative ones who pay lip service to the Tea Party are happy with business as usual as long as they don't get taxed too much or regulated too much.

It's hard to be sure who stands where. I found it interesting that even Grover Norquist came out and said that letting the Bush tax cuts expire wouldn't violate the pledge he demanded everyone take.

HispanicPundit said...

I think it might have something to do with this.

Vinny said...

I think it might have something to do with this.

Perhaps, but since the Republicans happily voted for tax cuts while taking America to war on the theory that "deficits don't matter," I'm not convinced.

Jon said...

Doh. My chart said "Million" and should have said "Billion". It's corrected now.

HP, I'm really not sure what you mean. Is there something about this increase that's different? Is it too much? Note that Reagan about tripled the debt limit in 8 years. Bush II nearly doubled it.

Chad said...

At no point was the US facing default or a downgrade under any of those Presidents.

A news flash came across the wire that Goldman Sach's is getting their revenge on Obama - outlined that without 4 TRILLION in cuts US will be downgraded. First President in modern HISTORY is what they said to have that happen. Since Obama/Democrates will never allow 4 Trillion in reductions we are going down and Obama/Progressive will be left holding the flaming poop bag.

Also lets set aside political correctness for one minute and lets go after the truth shall we. There are only 3.3 million people that are the super Rich that you love to hate who only pay MORE than thier share of taxes, contribute to society in great ways, create jobs and are generally good American stewards. How about the other side - the parasite class that continues to grow and take down this country. What about the 14 million illegal citizens adding burden - how about the unwed mother of 10 on federal aid, food stamps and what ever else they can get for free. How about the 82.5 MILLION American on some form of welfare chipping in to help the country by not having any more children that they can not pay for and to live within their means?

If your on welfare or you get some form of a gov't help you should be required to take a weekly drug test/alcohol test and should be on birth control.

I like the rich they make stuff, but what is the poor doing again besides taking more and more?

Vinny said...


If Republicans in Congress hadn't manufactured this crisis, we wouldn't be facing default or downgrade now either. It's only because Congress is threatening not to raise the debt ceiling that we face either possibility.

Jon said...

Chad, I heard Ralph Nader say basically Wall St has written a notice to Republicans saying basically the whole theater has been fun, but grow up. We're not going to allow the economy to collapse. Work it out now. So I think we are not going down. The game will end with a debt ceiling increase one way or the other. That may mean Obama has to ignore the law or it may mean Republicans will agree to something.

As I said though I think they do fear the tea party. People like you. Wow, quite a rant against the poor and suffering you offered. Unwed mothers with 10 kids? Really? They just want to be a parasite? They don't really want to work. They like unemployment? They like being looked down on, losing their homes, being criticized by people like you for their situation? You have a view that is very disconnected from reality my friend.

Paul said...

Chad -

can you provide your source for this -
"How about the 82.5 MILLION American on some form of welfare chipping in to help the country by not having any more children that they can not pay for and to live within their means?"

I am trying to verify it.

This statistic means that more than one in four Americans is on some form of welfare. Going to assume that this number includes retired people on social security.

Chad said...

USA Today article outlines 50.1 Million on Medicaid, More than 40 Million on Food Stamps, 10 Million on unemployment, 4.4 on welfare - assuming some overlap I came up with a rough number of 82.5 Million as a spit ball number.

This excludes section 8 housing, vouchers, free energy, free daycare, free cell phones and well you get the picture.

Jon - One of my good friends and a Professor of Economics with a minor in Sociology said to me on the golf course once (OFF THE RECORD of course) that if the US and the world really really wanted to solve poverty problem they would not allow the poor to have children and he is a Democrat! That is not my words, but it certainly makes sense. If you can eliminate poverty before it becomes poverty isn't that good?

Jon said...

Chad, what would be interesting I think is to see if we could agree on some spending cuts. So much talk about welfare queens and illegals, how about we talk a little about government spending for the benefit of the rich? Nader had a good list and I wonder how much you'd agree. He says you want to solve the debt crisis? Here's a few ideas (leaving aside single payer for the moment).

1-Let's end corporate welfare. That's hundreds of billions according to Nader.

