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Debt Ceiling Debacle 2013: It's the End of the World As We Know It and the GOP Feels Fine

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  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    Astaereth wrote: »
    Astaereth wrote: »
    I will point out two things:

    1. Much of the current deficit is due to the recession itself, because it increases earned benefit payments (more people need unemployment) and decreases revenues (fewer people have jobs, those with jobs earn less or miss raises, therefore incomes and the tax base shrink, therefore income tax revenues shrink overall). Here's Krugman on that:
    Krugman wrote:

    For starters, we need to be aware that we don’t need a balanced budget to have a stable fiscal situation; all we need is for debt to grow no faster than GDP. At the beginning of fiscal 2012, federal debt in the hands of the public was $10 trillion. Meanwhile, most estimates of long-run growth and inflation put them at a bit more than 2 and 2 respectively; so we can reasonably say that nominal GDP growth can be expected to be more than 4 percent per year. If debt grew at 4 percent, it would grow by $400 billion. So the deficit should be scaled down by that much.

    That still leaves $700 billion. Where’s that coming from?

    OK, revenues were $2.45 trillion, which was 15.7 percent of GDP, at $15.5 trillion. The CBO estimates, however, that potential GDP — what the economy would have produced at full employment — was $16.5 trillion over the same period. And if the economy had been at more or less full employment, we wouldn’t just have collected taxes on the additional income; historically, the tax share of GDP varies strongly with the business cycle. If the economy had been at potential and revenue had been a historically normal 18 percent of GDP, revenue would have been more than $500 billion more than it was; even if revenue had been only 17.5 percent, it would have been almost $450 billion more than it was.

    [...]

    Put these together: $400 billion that doesn’t increase the debt-GDP ratio; $450 billion or so in slump-related revenue loss; $150 billion or more in slump-related expenses; and guess what: the ONE TRILLION DOLLARS is basically just a depressed-economy story, having nothing to do with any fundamental mismatch between what we want and what we’re willing to pay.

    And this makes a lot of sense! The budget wasn’t deep in the red in 2007, and there have been no fundamental increases in government responsibilities or cuts in taxes since then (Obamacare won’t kick in until 2014, and it’s paid for in any case).

    2. What we've seen in recent years is that austerity in a recession merely kicks up this same cycle--the more you cut spending, the worse the recession gets, and the more your revenues go down. It's like the businessman who decides to stop cutting his hair and cleaning his suits in order to save money and then gets fired for having an unpresentable appearance.

    In other words, you can't cut your way to fiscal stability; you can only grow your way there. And that means spending money, or at the very least not cutting expenses.

    Nor can you use arbitrarily "necessary" cuts (like those a debt-ceiling default would entail) to do an end-run around decades of democratically-negotiated budgeting. Starving the beast doesn't work, because whether or not people are willing to pay their debts, they are always willing to incur them. To go back to the household metaphor, you can try quitting your high-paying job to go work at McDonalds as a self-encouragement to scale back your expenses, but it will turn out that your spouse won't let you pull the kids out of private school, your subscription to Steak of the Month can't be canceled without 90 days notice, and you can't bear to garage sale your home entertainment center with the 10.2 Surround Sound.

    I think I got a little too deep into the metaphor there, but the point is, "painful austerity now, balanced budgets later" isn't a strategy we shouldn't pursue because it's too painful now; it's a strategy we shouldn't pursue because it won't work.

    I disagree with Krugman on ACA costs (the government has already spent a lot, although it pales in comparison to what the premium subsidies will cost).

    But more importantly, I disagree that we can't cut spending as a way out of the hole, it just requires us to accept fewer benefits. For example, we did not have to extend unemployment benefits as far as we did, but not doing so would have meant choosing to allow a lot of people to fall into abject poverty. This may make it harder to get out of the recession, but we would still do it, the resulting picture would just be one of more income inequality than before it started. So I don't think that the choice is austerity and perpetual recession or debt financed spending and recovery. It's austerity and a recession that lasts longer and hurts people more (and for a longer time) or spending and a faster recovery, at the cost of more debt. I think the latter is clearly preferable, but preferring the former is not incoherent.

    The whole point of my post is that the bolded is incorrect; when the economy recovers, GDP goes up, revenue goes up, inflation goes up, and the ratio of debt to GDP goes down, down, down. Unemployment benefits help the economy recover (because it maintains consumption levels), so the debt that we incur paying for them will be paid off and then some when the economy recovers sooner.

