Quote of the moment, encore: President asks the Senate Majority Leader for help on the debt ceiling issue, November 16, 1983

November 16, 2013

Ronald Reagan preparing for a video address from the Oval Office. (Photo is from 1989; this post is about a 1983 address.)  Wikipedia image

Ronald Reagan preparing for a video address from the Oval Office. (Photo is from 1989; this post is about a 1983 event.) Wikipedia image

In a letter to the Majority Leader of the U.S. Senate, the President wrote:

This letter is to ask for your help and support, and that of your colleagues, in the passage of an increase in the limit on the public debt.

As [the Treasury Secretary] has told you, the Treasury’s cash balances have reached a dangerously low point.  Henceforth the Treasury Department cannot guarantee that the Federal Government will have sufficient cash on any one day to meet all of its mandated expenses, and thus the United States could be forced to default on its obligations for the first time in history.

This country now possesses the strongest credit in the world.  The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate.  Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets.  The Nation can ill afford to allow such a result.  The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion:  the Senate must pass this legislation before the Congress adjourns.

I want to thank you for your immediate attention to this urgent problem, and for your assistance in passing an extension of the debt ceiling.

Sincerely,

         Ronald Reagan

True then.  Still true now.

Letter from President Ronald Reagan to Senate Majority Leader Sen. Howard Baker, R-Tennessee, November 16, 1983.  The Treasury Secretary at the time was Donald Regan.

Tip of the old scrub brush to mainstream media pillar, The Washington Post, where a .pdf of the letter is available.

More:

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Ronald Reagan’s message to the Tea Party on the debt ceiling: Fail to raise it “an outrage”

October 11, 2013

Ronald Reagan, by Lawrence Lind

Ronald Reagan, by Lawrence Lind

Sen. Claire McCaskill (D-Missouri) summoned Ronald Reagan’s ghost to visit the Tea Party:

McCaskill said:

Published on Sep 27, 2013

Former President Ronald Reagan explaining the importance to American jobs and businesses of Congress living up to its financial obligations and paying the country’s bills.

(Hey, are Congress people getting the hang of internet video, finally?  Could teachers be far behind?)

More:


Olbermann on debt ceiling bill: “Four great hypocrisies”

August 2, 2011

Keith Olbermann doesn’t like the debt ceiling compromise, and tells why:

One suspects he has not read all the specifics of the bill.

One may also fear he’s right anyway.

A requirement for passing a Constitutional amendment is clearly unenforceable — perhaps illegal (such pledges are considered corruption, generally prosecutable).  Not that it matters.

Ronald Reagan said we shouldn’t negotiate with terrorists, but then did.  Now we see why we shouldn’t.

The Tea Party took the U.S. economy hostage.  They sliced up the hostage, and got quite a bit in ransom.  This is not a good way to run politics.  Shame on them.


Lesson for Congress: Sometimes an eagle has to drift a while just to survive

July 28, 2011

Maybe Ben Franklin got it wrong, and the bald eagle is the best candidate for our national bird.

Cousin Amanda, last year with the condors in California, spends this summer with the bears, salmon, whales and other spectacular wildlife in Alaska.  (Internships are great, for the interns, no?)

Comes this photo of our national symbol, the bald eagle:

Eagle in the water near Hoonah, Alaska; photo by Amanda Holland (rights reserved)

Yeah, it’s a bit of a flyspeck on the horizon photo, but it’s still instructive.  Probably looking for fish, this bird waded too far out into the estuary.  Once it realized it was wet, and in the water, it tried to swim to shore.  Eagle wings are made to soar, however, not swim.  Swimming didn’t work.  At this point, the bird could have continued to struggle to do the impossible, and probably drown; or it could just give up, and drown.

Or, it might sit tight and wait to see if another opportunity presents itself.  After about an hour in the water, the bird drifted into shallow water where it could walk out.

