I recently learnt that Denmark and the US are the only two countries with a fixed debt limit. Several other countries have relative to GDP debt limits. The purpose is the same; to ensure that executive branch can borrow money without having to ask the legislative branch each time. The US debt limit has existed since 1939 in its current form, but it was only recently (like since the 1980s) that it has become a hot potato. Denmark's has existed since 1993, and only been raised once, though far higher than the actual debt.
Other countries don't have these restrictions (fixed or relative), where it's usually because those countries' constitutions allow the executive branch to simply borrow money whenever it sees fit.
I think the debt limit is a good idea as it forces some consensus about spendings. Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation.
It's worse in countries that don't have separation between executive and legislative branch (most EU countries). For example in my country (Poland) you have a party winning an election and then they control both legislative, executive (parliament chooses the prime minister) and mostly judicial branch (not only attorney general is one of the ministers but because terms for supreme/constitutional courts are short they get to put their guys in as well. If they win two times in a row the majority of justice will be theirs.
Once that's done there are 0 check and balances on them. They just spend on social programs and laws benefiting their electorate and screw anyone else. It's a terrible system where winner takes all and is beyond check and balances.
Say what you want about US system but at least it's not free for all the way parliament democracy is. The debt limit is one of those checks - wanna spend money? - talk to the other side about it.
> I think the debt limit is a good idea as it forces some consensus about spendings
Except it doesn't, as seen in the US doing this dance on the brink every other year.
What you actually are thinking of is a spending limit where either constitutionally or by statute you can't pass a budget that isn't balanced to some level.
Being able to pass a budget with more spending than revenues and then saying "wait, we have to agree to borrow too" makes no sense
> judicial branch (not only attorney general is one of the ministers
The attorney general is not strictly considered a part of the judiciary in terms of separations of powers.
The role of prosecutor is pretty firmly an executive one based on the model where the legislature makes the laws, the executive enforces them and the judicial checks they're being enforced as written
The problem with poland is not as much the system as the fact that they fucked it up by appointing judges illegally. Any system is a free for all if you just break the rules, and parliamentary systems tend to be on average less of a free for all than presidential ones
> wanna spend money? - talk to the other side about it
That's the point, you already need to talk to the other side in order to spend the money, it's called passing a budget bill. A debt limit just allows you to decouple the debt discussion from the budget discussion, meaning that when it comes up it's either "raise it, we'll see about spending next budget" or "well, guess we're defaulting now"
* legislature determines the government's income by setting tax rates
* legislature determines the government's spending by passing the budget law
* legislature determines the maximum amount of government debt by law
Obviously if the budget law requires spending that exceeds the tax income, the difference has to be raised by the government by issuing debt.
Now the legislature can pass these different laws such that the executive has no choice but to break one of these 3 laws, as it is arithmetically impossible to follow all of them at the same time. I fail to see what the benefit of that would be for anyone.
If the legislature wants the government to spend less, they can simply pass a smaller budget.
> I think the debt limit is a good idea as it forces some consensus about spendings.
This is what the budget does. The same legislature that is full of people saying they won’t raise the debt ceiling already passed a budget that implies spending money beyond the current debt ceiling. It passed, with majorities in both houses, and the President signed it. The negotiations were difficult.
If we had an ounce of brains, we’d hold the debt ceiling negotiation at the same time as the budget negotiation. I’m not sure if there are congressional rules that prevent this, or if Congress just enjoys the idiocy.
The thing is, it's not the same legislature in the sense that the US has had an election since then and a different party has a majority in the House of Representatives than the one which passed the budget with all the spending. The real question which I think the media is ignoring is why they didn't raise the debt ceiling enough to fund that spending for at least a year or two when they still had power. The cynical answer to that is probably that it was an election tactic: they wanted to convince people to vote for them using the threat that the Republicans wouldn't come to a deal on the debt ceiling and would wreck the government.