2-Now, here's one we may or may not agree on. Let's make corporations actually pay taxes on profits. So companies report massive profits to their shareholders but to the IRS they report losses. This is through various gimmicks that they lobby to get, like transferring the profits via accounting to low tax countries and the expenses are applied in our country. Over a 3 year period 12 major companies made $167 billion in profits, but paid no taxes. In fact they collected $2.5 billion from the Treasury. If people that earn the money don't pay then yeah, you'll have deficits. There's hundreds of billions there.

3-Let's end these criminal wars in Iraq, Afghanistan, Yemen, Libya, Pakistan. Let's stop giving the criminal state of Israel $3 billion in military aid per year. Let's cut of Egypt and their $2 billion. We send tons to Colombia as they put down union organizers. There's hundreds of billions of dollars there.

4-Let's bring the troops home in Japan, Germany, Britain, Italy and whatever else. Let's also end these military programs developing out of date technology, like F-35 strike fighters. That's got to be at least $100 billion, maybe more.

We've pretty much balanced the budget right there. We didn't raise taxes. We didn't kick old people out on to the street. We aren't depriving grandma of her pills. How about that for a solution?

What really tells the tale about our political process is that these options, many if not all of which we could agree on, these are barely being discussed if their being discussed at all. I think most on the left and right could agree on a lot of this and it's not even in the cards. That's our political system.

Jon said...

Lots of grammatical errors there I see. Too lazy to fix.

Paul said...

Chad -

On this

Jon - One of my good friends and a Professor of Economics with a minor in Sociology said to me on the golf course once (OFF THE RECORD of course) that if the US and the world really really wanted to solve poverty problem they would not allow the poor to have children and he is a Democrat!

Not allowing the poor to have children is extreme and I don't agree with it as stated. But if what you mean is to educate the poor, provide free (or discounted) contraception or that sort of thing I agree with you. And by educating the poor I am not referring to abstinence only approach. I think most liberals - not sure just a guess - would be on board with what I am suggesting. Conservatives of the religious flavor would not...

Chad said...

Paul I ran out of time to elaborate on my post, but your thoughts echo that of my friend when he is not on the golf course with me and has 6 beers in him (lol).

This is a very touchy subject to be sure, but the analogy is simple to me and maybe to you as well. If your sibling fell on hard times and needed to move in with you and you needed to feed, cloth, bath, pay his/her bills, would you implement certain rules under your roof? Would you allow him/her to wreck your home or to sit in your basement day after day smoking wacky weed? Of course not - while your allowing him/her to get up from a fall you would ask them to perform chores on the house, run errands, make them go to school or apply for jobs and you certainly would not allow him/her to do drugs and alcohol while your offering a hand up.

Here is where it gets real tough - what if the above situation came with the knowledge (since you grew up with this person for all your life) that your brother/sister is simply a slacker. They screwed off in school, he/she had a couple kids out of wedlock, he/she doesn't have a skill that the labor market can use and then they knock on the door to live in the basement. First - are you letting them in knowing full well you will be the bank, the maid, the caregiver and that will never be re-paid for your efforts - ever. First - do you even let them in? Second - if your heart is that big to say yes, how strict will those rules be?

For those who need help there should be very strict rules before they get free things which should ensure some level of success and to avoid a long term situation.

Chad said...

Jon - are you getting soft on me - balance budget without taxation wow! Lets run through the list.

1- Details please on what we are talking about here. What Corporate Welfare Programs exactly?

2- Certainly up for discussion - I am pretty sure that it is not as cut and dry as you laid out and if you close one loop hole then two open up. Making the corporate tax code simple should be the goal.

3- Agree with everything except cutting off aid to Isreal.

4- Agree to bring home all troops yes for sure, military adjustments yes there too.

I am not sure we balanced the budget right there, but we certainly took a nice bite out of it.

Staying away from illegal immigration and social programs that have created a mountain of debt how about a couple of my own to help balance the budget.

1. Legalize and tax (the heck out of it) drugs. All tax revenue collected goes to infrastructure of the US projects. Job creator.

2. Balance budget admendment (non war time). Only can use what is brought in.

3. Drill baby frickin drill. Job Creator - tax revenue to go directly toward debt.

4. Eliminate over 1/2 the current regulations to let business breath. Job creation.

See there I just brought you additional revenues without touching the hot button items and probably got unemployment under 6% in less than 12 months.

we can agree on things!