Ms. Holland posted this photo on her Facebook site.  A friend there observed, “The symbol of our nation floating aimlessly with the tide because it is too bogged down to do anything else… How much irony can exist in one single photograph?”

Sometimes we get in “too deep.”  We may want to soar, but that’s not possible.  But if we’re patient, if we don’t do stupid stuff, we might just drift into safer waters, and survive, and thrive.

Yeah, we know, Tea Partiers: You think the nation spends too much money.  That’s a debate worth having.

But that’s not worth failing to raise the debt ceiling.  Failing to raise the debt ceiling will cost the nation, by conservative estimates, a half-trillion dollars in increased interest rates, with no gain of any program or paying of any debt.

It’s time to drift with the flow of events.  Raise the debt ceiling now, and survive without doing something stupid.  We can discuss solutions later, rationally, once we prevent the waste of a half trillion dollars, eh?  Time to stop fighting and stay alive, Congress.

We can learn a lot from the bald eagle.  I think even Ben Franklin would agree.

What’s that, Ben?  Our follies tax us more than taxes?

“Friends,” says he [Father Abraham], “and Neighbours, the Taxes are indeed very heavy, and if those laid on by the Government were the only Ones we had to pay, we might more easily discharge them; but we have many others, and much more grievous to some of us. We are taxed twice as much by our Idleness, three times as much by our Pride, and four times as much by our Folly; and from these Taxes the Commissioners cannot ease or deliver us by allowing an Abatement. However let us hearken to good Advice, and something may be done for us; God helps them that help themselves, as Poor Richard says, in his Almanack of 1733.

— Ben Franklin, The Way to Wealth, 1758


Slowpoke Comics on debt ceiling ultimata

July 24, 2011

At least one other person in the universe rather agrees with me that it’s odd as hell that anyone would take the debt ceiling issue to use as a bargaining chip.

Jen Sorenson tells the truth, the whole truth and little else, at Slowpoke Comics:

Jen Sorensen's Slowpoke Comics - Debt Ceiling

Jen Sorensen's Slowpoke Comics - Debt Ceiling (click image to read it full size at Jen's website)

What are the odds we can get the Dallas Morning News to carry this strip?


Debt ceiling: Pure politics?

July 20, 2011

Courtesy of some guy who goes by the handle Americus Paulytics:

Here’s the count of how many Republican U.S. Senators voted to increase the debt ceiling the last eleven times it’s been done

1997: 55
2002: 31
2003: 50
2004: 50
2006: 51
2007: 26
2008: 34
2008: 33

Then Obama was elected.

2009: 2
2009: 1
2010: 0

Bill Clinton occupied the White House in 1997; George W. Bush lived there the next seven times the Senate voted.  Is there a trend here?

Is  that account of events correct?

Tip of the old scrub brush to Marion Young.


Hard truths about the debt ceiling and uncertainty in the Treasury market

July 16, 2011

Two organizations provide information to Congress in an unbiased manner, with great care for accuracy and completeness of information:  The Congressional Research Service (CRS), an arm of the Library of Congress, and the General Accountability Office (GAO), formerly the General Accounting Office.  Both agencies share the unique status of being organs of the Congress, and not the executive branch.

Consequently, we and Congress should give particular consideration to a report issued by GAO on February 22, 2011:

Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market

GAO-11-203 February 22, 2011
Highlights Page (PDF)   Full Report (PDF, 52 pages)   Accessible Text   Recommendations (HTML)

Summary

GAO has prepared this report to assist Congress in identifying and addressing debt management challenges. Since 1995, the statutory debt limit has been increased 12 times to its current level of $14.294 trillion. The Department of the Treasury (Treasury) recently notified Congress that the current debt limit could be reached as early as April 5, 2011, and the Congressional Budget Office (CBO) projects that under current law debt subject to the limit will exceed $25 trillion in 2021. This report (1) describes the actions that Treasury traditionally takes to manage debt near the limit, (2) analyzes the effects that approaching the debt limit has had on the market for Treasury securities, and (3) describes alternative mechanisms that would permit consideration of the link between policy decisions and the effect on debt when or before decisions are made. GAO analyzed Treasury and market data; interviewed Treasury officials, budget and legislative experts, and market participants; and reviewed practices in selected countries.