The first point is somewhat fair regarding whether you can charge the current legislature with hypocrisy. It doesn’t really address the point that they’re gonna pass another budget this year under Republican control—so the debt ceiling is an absurd way to accomplish their goals.
The second point I disagree with. The history shows that debt ceiling increases are quite frequent—almost annual. Most of the time it doesn’t provoke a debt crisis. While pre-handling increases with the budget would be better, it doesn’t seem to normally be done. It’s just sometimes the case that one party blocks the process (I think it’s true it’s mostly Republicans, but individual Democrats have opposed raising the ceiling and that’s completely irresponsible). So you don’t need an assumption that Democrats pre-planned this.
> Without it people currently in power can spend as much as they please on their electorate needs and leave the next government in a difficult situation.
Spending levels are set by Congress, separate to the debt limit. The executive is not authorized to spend money that's not in the budget; there's no blank check. Abolishing the debt limit would not change this at all.
I don't believe its accurate to say that most EU states have no separation between executive and legislative branches.
The split is around 50%-50% with a majority of states actually having a bicameral system where these branches are separated, and this practically includes all major economic states of the EU as well as Poland and the EU itself. [1][2]
In recent legal material, your country (Poland) is a well-known example of an EU state where the governing party has been systematically breaking down this bicameralism and state of law to accomplish exactly what you're describing though.
The OP point was, that no matter how many chambers you have if one party wins majority in all of them and forms also the government (which usually happens), it will decide pretty much all it wants and go forward full steam with the opposition hopelessly running along barking. It's by design. The only chance is with coalitions as there will be more internal friction, but it's a very minor improvement indeed.
Most other countries allow the executive branch to simply borrow money, not whenever it sees fit, but when it is required to execute the budget approved by the legislative branch. That is an important distinction.
The Executive isn't determining that they need to borrow money. Congress did when they passed a budget and the Executive signed it into law. At that point Congress authorized revenue, borrowing, and expenditures, and other monetary considerations. So, again, there is no merit to the debt ceiling. It exists solely to act as a hostage for conservatives to use to harm the economy and claw back our safety net funding targeting veterans, the elderly, those living in poverty, and other vulnerable demographics.
> Constitution explicitly prevents us from defaulting
This is far from settled law. What it means for a debt to be “authorised by law” within this context is unresolved and frankly unclear. (The 14th Amendment requires paying debts. Not issuing new debt. Maybe the solution is forced sale of public assets, et cetera.)
In fact, we’ve defaulted many times in the past, but nobody seems to care about that. The treasury secretary indeed lied through her teeth about it, as did the WH press secretary.
But of course, the media talking point is to blame Republicans for this “unprecedented calamity”.
It's an extremely important distinction. For example, Parliament in the UK has to pass a budget every year in order to authorise continuing government spending and taxation, without which the government effectively cannot operate - there's no debt ceiling, but this serves the same basic purpose as Article I Section 8 of the US Constitution which is what limits the power of taxation and borrowing to Congress and lead to the debt ceiling. I think this is pretty common in parlimentary systems in general.
There’s an important destination here when talking about Westminster style systems. If a government were unable to secure enough votes for a budget, constitutionally this is the same as a confidence vote. The government would be dissolved and a new government would be formed either by a different coalition or a general election.
A budget is sometimes called a supply bill. When people talk about confidence and supply, that’s what they mean.
Parliamentary systems often don’t have these restrictions because failing to pass a budget would be considered losing a confidence vote and the government would be dissolved. It’s different with a U.S. style system with a fixed term congress and presidency that can’t be dissolved.
Every confidence vote is 100% along party lines and the executive is the parliamentary leadership. Senior cabinet officials run the country and the prime minister holds all the power.
Sounds better than politicians being controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about
Oh, they still do that. Cabinet officials are controlled by capital from behind the scenes while pandering to citizens and stoking nonsense controversy about things nobody cares about.
There is absolutely no merit to a debt ceiling. If you want to curb spending you do that when you set the budget. You don't do it when the bill comes. Can you imagine trying to get out of your mortgage payment because you said you wouldn't spend more than $500 this month? The bank would laugh at you and foreclose.