    So in my opinion the bolded in your post should be rewritten as, "The choice is between austerity and a recession that lasts longer, at the cost of the same debt now and more debt later, or spending and a faster recovery, at a cost of more debt now but less debt eventually." This is standard Keynesian stuff, where the government uses investment multipliers to help improve the economy out of a recession via deficit spending.

    For example, I am underemployed at the moment and looking for work. I could stop making my car insurance payments, on the theory that this would make my savings last longer; but if I couldn't drive, I wouldn't be able to show up to interviews. It's not a dumb thing to do because it sucks to not be able to drive; it's a dumb thing to do because it'd be shooting myself in the foot. The few hundred a month I'd save pale in comparison to how much longer it would take to find a job without a car, to the extent that I'd be better off putting that money on a credit card now and paying it off once I found work.

    And the point I am making (putting aside how hard those multipliers are to pin down) is that the government could stop providing a lot of the services it currently provides and the economy would still come out of recession. Your assumption of debt now plus more debt later under austerity seems to be predicated on the notion that austerity wouldn't really cut that deep. Again, I do not support this view, but I think it is fully coherent for someone to say (for example) that the government ought to stop providing unemployment, medical and retirement benefits entirely, and balance the budget on the back of these cuts. Drastically cut spending, and you simply need less revenue.

    Until your law enforcement costs skyrocket because the poor start killing the rich and stealing their shit so they can eat.

    Edit: I should really read the whole thread before I respond.

    Also yes.

    Recovery for the rich, austerity for the poor was tried once.

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    It didn't go well for basically anybody.

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  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    I just don't agree that short-term greed trumping long-term sustainability is coherent in the least.

    Allegedly a voice of reason.
  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    Chanus wrote: »
    I just don't agree that short-term greed trumping long-term sustainability is coherent in the least.

    It's coherent, but stupid.

    It is coherent if your only goal is "make as much money for myself as possible RIGHT NOW".

    It is really fucking stupid though.

    And at this point, I think we need to point out that SKFM basically agrees with this statement and hasn't actually be advocating for austerity.

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  • Knight_Knight_ Dead Dead Dead Registered User regular
    I wish every time SKFM came in and started being a silly goose about some nonsense that would benefit him even though he says he doesn't believe/support it, we'd just ignore him.

    Austerity doesn't work to pull a country out of a recession. It is incoherent, lets spend way less money and then hope demand appears by sheer force of will!

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  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    This is what I'm saying.

    If it's stupid, it's not coherent.

    It's maybe internally consistent.

    But it's not coherent.

    Allegedly a voice of reason.
  • Salvation122Salvation122 Registered User regular
    "Coherent" doesn't mean "intelligent" or "correct"

    It means "nothing I say contradicts anything else I say"

    If your philosophy is "fuck everyone else, target the bailout to help me, specifically, turn profits next quarter," then you're being coherent, you're just also an idiot

  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    If it is only "coherent" because you omit the inevitable next step where it necessarily crumbles in upon itself, it's not coherent.

    Allegedly a voice of reason.
  • Knight_Knight_ Dead Dead Dead Registered User regular
    "Coherent" doesn't mean "intelligent" or "correct"

    It means "nothing I say contradicts anything else I say"

    If your philosophy is "fuck everyone else, target the bailout to help me, specifically, turn profits next quarter," then you're being coherent, you're just also an idiot

    "We'll cut spending, raise taxes, and demand will appear because we want it to so very much" A and B do not lead to C. Incoherent.

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  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    Blurh ermergerd austerity sucks, get that bitch a stimulus bill. Bitches love stimulus bills.

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  • Salvation122Salvation122 Registered User regular
    Chanus wrote: »
    If it is only "coherent" because you omit the inevitable next step where it necessarily crumbles in upon itself, it's not coherent.

    Presumes you give a shit about the long-term health of whatever you're saying should be targeted for recovery. It's entirely possible that you plan on cashing out before your losses can no longer be propped up by exogenous factors.

  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    Chanus wrote: »
    If it is only "coherent" because you omit the inevitable next step where it necessarily crumbles in upon itself, it's not coherent.

    Presumes you give a shit about the long-term health of whatever you're saying should be targeted for recovery. It's entirely possible that you plan on cashing out before your losses can no longer be propped up by exogenous factors.

    Well Chanus argues that this is incoherent, I agree insomuch as I tend to think people should take the long view, but SKFM is also technically correct.


    Which as we all know is the best kind of correct.

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  • shrykeshryke Member of the Beast Registered User regular
    edited January 2013
    I don't see why you need to argue. Austerity during a recession doesn't work. This is becoming an "even more then previously established" established fact.

