That Pesky Debt Ceiling

Little noticed in the coverage thus far is a clause/idea that likely eliminates the "debt ceiling" going forward.

Buried in the language of last night's bill was, in fact, the change giving Milhous (and likely every future prez) the ability to VETO any bill NOT authorizing a debt ceiling increase. This VETO would kick the measure back to Congress and, if Congress fails to muster the 2/3 majority to override said VETO, the debt ceiling gets raised to wherever the current president wants it. Pretty slick, huh? IF THIS PROVISION IS INCLUDED IN ALL OTHER FUTURE AGREEMENTS (and why wouldn't it be now that it has happened once?), you can say goodbye once and for all to that whole, pesky debt ceiling stuff. Print and spend ad infinitum.

The language for this can be found in this news link: http://www.politico.com/story/2013/10/government-shutdown-debt-ceiling-default-update-98390.html as well as this piece of analysis discovered earlier by Turdite "tread_w_care":

Nails in the coffin, boys and girls.
Reason Mag links through to the .pdf of the bill here: http://reason.com/blog/2013/10/16/house-passes-spending-bill-partial-gover
My read on this is they did give Obama the authority to suspend the debt ceiling, period.  Pres. can send over a 'certification' to Congress suspending the debt ceiling, and the CONgress has 14 days to respond, either overturning it on vote (majority required is not clear), or . . . not.
The subsection is entitled "Default Prevention Act of 2013" - http://docs.house.gov/billsthisweek/20131014/BILLS-113hr2775-SAmdt-SCND.pdf

(Perhaps our Attorney General, CaL, might be able to review this over the weekend. I'd love to get his opinion.)

Anyway, now that this language has been inserted into the current "compromise", it is highly likely that it will be inserted into every future "compromise". Say goodbye to "The Debt Ceiling", say hello once and for all to Debt/Deficit/QE to Infinity.

TF

122 Comments

senseiam's picture

Well

Not really at all surprising.

The Doc's picture

Latest Willie

Jim Willie: Gold Resurrection from Financial Disaster
 

jones gold 2

 

The central bank concept is the Matrix in embodiment, but the Eastern nations led by BRICS and G-20 have a key to unlock the USDollar prison. A quick look at the Australian banking system reveals four global banks who own outsized portions, their reach extending to the largest gold producer in Oz as well. Incest is best. The fast decline in Money Velocity is the most convincing proof of the failure of monetary policy. It does not provide stimulus, but rather capital destruction. The foreign dumping of USTreasury Bonds actually accelerated this past summer, amidst the Taper Talk trial balloon offered by the hapless desperate Bernanke Fed. His legacy will be one of disproving his own PhD Thesis, since liquidity in torrents does not repair insolvency, and no traction comes to soaked ground.
A grand game of shuffling gold bars has begun, actually accelerated in a final phase. The big bullion banks wish to obscure that they are almost bone dry of gold in inventory. The COMEX will shut down from no gold, rather than criminal prosecution in a land where crime rules and treason is the syndicate bylaw.
The climax event will be the return of the Gold Trade Standard, discarding the USTreasury Bonds, converting them to Gold bullion. The early adopters and those who follow the viable solution will be the winners. Those who cling to their USTBonds and their other paper securities in indentured servitude will be the losers.

http://www.silverdoctors.com/jim-willie-gold-resurrection-from-financial-disaster/

Hammer's picture

Repost from last

Repost from last thread.

India's central bank governor, Raghuram Rajan, said India has a reserve of $280 billion which is 15% of its GDP. "The country can pay three-fourth of its debt from its Forex reserves," First Post cites him saying. 

"We bought over $60 billion dollar gold last year. $60 billion accounts for three-fourth of our current account deficit," he said. "If the push comes to shove, we can pay the world in gold."

Rajan also said that India will not approach the IMF for financing in the next five years, adding that countries only go the IMF when they are "desperate."

TreeTop Dweller's picture

Nice Catch!

Thanks for pointing that out!  All roads lead to print and print again!

Nigel Black's picture

IMF formally proposes wealth confiscation.

The International Monetary Fund Lays The Groundwork For Global Wealth Confiscation

The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets.

Yes, you read that right. But don’t take it from me. The report itself says:

“The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”— a one-off tax on private wealth—as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). … The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away. … The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth. (page 49)”

Note three takeaways. First, IMF economists know there are not enough rich people to fund today’s governments even if 100 percent of the assets of the 1 percent were expropriated. That means that all households with positive net wealth—everyone with retirement savings or home equity—would have their assets plundered under the IMF’s formulation.

Second, such a repudiation of private property will not pay off Western governments’ debts or fund budgets going forward. It will merely “restore debt sustainability,” allowing free-spending sovereigns to keep tapping the bond markets until the next crisis comes along—for which stronger measures will be required, of course.

Third, should politicians fail to muster the courage to engage in this kind of wholesale robbery, the only alternative scenario the IMF posits is public debt repudiation and hyperinflation. Structural reform proposals for the Ponzi-scheme entitlement programs that are bankrupting us are nowhere to be seen.

If ever there were a roadmap for prompting massive capital flight and emigration of productive citizens toward capitalism’s nascent frontiers in Asia, this is it.

http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/

opticsguy's picture

so is this the Day the Dollar Died?

The three men I admire most,

Blankfien, Dimon, and Bill Gross,

Took the Gulfstream to Davos,

The day the dollar died.