One argument for the debt ceiling is budgets, when passed, contain many unknowns. That said, a sensible debt ceiling would be closer to a government shutdown; discretionary spending is halted while non-discretionary payments continue.
> What budget’s unknowns does a dept ceiling fixes ?
A trillion dollars plus in student loan pauses and cancellations and starters. Also, for the recently passed IRA we now have “the uncapped tax credits will cost three times what Democrats claimed”.
Then pass a new bill to adjust the budget. We shouldn't skip out on our bills. It makes no sense. I'll say it again. There is no merit to having a debt ceiling. Further, it's unconstitutional.
There's an error of generalization here. There are some who would cut budgets in either case. These are politicians who are generally characterized as farright in the media.
There may be others, but these are two politicians who come to the top of my mind. However, generally speaking there are many GOP members who are content to approve spending on their own partisan budgets. This is a well known issue.
As for the accusation, "that's why they're being called far right"
I had hoped to avoid this by stating, "I do not dispute the characterization..."
The reasons why some are described as "far right" are beyond the scope of this discussion. I do not attribute motive. It is simply an observation of the status quo. They are described as far right here and elsewhere. They seek to limit the government's budget regardless of which way the pendulum is currently swinging. They maybe described as "far right" for any number of reasons. It is an entirely separate topic which could be debated at length.
Perhaps you are projecting your own elaborate ideas, partisan biases and expectations into what was a simple and concise statement? Furthermore, you assume we should all implicitly understand your accusations and their frame of reference. Only by elaborating on why you feel it is a straw-man are we able to discuss this. Without elaboration we can only assume your intent, which more often that not leads to even more projection and partisan caricatures.
Another interesting ambiguity is "semi-sophisticated". It could have meant that HN was too sophisticated for the stawman you alleged. Perhaps it meant that HN isn't sophisticated enough to read the sentence without inflammatory nonsense. I'll leave that as an exercise for the reader.
You started in bad faith pretending that "cutting the budget" is the sole reason these actors are being called far right. There is no purpose to your comment otherwise. Were you literally writing, "I agree these are far right, but I disagree they are being called far right at this time?" That's seriously your response here? Hint: the "adding to the discussion" principle you hold so dear applies to yourself as well.
It may indeed be an error to assume the HN audience is sophisticated enough to recognize bad faith comments, obvious political bias, or even logical fallacy given some of the authors it contains.
It is because people on the right who are not "far right" who want to limit the government's budget approach it by trying to actually limit the budget. The debt ceiling does not limit the budget. It limits taking on debt to satisfy obligations from past budgets that are now coming due.
You have a debt obligation like a utility bill. You want to pay it with your credit card, but you can't because you are over the limit. The end result is you don't spend that money. Your spending is limited, by the debt limit.
Let’s say you used your credit card to spend $1000 this month. The money is spent. At the end of the month it’s time to pay back the credit card company for the $1000 you spent, but you say: sorry, my debt limit is only $600, so you default on your debt and now your credit is ruined.
That’s what the debt limit is like. Financial responsibility would be not spending the $1000 in the first place. It’s wildly irresponsible to spend the money and then decide not to pay the debt, but Republicans consistently threaten to do this because so many of their voters don’t understand what a debt limit is, mistakenly thinking it is a spending limit.
"The news", despite the understandable confusion stemming from its name, isn't about what's new; It's about what's current. "The thing that happened before just happened again" is still news.
After reading some supporting material associated with this topic, I became a fan of MMT. For those interested, I recommend Stephanie Kelton's "The Deficit Myth", and Randall Wray's work. The latter has recently published a really ELI5 for the subject: "Money for Beginners" (NOTE: pay attention to the author - there are quite a few books with similar title)
MMT as an academic concept is fascinating. MMT as a policy tool is useless; if we could predict when runaway inflation will arise we’d have a perfect solution to central banking.