    You don't need to talk about anything else. SKFM's argument fails right there.

    Everything else seems to be trying to weaken the point with talk of social consequentness of stupid policy and the like. SKFM's base premise is just 100% wrong. The bad social consequences don't come in to it until we are talking about someone actually doing it.

    shryke on
  • spacekungfumanspacekungfuman Poor and minority-filled Registered User, __BANNED USERS regular
    shryke wrote: »
    I don't see why you need to argue. Austerity during a recession doesn't work. This is becoming an "even more then previously established" established fact.

    You don't need to talk about anything else. SKFM's argument fails right there.

    Everything else seems to be trying to weaken the point with talk of social consequentness of stupid policy and the like. SKFM's base premise is just 100% wrong. The bad social consequences don't come in to it until we are talking about someone actually doing it.

    And I am arguing that austerity can work, we may just not like the outcome. If you think that coming out of a recession means getting everything, including employment levels back to Pre-recession levels, you are flat out wrong. The recession technically ended in June 2009, before bailout moneys under ARRA had even started to be distributed in earnest. You know who was up at the end of the recession? My industry. And even with austerity measures in place back then, I would argue we still would have emerged from recession (as long as the bank bailout still happened), it would have been a pretty bleak picture. But even if a larger chunk of the population was left permanently poor post recession, and certain areas never recovered, the majority of people in the US would still have been employed and active participants in the consumer market. Like I said before, a targetted recovery, but not an unsustainable one, as long as the government is able to maintain order. Some people are maintaining that they would not be able to, but we don't have an answer to that question.

  • shrykeshryke Member of the Beast Registered User regular
    edited January 2013
    shryke wrote: »
    I don't see why you need to argue. Austerity during a recession doesn't work. This is becoming an "even more then previously established" established fact.

    You don't need to talk about anything else. SKFM's argument fails right there.

    Everything else seems to be trying to weaken the point with talk of social consequentness of stupid policy and the like. SKFM's base premise is just 100% wrong. The bad social consequences don't come in to it until we are talking about someone actually doing it.

    And I am arguing that austerity can work, we may just not like the outcome. If you think that coming out of a recession means getting everything, including employment levels back to Pre-recession levels, you are flat out wrong. The recession technically ended in June 2009, before bailout moneys under ARRA had even started to be distributed in earnest. You know who was up at the end of the recession? My industry. And even with austerity measures in place back then, I would argue we still would have emerged from recession (as long as the bank bailout still happened), it would have been a pretty bleak picture. But even if a larger chunk of the population was left permanently poor post recession, and certain areas never recovered, the majority of people in the US would still have been employed and active participants in the consumer market. Like I said before, a targetted recovery, but not an unsustainable one, as long as the government is able to maintain order. Some people are maintaining that they would not be able to, but we don't have an answer to that question.

    The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.


    Austerity doesn't help you out of a recession, nor does it lead to better outcomes. There's no reason for it in depressed economy.

    shryke on
  • V1mV1m Registered User regular
    But even if a larger chunk of the population was left permanently poor post recession, and certain areas never recovered, the majority of people in the US would still have been employed and active participants in the consumer market. Like I said before, a targetted recovery, but not an unsustainable one, as long as the government is able to maintain order. Some people are maintaining that they would not be able to, but we don't have an answer to that question.

    Well in the sense that it's debatable as to whether it would lead to the second revolution or the New American Reich, I guess we don't have a specific answer to "What kind, exactly, of horrible violent political turmoil will result?".

  • bfickybficky Registered User regular
    PSN: BFicky | Switch: 1590-9221-4827 | Animal Crossing: Brandon (Waterview) | ACNH Wishlist
  • MalkorMalkor Registered User regular
    aw man

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  • DrakeonDrakeon Registered User regular
    I don't understand why you take options off the table. Why not use it as leverage?

    PSN: Drakieon XBL: Drakieon Steam: TheDrakeon
  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    Drakeon wrote: »
    I don't understand why you take options off the table. Why not use it as leverage?

    Democrats.

    More specifically: Obama.

    He is either so brilliant a chess player we just can't comprehend his methods or, as is more likely, he really doesn't understand how to negotiate.

    Allegedly a voice of reason.
  • MalkorMalkor Registered User regular
    Wait so I guess we're just doing to default?
    The administration’s position is that raising the debt limit is Congress’s responsibility until the day that Congress votes to make it the White House’s responsibility, which is a resolution the Obama administration would happily accept. Until then, White House officials say, they will not negotiate over the debt ceiling, and if congressional Republicans attempt to use it as leverage, then the consequences will be theirs to bear.

    fuuuuuuuuuck

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  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    The idea is somehow the American public will start blaming Congress and not the White House this time.

