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Thread: Government shutdown, debt ceiling looming...

  1. #1

    Default Government shutdown, debt ceiling looming...

    Congress Heads Into Tumultuous Week Pressured by Converging Deadlines

    Government shutdown, debt ceiling loom as Democratic leaders plan votes on multitrillion-dollar spending ambitions

    https://www.wsj.com/articles/congress-heads-into-tumultuous-week-pressured-by-converging-deadlines-11632657601?st=p93nsavs3bmsxim&reflink=desktopwebs hare_permalink
    Last edited by tsptalk; 05-22-2023 at 08:53 AM.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.


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  3. #2

    Default Re: Government shutdown, debt ceiling looming...

    Debt Ceiling 2023

    Biden and McCarthy to meet at White House on Monday to try and avoid looming debt default


    President Joe Biden and House Speaker Kevin McCarthy, R-Calif., will meet in person at the White House Monday to resume negotiations around the debt ceiling.

    Treasury Secretary Janet Yellen said Sunday that “hard choices” will need to be made about which bills will go unpaid if the debt ceiling is not raised.

    McCarthy told reporters that he had a “productive” call with Biden on Sunday, and that staff members for both parties will resume talks
    https://www.cnbc.com/2023/05/21/debt...ot-raised.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  5. #3

    Default Re: Government shutdown, debt ceiling looming...

    This Debt Ceiling Fight is something I promised myself 12 years ago, that I would wait on the sidelines for it to conclude, and exited stocks today for the safety of the G with 1st May IFT.

    But the larger overall discussion of the Debt situation is an interesting one here to discuss...and one of Tom's polls touched on it...where a large majority said spending was the main problem.
    If we are successful in tackling the National Debt (cure the patient) we have to first "Stop the Bleeding" by balancing the Federal Budget.
    One side says we have to cut spending...the other side says we have to raise revenue.
    The "spending side" sounds good, until one actually looks at our Federal Annual Budget, and see's there's really only 13% to play with, assuming we're not going to cut military in the most dangerous time across the world since the Cuban Missile Crisis 60 years ago...with not just Russia's threat to the free world, but also China (Taiwan).
    So the US probably needs to increase military spending in the short term.
    Taxes, on the other hand (revenue) are near the lowest levels in nearly a century. And every time the top rate was cut below 40% we've gotten into trouble, like when we squandered the near balanced budget of the late 90's with tax cuts in the early 2000's, started increasing our deficits sharply post 2017 via tax cuts, and increased deficits tremendously after massive tax cuts in early to mid 1980's. Got into trouble in the late 1920's when we cut taxes so much, it led to the irrational exuberance that helped sink the US into the Great Depression.

    A cold hard look at the numbers below. With both sides locked into their beliefs, I don't see a viable solution anytime soon, not until 1 side realizes entitlements need to be trimmed, and the other side realizing taxes for some, have to go up...IMHO. Actually its my opinion steeped in mathematical fact. But curious what others think.

    Federal Bdget & Debt.jpg
    CURRENTLY 100% G (as of COB 03/18/2024) 1st March IFT

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  7. #4

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    Default Government shutdown, debt ceiling looming...

    I think we need to raise taxes, and we need to apply import duties- enough to pay for health care for Americans. Lift the cap on Social Security. Impose a 0.1% stock transfer tax, AND a 1% stock buyback tax. And then repeal the Trump tax cuts that blew the hold in the deficit.

    Corporations allow development that individual ownership couldn’t do. With that benefit, should come extra fees to society. That is what I think.

    But that’s just me.


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  9. #5

    Default Re: Government shutdown, debt ceiling looming...

    Definately agree with lifting the cap on Social Security.
    Part of my salary is exempt from SS taxes and I'm just a federal employee who will be relying on SS for at least 25% of my retirement.
    Also top tax rate has to go back to the long term average we had during America's longest sustained economic expansion, between the 91% from 1946-160 and the 37% it is today. I would say 50% would be a good start...then as we approach a balanced annual budget, that top rate can come down gradually to 45 or 40%.
    Thats is we are serious about doing something about our National Debt.

    Quote Originally Posted by James48843 View Post
    I think we need to raise taxes, and we need to apply import duties- enough to pay for health care for Americans. Lift the cap on Social Security. Impose a 0.1% stock transfer tax, AND a 1% stock buyback tax. And then repeal the Trump tax cuts that blew the hold in the deficit.

    Corporations allow development that individual ownership couldn’t do. With that benefit, should come extra fees to society. That is what I think.

    But that’s just me.


    Sent from my iPhone using TSP Talk Forums
    CURRENTLY 100% G (as of COB 03/18/2024) 1st March IFT

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  11. #6

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    Default Re: Government shutdown, debt ceiling looming...

    I expect that there are some areas that we can trim the budget but certainly not 4 trillion from discretionary spending. But taxes need to be raised as well. The other problem is if the spending cuts hurt the state budgets, then the state will raise taxes or cut more areas that will hurt the residents of the state. It's just a vicious circle.
    May the force be with us.

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  13. #7

    Default Re: Government shutdown, debt ceiling looming...

    Thanks for keeping this thread civil so far. We know how it can go and someone may eventually spoil it, but until then, just reporting on what's happening...


    Debt ceiling talks hit a snag over spending levels with eight days until default deadline

    Debt ceiling negotiations appeared to hit a snag with only eight days to go until the U.S. faces risk of a default.