Jon said...

It's good to find a little agreement.

But why give Israel billions? Let me ask you what you ask me. Where does the Constitution grant the authority to do that? Second, why would you do it? Nobody can touch them militarily anyway, they have an economy that's humming along nicely. They really don't even need our money.

I'm good with your drug legalization. I think your drilling plans are just mistaken. It's not the revenue generator you think it is. Don't agree with a balanced budget amendment. Keynesians believe that the counterweight of government is good for an economy. So the economy is up you should run a surplus. When catastrophe strikes, as it did when AIG collapsed, you might run a deficit. Don't fool yourself into thinking that just letting AIG collapse would have been no big deal. After Lehman fell and AIG was teetering companies like AT&T and GE could not get commercial paper, meaning they did not have access to the money they need to pay their bills. Can't pay employees. Can't pay suppliers. All employees are laid off. All suppliers are destroyed. Like it or not AIG was too big to fail. Their failure meant everything grinded to a halt. Free market cheerleaders like Paulsen and Bernanke got really Keynsian really quickly. The theory is great but we are literally on the verge of catastrophe. The liquidity was essential. Your ammendment under those conditions would have basically stopped all work except what you can do in your own garden. Good luck.

Obviously I don't agree with you on regulations.

Still, you and I could get us 75% of the way there. Sad that options that even you and I can agree with aren't even being discussed.

Paul said...

Chad -

Do you think the analogy your provide is a valid one for the typical person you are concerned about or is a comparison more apt to the fringes? Trying to get a better feel of your perception.

If for typical person - you are making the case that there are no stipulations in place for the benefits?

Chad said...

Kudos to you on calling me out on Isreal. If all funding to every other country was pulled then we agree on another point.

Took me 2 minutes to find this one article with an estimate for only Natural Gas Exploration at ONE SITE and what that would mean in jobs.

"In July of 2010, a report released by the American Petroleum Insistute stated that natural gas production in the Marcellus Shale region —if developed— could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade."

That one site would almost reduce unemployment by more than 3/4% right there. We haven't even mentioned the indirect number of jobs that creates - truckers, houses, restaurunts to support a 1/4 million people, roads and so on.

I have seen similar articles outlining about the same kind of numbers for sites for oil and coal as well, but I don't have them handy right this moment. I am sure you weren't out on the Blaze yesterday, but there was a coal owner looking to employ up to 150 plus people in Birmingham, AL walked away due to regulations (Atlas Shrugged) the negative impact on that community outside the loss of 150 good paying jobs is $50/$60 million dollars in consumables - how many more jobs is that? That is happening all over - sat in front of a customer yesterday that outlined that because of gov't regulations - let me repeat - regulations by gov't, 2 of the most productive coal sites on the East Coast are now schedule to close in 2013. The cost to retro fit scrubbers at these sites to meet new regulations are in the billions and destroys any chance at being competitive in the energy sector so they are out. Directly that is a loss of 1,500 jobs - indirectly my customer had to lay off 50 workers since they are not repairing the exchangers any longer in Kentucky, how about the 12 truck loads a day that ship out of the plant - gone. The town will close. Obama wanted to kill coal producers and he is winning that battle with regulations - the cost for Americans will be incredible.

Balance Budget Admendment will have a super majority vote clause to handle emergencies outside of war Jon so that is not an issue. The debate about the banks - we'll disagree about to big to fail comment. Besides if they were to big to fail why is it that the big banks now control over 77% of the assests?

Obama's plans/regulations have put us in even greater risk now than ever. He should want more banks and not less, but heck what are we talking about here his policies have been a disaster from day 1. He has GE's CEO Immelt on his staff, GE who paid no taxes and the CEO that made a boat load of money is now moving the X-Ray division to China and that is OK - no big deal. Probably because it takes jobs out of Wisconsin.

Chad said...

Paul - My analogy was not intended to be on the fringe. I guess my goal was to make it more personal to see what common sense measures you and I might put on a free loader in our house. When Friday rolls around and the paycheck hits the bank via direct deposit the world is good for everyone, but for me about a week later when the ADP slips comes in the mail I get all wound up when I see what is stolen from me and my wife in taxes and then to watch people like my neighbor just laughat me for putting in the hard work required to earn success.