The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred. While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited. This is because the debt reflects previously enacted tax and spending policies. Delays in raising the debt limit create debt and cash management challenges for the Treasury, and these challenges have been exacerbated in recent years by a large growth in debt. In the past, Treasury has often used extraordinary actions, such as suspending investments or temporarily disinvesting securities held in federal employee retirement funds, to remain under the statutory limit. However, the extraordinary actions available to the Treasury have not kept pace with the growth in borrowing needs. For example, unlike the past, the amount potentially provided by the extraordinary actions for 1 month in fiscal year 2010 was less than the monthly increase in debt subject to the limit for most months of the year. As a result, once debt reaches the limit, Congress will likely have less time than in prior years to debate raising the debt limit before there are disruptions to government programs and services. This trend is likely to continue given the long-term fiscal outlook. Failure to raise the debt limit in a timely manner could have serious negative consequences for the Treasury market and increase borrowing costs. Also, some of the actions that Treasury has taken to manage the amount of debt near the limit add uncertainty to the Treasury market. In the past, Treasury has postponed auctions and dramatically reduced the amount of bills outstanding, which compromised the regularity of auctions and the certainty of supply on which Treasury relies to achieve the lowest borrowing cost over time. GAO’s analysis suggests that borrowing costs modestly increased during debt limit debates in 2002, 2003, and most recently in 2010. In addition, managing debt near the debt limit diverts Treasury’s limited resources away from other cash and debt management issues at a time when Treasury already faces challenges in lengthening the average maturity of its debt portfolio. Observers and participants suggested improving the link between the spending and revenue decisions that drive debt and changes in the debt limit. Better alignment could be possible if decisions about the debt level occur in conjunction with spending and revenue decisions as opposed to the after-the-fact approach now used. This practice, which is similar to practices used in some other countries, might facilitate efforts to change the fiscal path by highlighting the implications of tax and spending decisions on changes in debt. To avoid potential disruptions to Treasury markets and help inform fiscal policy decisions in a timely way, Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue. Treasury provided technical comments on a draft of this report, which GAO incorporated as appropriate.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from “In process” to “Open,” “Closed – implemented,” or “Closed – not implemented” based on our follow up work.

*     *     *     *     *     *     *

Matters for Congressional Consideration

Recommendation: The projections of a growing debt burden have raised concerns both in Congress and in the public. Well-designed budget processes and metrics can help as Congress and the President seek to address the federal government’s long-term fiscal challenge. The current design of the debt limit does not engender or facilitate debate over specific tax or spending proposals and their effect on debt. In addition, the uncertainty it creates can lead to disruptions in the Treasury market and in turn to higher borrowing costs. To avoid these potential disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way, Congress may wish to consider ways to better link decisions about the debt limit with decisions about spending and revenue. Such a process would build on the approach used in 2008 and 2009 when Congress passed and the President signed three laws that were expected to increase borrowing with a corresponding increase in the debt limit. This report presents a number of approaches that could serve as a basis for better linking decisions about spending and revenue with decisions about the debt limit.

Status: In process

Comments: When we determine what steps the Congress has taken, we will provide updated information.

Use the links near the top of the report to get to the full report.

Pay particular attention to this, repeated from above:

The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred. While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited. This is because the debt reflects previously enacted tax and spending policies. Delays in raising the debt limit create debt and cash management challenges for the Treasury, and these challenges have been exacerbated in recent years by a large growth in debt.

Tip of the old scrub brush to Michael A. Ryder.

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Wall of shame:  Bloggers and others who do not have a clue


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