What will be the debt outcome come November/December?

[SivaGanesha 2]

It seems that the new debt legislation creates four different scenarios, one of which will play out in November. I'm wondering which scenario you expect will actually happen.

A Supercongress (6 Dems, 6 Reps) will be created to recommend additional budget cuts.

Scenario #1 is that the supercongress approves, and Congress, ratifies, at least $1.2T in budget cuts. This would result in the debt ceiling being raised without further ramifications.

Scenario #2 is that the supercongress approves, and Congress ratifies, less than $1.2T in budget cuts. This results in the debt ceiling being raised, but automatic 'trigger' cuts, intended to be politically painful for both parties, kicking in to make up the difference.

Scenario #3 is that either the supercongress or Congress cannot agree on any cuts. This results in the debt ceiling being raised, but automatic 'trigger' cuts, intended to be politically painful for both parties, kick in for the full $1.2T in cuts.

Scenario #4 is that Congress passes and sends a Balanced Budget Amendment to the states. This results in the debt ceiling being raised but with no immediate budget cuts at all.

I personally think scenario #4 (a balanced budget amendment) is a far more likely outcome than people seem to think. The 'supercongress' and Congress are likely to deadlock, as usual, on proposing any cuts. The only way to avoid the pain of the 'trigger' cuts, for either party, will be the balanced budget amendment--which may be enough to attract the 2/3 majority required.

"It's hard to have fun at 4-way unless your whole team gets down to the ground safely to do it again!"--Northern California Skydiving League re USPA Safety Day, March 8, 2014

[kelpdiver 2]

I see a variation on Scenario 2 as most likely - the committee will create 1.2T in savings out of thin air and claim they meet the mandate, but the CBO will laugh hysterically. (or cry)

You might recall how Sacramento passed a similar bullshit budget in June and the controller declared it invalid due to unrealistic assumptions, and Jerry Brown then vetoed it. In this case, Obama probably still signs it, but the deficit hawks will go nuts.

[DanG 1]

You forgot:

Scenario #5: No one can agree on any cuts, so Congress amends the current deal so that the trigger is either pushed farther into the future, or taken out entirely.

I vote for #5.

- Dan G

[rehmwa 2]

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I see a variation on Scenario 2 as most likely - the committee will create 1.2T in savings out of thin air and claim they meet the mandate, but the CBO will laugh hysterically. (or cry)

Congress will somehow claim that the budget growth is actually ANOTHER 6T increase and then they'll 'cut' 2T from that claiming that they cut 2T vs a 1.2T goal -

they'll claim they cut 2T while ACTUALLY increasing spending by a net 4T


this will be immediately followed by a scramble to raise taxes to cover the 4T increase (er, 'already accounted spending level')

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[TheBachelor 5]

Some minor cuts will be made, and they'll use smoke and mirrors to make it look like they reached their targets.

There are battered women? I've been eating 'em plain all of these years...

[Southern_Man 0]

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You forgot:

Scenario #5: No one can agree on any cuts, so Congress amends the current deal so that the trigger is either pushed farther into the future, or taken out entirely.

I vote for #5.

This. They are already (rhetorically) backing off from the cuts for this year, which only total 21B dollars or 1% of the cuts needed. No chance they take any serious action to actually put this "agreement" into effect. It is all political theatre.

"What if there were no hypothetical questions?"

[winsor 236]

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You forgot:

Scenario #5: No one can agree on any cuts, so Congress amends the current deal so that the trigger is either pushed farther into the future, or taken out entirely.

I vote for #5.

This. They are already (rhetorically) backing off from the cuts for this year, which only total 21B dollars or 1% of the cuts needed. No chance they take any serious action to actually put this "agreement" into effect. It is all political theatre.

P.J. O'Rourke had it pegged when he said that "giving power and money to politicians is like giving whiskey and car keys to teenage boys."

Asking Washington to stop spending money faster than it could be printed is like asking a junkie with an unlimited supply to cut back on their consumption. If you believe them when they they tell you that they will conduct themselves in a completely different manner in the future than they did in the past, you are in for a rude awakening.

The problems we face go far deeper than the numbers on the budget - they are structural.

For example, in the '50s people paid cash for hospital costs, having kids and so forth. By the '70s this had become impossible, since liability and layers of administrative overhead became much more expensive than the cost of care itself.

In the '40s the cost of military power, while staggering, was but a tiny fraction of what it is today.

In the '30s if you could not afford food, you went hungry. Now, by having a child a teenager is ensured a life of "freedom" and mediocrity, with food, housing and expenses a "right" that goes on the tab of whoever is left paying the bills.

In the '30s we had maybe 1/3 as many people, plentiful mass transit, and great stocks of petroleum. Now we have triple the population with fewer skilled laborers, the urban rail systems in most of the country are long gone, we are a net importer of food and import over 75% of the petroleum it takes us to barely function.

All things considered, we are so far beyond screwed that the only question is when and how bad. A skydiver behaving as responsibly as Washington would be viewed as a crater looking for grid coordinates.

It does not pay to get hung up on the crappy details of how we progress to our impending doom as a nation, since we have made it inevitable.

Enjoy yourself - it's later than you think.


BSBD,

Winsor