Let me elaborate - this is not a fabrication of any kind - we have a neighbor family that we've gotten to know because our kids are the same age. They have the same size house, same number of kids (2), newer vehicles that are far more expensive than what we drive. Now - we make about $95/K more per year than they do since they can not keep their mouths shut, but after paying out all bills they have far more desposable income than we do - a new hot tub, 3 flat screens, a bar in their basement and a boat. Why? They pay no income taxes, they qualify for food stamps, deep discounts at the same daycare our children go to (we pay $400/wk, they pay $85/wk and complain) and even membership at the Y for $15/month when ours is $95/month. They are section 8 housing so they pay a 1/4 what we do for rent, they get special rates for gas/electric, they had their children while using Wic/Medicaid so they paid nothing for medical bills, food, formula, diapers - oh but the lady of the house got her teeth done while pregnant so $4K in work on her teeth was all free.

To make matters worse, they have a circle of friends that talk openly about how they dup the system in some way shape or form which essentially means how they are taking my money from me and my family which I take very personally and that was the reason for the analogy.

I know this is not an isolated issue by any stretch so when I hear Jon/Progressives tell me that they needs more of my money for the poor or he wants to take more from the top it makes me blind with anger. Until Jon/Progressives go after my neighbor for their abuse by making comon sense tough rules before handing over freebies then I am not interested in hearing about the wealthy not paying their part which is idiotic anyhow. Examine the $80 million people or more taking freebies - Should they be allowed to buy a $3,000 hot tub while getting food stamps? How about buying a new $40K car while on medicaid - is that ok? How about being able to live in a 3,000 square foot home for $300 out of pocket a month - is that ok?

Eliminate all that waste and maybe the Left will have enough money to help the people really in trouble and let me keep some more money in my pocket along the way.

Paul said...

Chad -

"could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade."

That one site would almost reduce unemployment by more than 3/4% right there."

The labor force is currently approximately 153.4 million.

To decrease the unemployment rate by one percent requires 1.53 net new million jobs. 280,000 is about 0.2%

The report is unclear but my guess is that the 280,000 estimate already includes indirect jobs. I will give it the benefit of the doubt and for sake of discussion assume it doesn't. So I'll do a multiplier of 5 (rough estimate based on the link you provided : "The natural gas industry employs 622,000 people directly and helps create nearly 3 million more American jobs"). That would bring the indirect jobs to 1.4 million for a total of 1.68 million new jobs. You have decreased the unemployment but just a bit over 1%.

I am assuming that you don't care about environmental issues nor safety so no point getting into that.

Paul said...

sorry for the poor wording here
"To decrease the unemployment rate by one percent requires 1.53 net new million jobs."

should have written

"To decrease the unemployment rate by one percent requires 1.53 million net new jobs."

Chad said...

Sorry for the typo's - was on a roll and the site doesn't have spell check like my other programs that catch my errors!

Chad said...

Paul - thanks for the clarification on the math, I was making some bad assumptions obviously -- yet the thought of reducing unemployment by 1% through just one single resource is pretty good still. Is your math including coal and oil or just natural gas? So maybe another multiplier to get to 3% is possible?

The other thought is what would be the implications/impact by keeping the oil money in the US? I have read many articles outlining that using US oil would not necesarily mean a big drop in prices here if but we stop putting money in the pocket of our enemies.

Paul - I do care about the environment, but certainly am not concerned that our actions would make any long term impact on the world.

Jon said...

Chad, take the API with a grain of salt. What would you expect them to say when it comes to their efforts to improve profits for the Petroleum industry? This is the same group that, working in conjuction with the Chamber of Commerce, openly called for and initiated a propaganda effort to convince people that global warming was a liberal hoax even though they know it is real. That's kind of their institutional requirement. They want to improve their profits. If that means deception, what's the difference between that and advertising generally, which is intended to encourage people to make irrational choices that serve their profit motive?