    Because WHAT THE FUCK ARE YOU THINKING

    Allegedly a voice of reason.
  • Mild ConfusionMild Confusion Smash All Things Registered User regular
    I'm not gonna panick. The man is Xanatos.

    At least, I hope so...

    steam_sig.png

    Battlenet ID: MildC#11186 - If I'm in the game, send me an invite at anytime and I'll play.
  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    I'm not panicking because I totally expected Obama to take options off the table before negotiations ever started because that's what he's always done.

    Allegedly a voice of reason.
  • TheBlackWindTheBlackWind Registered User regular
    First the Death Star, now the Platinum Coin... So much for "hope".

    PAD ID - 328,762,218
  • Kid PresentableKid Presentable Registered User regular
    edited January 2013
    I'm slightly baffled but not completely baffled. Maybe you don't want to allow Congress the luxury of being shitheads without consequence. If they're operating under the assumption that you will use a magic solution to keep the country from burning down, what motivation do they really have to do anything but bluster? If you know that daddy is gonna make everything okay, you can be as petulant as you want! On the other hand, now the country is gonna burn down or we're gonna eat at least half of a shit-sandwich, for no reason, and call it a compromise. Or the whole "not gonna mint a coin to save the world" statement is a bluff, and they really would do it if needed? Oh boy, I dunno.

    Kid Presentable on
  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    I have a small amount of hope Treasury and the Fed are only posturing that the option is off the table for pretty much the reason you listed.

    Allegedly a voice of reason.
  • CorehealerCorehealer The Apothecary The softer edge of the universe.Registered User regular
    First the Death Star, now the Platinum Coin... So much for "hope".

    I guess we need a new hope, or at least some spare change.

    Is there really going to be an argument over whose fault it is come zero hour? Really?

    Oh who am I kidding of course there will because both sides are the same hurr durr.

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  • enlightenedbumenlightenedbum Registered User regular
    We need someone with a tendency and past history of making ridiculous photo ops to shame Republicans... I wonder if there's anyone like that in the Democratic Party with ambition?

    Self-righteousness is incompatible with coalition building.
  • Eat it You Nasty Pig.Eat it You Nasty Pig. tell homeland security 'we are the bomb'Registered User regular
    obama starts being a big believer in separation of powers at the weirdest goddamn times

    NREqxl5.jpg
    it was the smallest on the list but
    Pluto was a planet and I'll never forget
  • spacekungfumanspacekungfuman Poor and minority-filled Registered User, __BANNED USERS regular
    shryke wrote: »
    shryke wrote: »
    I don't see why you need to argue. Austerity during a recession doesn't work. This is becoming an "even more then previously established" established fact.

    You don't need to talk about anything else. SKFM's argument fails right there.

    Everything else seems to be trying to weaken the point with talk of social consequentness of stupid policy and the like. SKFM's base premise is just 100% wrong. The bad social consequences don't come in to it until we are talking about someone actually doing it.

    And I am arguing that austerity can work, we may just not like the outcome. If you think that coming out of a recession means getting everything, including employment levels back to Pre-recession levels, you are flat out wrong. The recession technically ended in June 2009, before bailout moneys under ARRA had even started to be distributed in earnest. You know who was up at the end of the recession? My industry. And even with austerity measures in place back then, I would argue we still would have emerged from recession (as long as the bank bailout still happened), it would have been a pretty bleak picture. But even if a larger chunk of the population was left permanently poor post recession, and certain areas never recovered, the majority of people in the US would still have been employed and active participants in the consumer market. Like I said before, a targetted recovery, but not an unsustainable one, as long as the government is able to maintain order. Some people are maintaining that they would not be able to, but we don't have an answer to that question.

    The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.


    Austerity doesn't help you out of a recession, nor does it lead to better outcomes. There's no reason for it in depressed economy.

    I agree that austerity cannot help you get out of a recession. The purpose of austerity is to limit the amount of debt you incur while your revenue is down because of the recession.

    I don't support austerity, but I do think there are coherent arguments supporting it.

  • spacekungfumanspacekungfuman Poor and minority-filled Registered User, __BANNED USERS regular
    I am not surprised at all that they are taking the coin off the table. It's a solution like the type it's my job to find, and the government rarely plays those types of games.