> What is good about MMT is not original and what is original in MMT is not good.
As you just paraphrased either Dr. Samuel Johnson, or Reverend Martin Sherlock (jury is still out on this one), would you care to elaborate on your characterization, please?
Every few years (until they drop the farce altogether and sell the country off for parts to the billionaires), the US will have another manufactured crisis like this. And every time the two parties will come together to strip public goods and social programs.
The United States runs the world's reserve currency - it is existentially impossible for it to be "broke."
People really need to stop thinking the finances of nations operate by the same rules as a family balancing their checkbook. America's "check" is never going to "bounce."
Which reinforces the fact that this is pure theatre and therefore ridiculous.
However, yes, a country's financials are apples and oranges to a household's, although it's primarily politicians that intentionally do the illogical comparison in order to score cheap political points against "the other guy" because most of the proletariat can't distinguish between apples and oranges.
>As of 2021, the U.S. gold reserves total 8,134 metric tons. The next highest holdings were Germany's, whose gold reserves were 3,364 metric tons.[43] As of 31 July 2020, Fort Knox holds 147.34 million troy ounces (4,583 metric tons) of gold reserves with a market value of US $290.9 billion, representing 56.35% of the gold reserves of the United States.
Most other countries hold USD for this purpose, but of course the US can't do that.
Note that this has literally nothing to do with the ability to repay debt, and that the Treasury bills market is larger and more liquid than the gold market. The US holds like 600 B$ worth of gold. There are like 30 trillion dollars in outstanding treasuries. Even if all the gold was liquidated at current market value without slippage, it would only be enough to pay back 2% of the debt.
It is it not also true that the hypothetical family would never go bankrupt if we assume they could pay in debt instruments indefinitely?
Instead of balancing a checkbook, they could simply buy groceries with IOUs. Of course, in an emergency scenario those IOUs would be heavily discounted by creditors seeking to make good on the debt. In this scenario, the price of gold as denominated in discounted IOUs would be much higher.
The entire exercise and the term emergency illustrates that there are indeed limits. This is the reason why they claim to hold gold.
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[ 4.7 ms ] story [ 157 ms ] threadOther countries don't have these restrictions (fixed or relative), where it's usually because those countries' constitutions allow the executive branch to simply borrow money whenever it sees fit.
It's worse in countries that don't have separation between executive and legislative branch (most EU countries). For example in my country (Poland) you have a party winning an election and then they control both legislative, executive (parliament chooses the prime minister) and mostly judicial branch (not only attorney general is one of the ministers but because terms for supreme/constitutional courts are short they get to put their guys in as well. If they win two times in a row the majority of justice will be theirs.
Once that's done there are 0 check and balances on them. They just spend on social programs and laws benefiting their electorate and screw anyone else. It's a terrible system where winner takes all and is beyond check and balances.
Say what you want about US system but at least it's not free for all the way parliament democracy is. The debt limit is one of those checks - wanna spend money? - talk to the other side about it.
And who in power in the US both approved the current year spending budget, and is currently threatening to not raise the debt ceiling?
Except it doesn't, as seen in the US doing this dance on the brink every other year.
What you actually are thinking of is a spending limit where either constitutionally or by statute you can't pass a budget that isn't balanced to some level.
Being able to pass a budget with more spending than revenues and then saying "wait, we have to agree to borrow too" makes no sense
> judicial branch (not only attorney general is one of the ministers
The attorney general is not strictly considered a part of the judiciary in terms of separations of powers.
The role of prosecutor is pretty firmly an executive one based on the model where the legislature makes the laws, the executive enforces them and the judicial checks they're being enforced as written
The problem with poland is not as much the system as the fact that they fucked it up by appointing judges illegally. Any system is a free for all if you just break the rules, and parliamentary systems tend to be on average less of a free for all than presidential ones
> wanna spend money? - talk to the other side about it
That's the point, you already need to talk to the other side in order to spend the money, it's called passing a budget bill. A debt limit just allows you to decouple the debt discussion from the budget discussion, meaning that when it comes up it's either "raise it, we'll see about spending next budget" or "well, guess we're defaulting now"
* legislature determines the government's income by setting tax rates
* legislature determines the government's spending by passing the budget law
* legislature determines the maximum amount of government debt by law
Obviously if the budget law requires spending that exceeds the tax income, the difference has to be raised by the government by issuing debt.