Along the same lines apparently Julia Roberts is associated with a make-up corporation that was required to pull ads in Britain because their courts decided that the photo shop made the claim misleading. They'd show with make up on one side of the face and without on the other, but photoshop is used to distort reality. Deceptive advertising. Deception makes sense for a corporation, but it's not great for consumers.

On Israel though, Israel makes up the vast bulk of military aid when you consider that aid to Egypt is really aid to Israel. We buy off Egypt because they agreed to a peace agreement. That was part of the bribery. Which is why Israel, and the US, was so resistant to Mubarak being ousted. Sure, the people want democracy, but we have a pliant dictator here. And he's more than willing to gun down Palestinians at the Rafa border crossing, which is what Israel is interested in. A democratic Egypt might just let these poor prisoners out. So aid to Israel is really probably 75% of military aid. You're much more Constitutional if you cut them off first. They are the big ones. The rest are a pittance. Not really worth getting to excited about.

On Obama, we're once again in agreement. You are absolutely right. Obama bailed them out because they are too big to fail. And now what? They're getting even bigger and we really can't let them fail. Now why would he do that? Because these corporations have the money and that's what they want. They want to be unable to fail. That way they can take huge risks and privatize the profits. When the risks come to fruition, no problem. Socialize the losses. That's how private concentrations of wealth do it. Why wouldn't they? Why not funnel huge amounts of cash into your pocket and make the taxpayer pick up the tab when things go bad? It's what corporations want, and it's what they've bought with Obama and the rest in Washington.

Jon said...

A couple of thoughts on this neighbor of yours. First of all I agree with you. This is an abuse that I want stopped so real people in need (there are many) can be helped. Of course there are things I don't know though. Is it possible they have a lot of money, like an inheritance? Is welfare based on income? I think wealth should play a role. It does in Europe. For instance in Norway there's a 1% annual wealth tax. You pay 1% of your total net worth to the government. In the US the top 1% own 50% of all the stocks. They don't pay 50% of the taxes. Wealth should matter.

The other thing is these people may be living way beyond their means. They can temporarily have lots of stuff, but long term they can get crushed. You're annoyed today, but when they are retired and have nothing they'll regret it. Let's recall what happened. Unregulated financiers gave everyone a home with no money down because they were inflating a bubble with Credit Default Swaps. No need to put money down. Your home is money, and it grows enormously every year. So they buy this house with nothing down and now they're underwater big time. More government involvement could have prevented this. In fact it did when we had it. No financial crises during the Bretton Woods years (that is after WWII up to 1972). Zero, worldwide. Now what? Repeated financial crisis, and they get bigger and bigger.

I actually agree that you are taxed too much. We've talked about government waste. You and I are in agreement on a lot of these points. But we must choose between unhappy alternatives, since eliminating corporate welfare, stupid wars, foreign military aid, and legalizing drugs isn't really in the cards because our government doesn't serve the interests of the public, but only their corporate masters. We must choose between cutting off elderly Social Security recipients and Mediare recipients, or raising taxes to the Clinton era levels. These are low historically. I'd like to give you a tax cut. I think we could do it if we had representative government. Like I say, representative government means single payer health care. Your budget is balanced right there with no tax increases and no other spending cuts. But we don't have representative government, so we must choose between crappy alternatives.

Paul said...

Chad -

Paul - thanks for the clarification on the math, I was making some bad assumptions obviously -- yet the thought of reducing unemployment by 1% through just one single resource is pretty good still.

As a general rule of thumb I agree. Though there could be cases where the costs are such that I would oppose.

Is your math including coal and oil or just natural gas? So maybe another multiplier to get to 3% is possible?

My math includes the 280,000 that the study claims would be created. I took my "5" multiplier by using a very rough approximation of their claims that X industry employs Y directly and Z indirectly. Z / Y -> ~5 (in this rough range)

Paul - I do care about the environment, but certainly am not concerned that our actions would make any long term impact on the world.

I don't quite follow what you are saying. Are you saying that you don't think our actions would have long term consequences? Or is it that you don't care that they do/could have long term impacts.

I am unfamiliar with the Marcellus Formation or the process of gas extraction. I did a search and came across the following linke
Marcellus Formation

- Note I do not vouch for the authenticity or accuracy of the info within the link. With that disclaimer aside - Take a look at the economic impact session.