Obamacare cost...

[Moliere]

Thanks. Then you agree with me. I said there is a chance. Not that it was likely.

I think senior citizens and veterans among others might disagree with your interpretation of debt.

Of course the market doesn't cause the default. And at some point the market would react to a rising risk of default. However, that does not mean that the lack of a significant market reaction means there is no risk. That's silly to say and it is what Moliere is arguing.

I don't recall ever saying that. In fact, I think I said the opposite. The market reflects what people think is going to happen and people take into account risk. That's why returns on equities are higher than bonds, because equities are more risky. It's why returns on Treasuries are very, very low, because they are extremely low risk. In fact, most people consider US Treasuries to be the benchmark for the risk-free rate.

[Moliere]

It depends on how you're using the term. That said, with the debt ceiling you won't find anybody (except here apparently) who says that the use of "debt" in "debt ceiling" only includes financings.

You're blowing my mind now. The debt ceiling is set on the US bonds issued, or financings. If it included all liabilities we'd need a ceiling more around the $100 trillion range. The $100 trillion is just a guess since GASB doesn't actually require the US gov't to book all liabilities in its balance sheet, and even if it did you couldn't rely on the financial statements because they don't ever get an unqualified audit opinion.

[Pelado]

You're blowing my mind now. The debt ceiling is set on the US bonds issued, or financings. If it included all liabilities we'd need a ceiling more around the $100 trillion range. The $100 trillion is just a guess since GASB doesn't actually require the US gov't to book all liabilities in its balance sheet, and even if it did you couldn't rely on the financial statements because they don't ever get an unqualified audit opinion.

I've always thought of an unqualified audit opinion as a counter-intuitive term.

[calicoug]

You're blowing my mind now. The debt ceiling is set on the US bonds issued, or financings. If it included all liabilities we'd need a ceiling more around the $100 trillion range. The $100 trillion is just a guess since GASB doesn't actually require the US gov't to book all liabilities in its balance sheet, and even if it did you couldn't rely on the financial statements because they don't ever get an unqualified audit opinion.

You are misunderstanding my point. Any issue with the debt ceiling is going to affect all kinds of liabilities of the government even of those liabilities aren't capped by the debt ceiling. If we have to redirect our payments to financings first (and by law we do) then some other liability will go unpaid. What will it be? Social security? Veterans' benefits? The fact that those payments aren't "capped" by the debt ceiling is irrelevant. Something won't get paid. And if that happens, the credibility of the US as the world's "risk free" standard will be compromised. It would be chaos. And ultimately it would significantly impact bond prices along with lots of other issues.

Furthermore, does anyone actually believe the government can be reconfigured overnight to only pay on bonds? That isn't how the government is set up to operate. Would bonds have to be paid manually? Who can do that work? Who is setting up that process?

The "debt" on debt ceiling cannot be contained to just financings. The debt ceiling will impact all spending if it is breached. That's the issue and there is a risk of it happening whether you agree or not. And you have said there is no chance:

The market takes into account what people think will happen. No one thinks we'll default because we won't. People are smart.

[imanihonjin]

You are misunderstanding my point. Any issue with the debt ceiling is going to affect all kinds of liabilities of the government even of those liabilities aren't capped by the debt ceiling. If we have to redirect our payments to financings first (and by law we do) then some other liability will go unpaid. What will it be? Social security? Veterans' benefits?

The government will just have to utilize your awesome business model of finding magical areas to cut.

[Pelado]

You are misunderstanding my point. Any issue with the debt ceiling is going to affect all kinds of liabilities of the government even of those liabilities aren't capped by the debt ceiling. If we have to redirect our payments to financings first (and by law we do) then some other liability will go unpaid. What will it be? Social security? Veterans' benefits? The fact that those payments aren't "capped" by the debt ceiling is irrelevant. Something won't get paid. And if that happens, the credibility of the US as the world's "risk free" standard will be compromised. It would be chaos. And ultimately it would significantly impact bond prices along with lots of other issues.

Furthermore, does anyone actually believe the government can be reconfigured overnight to only pay on bonds? That isn't how the government is set up to operate. Would bonds have to be paid manually? Who can do that work? Who is setting up that process?

The "debt" on debt ceiling cannot be contained to just financings. The debt ceiling will impact all spending if it is breached. That's the issue and there is a risk of it happening whether you agree or not. And you have said there is no chance:

Well we know they struggle implementing things with a 2 1/2 year lead time, so you may have a point.

[calicoug]

The government will just have to utilize your awesome business model of finding magical areas to cut.

These liabilities already exist. You can't "cut them."

[calicoug]

Well we know they struggle implementing things with a 2 1/2 year lead time, so you may have a point.

I know you are being sarcastic but realistically there are millions of checks to cut. How would they get reprioritized to pay bonds first and who would do it? It's a massive project and one that won't happen in 2 weeks no matter what the law requires. It would be total chaos.

[Pelado]

I agreed with you.

[Moliere]

These liabilities already exist. You can't "cut them."

The liabilities you speak of are simply actuarial calculations. You can cut them by myriad of ways. Just off the top of my head you could raise the age limit for receiving SS benefits, reduce reimbursements made to doctors for Medicare related operations, increase the taxability of SS benefits, etc.

You talk as if there is an actual contract between me and the gov't for these services. There is no contract. They really don't owe me anything, at least not right now.

[calicoug]

I agreed with you.

Sorry, I thought you were being sarcastic.

[imanihonjin]

These liabilities already exist. You can't "cut them."

Surely your plan has something they could cut. I mean after all it seems if a business owner can magically absorb the extra expenses associated with Obamacare by cost cutting in other places, the government should be able to do it too.

[Pelado]

Sorry, I thought you were being sarcastic.

Oh, I was, but I definitely agree(d) with you that the federal government would have difficulty in effectively accomplishing a task in a tight time frame.

[Color Me Badd Fan]

They do exist -- someone was actually able to sign up for an Obamacare exchange policy.

And now virtually every media outlet is eager to interview this oddity. Oh yeah, he also happened to be an Obama for America Organizing for Action volunteer.

http://www.mediaite.com/online/chad-...tlet-is-on-it/

[calicoug]

Surely your plan has something they could cut. I mean after all it seems if a business owner can magically absorb the extra expenses associated with Obamacare by cost cutting in other places, the government should be able to do it too.

I don't think you realize we are talking about two different issues. The government obviously has room to cut. But that is the budget process. The debt ceiling involves liabilities already made. You can't cut a liability. Neither can a business owner. You can cut things that may become a liability but that's different.