    The White House and House Republicans appeared at an impasse over spending cuts the GOP has demanded.
    https://www.cnbc.com/2023/05/24/debt...-mccarthy.html
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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  15. #8

    Default Re: Government shutdown, debt ceiling looming...

    My two cents. Debt ceiling showdowns do nothing. From 2011 they only accelerated increasing the debt. Even now it’s just noise.

    There’s always going to be an excuse or crisis. The only solution is a balanced budget amendment.

    Tax receipts increase usually. Have been since 2009. There’s no reason why spending can’t see modest increases in parallel. If we’re not adding deficits each year then that’s all you can reasonably hope for.

    As for tax increases it sounds good. More money to pay it down? But it just means more spending to me. It’s a separate issue imo. Still it’s important to remember more revenue doesn’t mean they use it to pay down anything. I’d support tax increases only if there’s something in place to control spending.

    This is a spending problem. Even with a modest tax increase hopefully aimed at wealthy, it’s asking too much to rely on future congresses to be disciplined enough to keep spending in check without an amendment.


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    Default Re: Government shutdown, debt ceiling looming...

    I’m concerned because of the timing right now. If there is no agreement today, (which there won’t be), then it is going to be too late to get a new debt ceiling signed into law in a timely fashion.

    Whenever the House and the White House can come up with a deal, it will still have to be voted on in the House AND also pass the Senate. They both are supposed to adjourn after today. And Monday is a holiday.

    I’m seeing it easily going beyond June 1, and a bankruptcy is imminent at that point.

    I just called my Congressman’s office, and the staffer answering the phone said “oh, I’m sure the Dems will cave. Just because somebody said June 1 doesn’t really mean June 1. “

    I can’t believe the staffer is saying such a thing. It’s not going to be pretty if it actually goes belly up.


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    Default Re: Government shutdown, debt ceiling looming...

    Just some quick things that come to mind.

    Getting rid of the gift exemption is a nice place to start. Over a lifetime you can give away $13M if single or $26M if married, to friends and family. That's ridiculous, unreasonable, and only benefits a small subset who are more concerned with passing down generational wealth than anything else.

    Another place is the lifetime contribution limit of $550k per beneficiary to a 529 (college savings) fund. I'm not saying to do away with 529's because they are a great vehicle for savings, but the top 1% of earners receive 40% of the benefits of a 529 plan. It's just another way to shelter money even though it is subject to the above rules.

    How about preventing tax breaks for corporations to move to a certain city? Once the tax break dries up, the company plays hardball to renegotiate or ups and leave. Disney is facing similar challenges with that right now. Sure they take care of the property and roads and all, but the honeymoon phase is over.

    Social Security and Medicare ages need to be raised. Really no need to elaborate there.

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  21. #11

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    Default Government shutdown, debt ceiling looming...

    Fitch puts United States' AAA rating on negative watch, citing debt ceiling fight

    Source: CNBC

    Fitch put the United States’ AAA long-term foreign-currency issuer default rating on negative watch Wednesday evening, pointing to brinksmanship over the debt ceiling.

    “The Rating Watch Negative reflects increased political partisanship that is hindering reaching a solution to raise or suspend the debt limit despite the fast-approaching x date,” the rating agency said.

    Futures linked to the Dow Jones Industrial Average briefly slipped about 100 points after Fitch, one of the big three ratings agencies, issued its note. The so-called X-date, which is when the U.S. could default on its debt, could arrive as early as June 1, according to Treasury Secretary Janet Yellen.

    Fitch noted that it still expects Washington officials to arrive at a resolution before the deadline. “However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations,” the rating agency said.

    Read more: https://www.cnbc.com/2023/05/24/fitc...t-ceiling.html


    (That is a significant, negative action).

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  23. #12

    Default Re: Government shutdown, debt ceiling looming...

    Quote Originally Posted by James48843 View Post
    Fitch puts United States' AAA rating on negative watch, citing debt ceiling fight

    Source: CNBC

    Fitch put the United States’ AAA long-term foreign-currency issuer default rating on negative watch Wednesday evening, pointing to brinksmanship over the debt ceiling.

    “The Rating Watch Negative reflects increased political partisanship that is hindering reaching a solution to raise or suspend the debt limit despite the fast-approaching x date,” the rating agency said.

    Futures linked to the Dow Jones Industrial Average briefly slipped about 100 points after Fitch, one of the big three ratings agencies, issued its note. The so-called X-date, which is when the U.S. could default on its debt, could arrive as early as June 1, according to Treasury Secretary Janet Yellen.

    Fitch noted that it still expects Washington officials to arrive at a resolution before the deadline. “However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations,” the rating agency said.

    Read more: https://www.cnbc.com/2023/05/24/fitc...t-ceiling.html


    (That is a significant, negative action).

    Sent from my iPhone using TSP Talk Forums

    Thats what Moody's did 12 years ago, and was responsible for half of the S&P's 22% plunge in 2011.
    And that occurred a few days after the debt ceiling deal was done at the last minute.
    Makes a strong case to not only be out of stocks now, but stay out thru the 1st 1-2 weeks in June even if there is a debt deal, because Fitch will likely do what Moody's did 11 years earlier...Lower US AAA rating to AA+.
    I'm not gonna mention parties here, but am going to say those in Congress using Default as a political weapon, should be removed from office, they're putting party over country.
    CURRENTLY 100% G (as of COB 03/18/2024) 1st March IFT

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