Now the legislature can pass these different laws such that the executive has no choice but to break one of these 3 laws, as it is arithmetically impossible to follow all of them at the same time. I fail to see what the benefit of that would be for anyone.
If the legislature wants the government to spend less, they can simply pass a smaller budget.
This is what the budget does. The same legislature that is full of people saying they won’t raise the debt ceiling already passed a budget that implies spending money beyond the current debt ceiling. It passed, with majorities in both houses, and the President signed it. The negotiations were difficult.
If we had an ounce of brains, we’d hold the debt ceiling negotiation at the same time as the budget negotiation. I’m not sure if there are congressional rules that prevent this, or if Congress just enjoys the idiocy.
The second point I disagree with. The history shows that debt ceiling increases are quite frequent—almost annual. Most of the time it doesn’t provoke a debt crisis. While pre-handling increases with the budget would be better, it doesn’t seem to normally be done. It’s just sometimes the case that one party blocks the process (I think it’s true it’s mostly Republicans, but individual Democrats have opposed raising the ceiling and that’s completely irresponsible). So you don’t need an assumption that Democrats pre-planned this.
https://sgp.fas.org/crs/misc/R43389.pdf#page10
Spending levels are set by Congress, separate to the debt limit. The executive is not authorized to spend money that's not in the budget; there's no blank check. Abolishing the debt limit would not change this at all.
The split is around 50%-50% with a majority of states actually having a bicameral system where these branches are separated, and this practically includes all major economic states of the EU as well as Poland and the EU itself. [1][2]
In recent legal material, your country (Poland) is a well-known example of an EU state where the governing party has been systematically breaking down this bicameralism and state of law to accomplish exactly what you're describing though.
[1] https://en.wikipedia.org/wiki/National_parliaments_of_the_Eu... [2] https://data.ipu.org/compare?field=country%3A%3Afield_struct...
This is far from settled law. What it means for a debt to be “authorised by law” within this context is unresolved and frankly unclear. (The 14th Amendment requires paying debts. Not issuing new debt. Maybe the solution is forced sale of public assets, et cetera.)
But of course, the media talking point is to blame Republicans for this “unprecedented calamity”.
https://www.axios.com/2023/05/16/us-history-debt-default
A budget is sometimes called a supply bill. When people talk about confidence and supply, that’s what they mean.
For people interested in the difference between the US and Denmark with regards to the debt ceiling, take a look at [1].
[1] https://www.cnbc.com/2023/05/24/the-us-isnt-the-only-country...
How much debt the US will take on is decided when the Federal budget is authorised. That's when it happens.
The only thing the debt ceiling does is have the US arbitrarily go into default on treasury bills.
Education: 1M$
Here « education » may have unknowns but the ceiling is supposed to apply to the second par : « 1M$ ». I can’t see what may be unclear in this number.
> one argument
Mind sharing others ? I’d would be (sincerely) happy to understand why US needs this while the rest of the world does not.
A trillion dollars plus in student loan pauses and cancellations and starters. Also, for the recently passed IRA we now have “the uncapped tax credits will cost three times what Democrats claimed”.
https://www.wsj.com/articles/inflation-reduction-act-subsidi...
Not to mention the implicit theory that any of the far right are consistent with that from administration to administration.
If you want comments that only add to the discussion without bad faith, start by reflecting on your own.
https://rollcall.com/2019/06/03/sen-rand-pauls-austere-budge...
https://www.politico.com/story/2017/10/17/rand-paul-oppose-s...
https://www.reuters.com/article/us-health-coronavirus-usa-ma...