  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    obama starts being a big believer in separation of powers at the weirdest goddamn times

    Well, no. He's always been a strong proponent of separation of powers. I'm annoyed he blanked the option (even though it's polling pretty badly according to PPP), but this move is most likely meant to remove all doubt who is going to be at fault when we kill the global economy next month.

    9XQzl.jpg

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  • shrykeshryke Member of the Beast Registered User regular
    shryke wrote: »
    shryke wrote: »
    I don't see why you need to argue. Austerity during a recession doesn't work. This is becoming an "even more then previously established" established fact.

    You don't need to talk about anything else. SKFM's argument fails right there.

    Everything else seems to be trying to weaken the point with talk of social consequentness of stupid policy and the like. SKFM's base premise is just 100% wrong. The bad social consequences don't come in to it until we are talking about someone actually doing it.

    And I am arguing that austerity can work, we may just not like the outcome. If you think that coming out of a recession means getting everything, including employment levels back to Pre-recession levels, you are flat out wrong. The recession technically ended in June 2009, before bailout moneys under ARRA had even started to be distributed in earnest. You know who was up at the end of the recession? My industry. And even with austerity measures in place back then, I would argue we still would have emerged from recession (as long as the bank bailout still happened), it would have been a pretty bleak picture. But even if a larger chunk of the population was left permanently poor post recession, and certain areas never recovered, the majority of people in the US would still have been employed and active participants in the consumer market. Like I said before, a targetted recovery, but not an unsustainable one, as long as the government is able to maintain order. Some people are maintaining that they would not be able to, but we don't have an answer to that question.

    The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.


    Austerity doesn't help you out of a recession, nor does it lead to better outcomes. There's no reason for it in depressed economy.

    I agree that austerity cannot help you get out of a recession. The purpose of austerity is to limit the amount of debt you incur while your revenue is down because of the recession.

    I don't support austerity, but I do think there are coherent arguments supporting it.

    There are internally consistent arguments for it. Those arguments are built on faulty premises.

    Their coherence is irrelevant, they are still wrong.

  • ChanusChanus Harbinger of the Spicy Rooster Apocalypse The Flames of a Thousand Collapsed StarsRegistered User regular
    God I hate that face.

    I think only McConnell's causes me more hate.

    Allegedly a voice of reason.
  • Captain CarrotCaptain Carrot Alexandria, VARegistered User regular
  • V1mV1m Registered User regular
    bficky wrote: »

    Oh so he's going for a power play.

  • FencingsaxFencingsax It is difficult to get a man to understand, when his salary depends upon his not understanding GNU Terry PratchettRegistered User regular
    I think we need to be clear that SKFM is not arguing that it's a good idea, he's arguing that it's an idea consistent with their economic philosophy.

    Now, that philosophy is indeed based on shaky premises, and is at the very least somewhat immoral, but it's not out of the blue for them or anything.

  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    V1m wrote: »
    bficky wrote: »

    Oh so he's going for a power play.

    Honestly, this will spin better than TDC, even though TDC is ingenious if inelegant.

    It'll be Both Sides Are Bad Vote Republican because Democrats Can't Govern Without Resorting To Tricks if the coin is what we have to do.

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  • V1mV1m Registered User regular
    V1m wrote: »
    bficky wrote: »

    Oh so he's going for a power play.

    Honestly, this will spin better than TDC, even though TDC is ingenious if inelegant.

    It'll be Both Sides Are Bad Vote Republican because Democrats Can't Govern Without Resorting To Tricks if the coin is what we have to do.

    It was that "I'll be happy to accept responsibility for the debt ceiling if Congress wants to dump it on me, but they have to officially dump it on me" line. So if Congress want to make the debt ceiling a presidential responsibility that's fine, but they have to legally hand over the responsibility to do so.

  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    edited January 2013
    V1m wrote: »
    V1m wrote: »
    bficky wrote: »

    Oh so he's going for a power play.

    Honestly, this will spin better than TDC, even though TDC is ingenious if inelegant.

    It'll be Both Sides Are Bad Vote Republican because Democrats Can't Govern Without Resorting To Tricks if the coin is what we have to do.

    It was that "I'll be happy to accept responsibility for the debt ceiling if Congress wants to dump it on me, but they have to officially dump it on me" line. So if Congress want to make the debt ceiling a presidential responsibility that's fine, but they have to legally hand over the responsibility to do so.

    Ah, yes.



    Not going to happen, that's also kind of a stupid thing to say from a political pov.

    Not inaccurate, but it doesn't play well with others.

    EDIT:

    Although, rereading it, it sounds like Klein's shitty phrasing rather than an actual policy position.

    AManFromEarth on
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