There may be others, but these are two politicians who come to the top of my mind. However, generally speaking there are many GOP members who are content to approve spending on their own partisan budgets. This is a well known issue.
As for the accusation, "that's why they're being called far right"
I had hoped to avoid this by stating, "I do not dispute the characterization..."
The reasons why some are described as "far right" are beyond the scope of this discussion. I do not attribute motive. It is simply an observation of the status quo. They are described as far right here and elsewhere. They seek to limit the government's budget regardless of which way the pendulum is currently swinging. They maybe described as "far right" for any number of reasons. It is an entirely separate topic which could be debated at length.
Perhaps you are projecting your own elaborate ideas, partisan biases and expectations into what was a simple and concise statement? Furthermore, you assume we should all implicitly understand your accusations and their frame of reference. Only by elaborating on why you feel it is a straw-man are we able to discuss this. Without elaboration we can only assume your intent, which more often that not leads to even more projection and partisan caricatures.
Another interesting ambiguity is "semi-sophisticated". It could have meant that HN was too sophisticated for the stawman you alleged. Perhaps it meant that HN isn't sophisticated enough to read the sentence without inflammatory nonsense. I'll leave that as an exercise for the reader.
It may indeed be an error to assume the HN audience is sophisticated enough to recognize bad faith comments, obvious political bias, or even logical fallacy given some of the authors it contains.
To repeat: You read that, I didn't write that.
Is there anyone who has not been characterized as "far right" who wants to shrink the overall size of the Federal budget?
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
You have a debt obligation like a utility bill. You want to pay it with your credit card, but you can't because you are over the limit. The end result is you don't spend that money. Your spending is limited, by the debt limit.
That’s what the debt limit is like. Financial responsibility would be not spending the $1000 in the first place. It’s wildly irresponsible to spend the money and then decide not to pay the debt, but Republicans consistently threaten to do this because so many of their voters don’t understand what a debt limit is, mistakenly thinking it is a spending limit.
Where's the news exactly?
What is good about MMT is not original and what is original in MMT is not good.
As you just paraphrased either Dr. Samuel Johnson, or Reverend Martin Sherlock (jury is still out on this one), would you care to elaborate on your characterization, please?
If they don't want to hit debt ceilings, stop approving spending that pushes into it in the first place...
People really need to stop thinking the finances of nations operate by the same rules as a family balancing their checkbook. America's "check" is never going to "bounce."
However, yes, a country's financials are apples and oranges to a household's, although it's primarily politicians that intentionally do the illogical comparison in order to score cheap political points against "the other guy" because most of the proletariat can't distinguish between apples and oranges.
https://en.wikipedia.org/wiki/United_States_Bullion_Deposito....
>As of 2021, the U.S. gold reserves total 8,134 metric tons. The next highest holdings were Germany's, whose gold reserves were 3,364 metric tons.[43] As of 31 July 2020, Fort Knox holds 147.34 million troy ounces (4,583 metric tons) of gold reserves with a market value of US $290.9 billion, representing 56.35% of the gold reserves of the United States.
https://en.m.wikipedia.org/wiki/Foreign_exchange_reserves
Most other countries hold USD for this purpose, but of course the US can't do that.
Note that this has literally nothing to do with the ability to repay debt, and that the Treasury bills market is larger and more liquid than the gold market. The US holds like 600 B$ worth of gold. There are like 30 trillion dollars in outstanding treasuries. Even if all the gold was liquidated at current market value without slippage, it would only be enough to pay back 2% of the debt.
Instead of balancing a checkbook, they could simply buy groceries with IOUs. Of course, in an emergency scenario those IOUs would be heavily discounted by creditors seeking to make good on the debt. In this scenario, the price of gold as denominated in discounted IOUs would be much higher.
The entire exercise and the term emergency illustrates that there are indeed limits. This is the reason why they claim to hold gold.
If the government wanted to spend money on some effort, they needed the citizens to buy bonds.
This seems like a better form of democracy.