Note: paraphrased from Minyanville on TARP day 5 years ago (the first time we thought the dollar died)

¤'s picture

Pseudo- Debt Ceiling

Back in Nov 2012 when Geithner first mentioned doing away with the debt ceiling you knew some variation of it would eventually happening. I remember catching some flak for suggesting some variation of this would indeed happen.

Here it is.

If Obama or any other President gets final say on the debt ceiling because of Congressional reticence then what you'll have is a faux debt ceiling that will continually get raised so that the Pol.'s up for election can wash their hands of it.

The President becoming the decision maker on the debt ceiling is politically expedient and convenient to say the least.

Mr. Fix's picture

I just watched the “liar in chief” give his victory speech.

Talk about spiking the football! Apparently, we were having a robust economy until the Republican brinksmanship  drove it off a cliff.

according to the scumbag who lives in the White House, there was a lot of  damage done to our economy in the past two weeks, but the impact will not be apparent immediately.

He continues to inform us that all that is wrong with the world is the direct result of conservatives in the house,

and without them, we would be the most prosperous nation in the world with unparalleled  growth.

It's a freaking shame this country does not have a press corps anymore,

in a speech that contained one lie after another, it will now be reported as gospel.

So you heard it here first, when the economy falls off the cliff next month, it will all be because of the tea party.

Turd Ferguson's picture

That's awesome

MODERATOR

Don McLean would be proud.

nut cutter's picture

mr fix... hat tip

and spot on.....  

opticsguy's picture

The next three months will be the equivalent of the first class

passengers on the Titanic throwing snowballs with the ice shavings on the deck.

Mr. Fix's picture

More on the debt ceiling:

Last night while driving, I was listening to Mark Levin on the radio, and he explained that the new debt ceilings are now automatic, unless the Congress can muster up a two thirds supermajority to override the president.

He also concedes that this will never happen, and it is apparent that we no longer have a official number listed as a debt ceiling anymore, it's whatever the president wants it  to be now.

In the president's speech, he also claimed that are debt is now falling at the greatest rate in history.

I don't think we will be seeing many “official numbers” referring to government debt anymore,

apparently, us little people have no need to know anymore, and it would only repudiate the “great lie” that has become substituted for American government.

I would expect most holders of American dollars overseas to start dumping them in droves, as soon as the implications of what happened last night become mainstream.

HappyNow's picture

The idea of a debt ceiling

The idea of a debt ceiling has become a joke so in real terms this is no change.   There is no politically viable way out of QE to infinity.

DPH sounds like you paid the price of being ahead of your time.  Congrats on the call.

There is a downside to this Presidential power though.  Unless I am not seeing it straight.

Obama used this standoff to push through Obamacare.   If he already had the ability to raise the ceiling then he would not have been able to use the ceiling as a hostage.

Or does the language allow the President to tack on such measures as he feels appropriate and push it all through?   Eg. raise debt ceiling and attach Obamacare then force it all through?

Silver_investor's picture

Good Catch

This is the only site that I've been to this morning that mentions this. It seems to me that this is the same thing they did earlier this year. Back at the end of January they temporarily suspended the statutory debt limit until May 18th. The Treasury then began using "extraordinary measures" to avoid breaching the debt limit. Now that the debt ceiling issue has been "resolved", we're going to see a sharp increase in the federal debt as a result of those "extraordinary measures" the Treasury had been using. It may be reflected in today's Daily Treasury Statement which comes out at 4:00 p.m. I don't know exactly how much the increase will be, but it will likely be several hundred billion.  

opticsguy's picture

Mr Fix

We're only a pleasure barge away from our own Caligula.

Silver_investor's picture

@Mr. Fix

"In the president's speech, he also claimed that are debt is now falling at the greatest rate in history."

He's a sociopath! As I just mentioned in my previous comment, we are going to see a very sharp increase in the federal debt due to the "extraordinary measures" the Treasury was using to avoid breaching the debt limit. (Those extraordinary measures are just accounting gimmicks.) I think he made this statement because the annual budget deficit for FY 2013  will be under $1 trillion--after four consecutive years of trillion dollar deficits

Magpie's picture

Actually, I think Zero was

referring to the deficit, not the debt ceiling.   He's been making that statement a lot lately.  So has Krugman.   They seem to think Zero is making that happen all by hiz little ol' self.

Howard Roark's picture

Greece

Well I just read that the minister of the administrative reform (only a socialist gub could have such a minister!) of Greece made a statement on a private tv saying that "Greece will make no more cuts on spending" and that "Greece has reached the limit".

I guess that talks with the troika (November) will go smoothly... and with a little help from Frau Merkel. 

Here in Lusitania, the budget talks are hot, all the budget deficit targets were missed, more cuts in social pensions (just wait for the Constitutional Court!) and limited tax deductions for families are due for 2014. And only then the costs of paying the interest on the debt will increase. A lot! 

Nothing to see here. Europe is problem free...

Of course it is.

Salut,

HR

Magpie's picture

Ten things to expect from Obamacare in 2014

http://www.caseyresearch.com/articles/ten-things-to-expect-from-obamacare-in-2014

7. Further destruction of Medicare.

In 2014, Medicare patients will discover several unwanted changes:

  • higher premiums for their supplemental policies
  • fewer types of Medicare supplement policies available
  • more cutbacks in Medicare-covered services
  • longer delays to see doctors, because many doctors are closing their doors to Medicare patients due to the cuts in reimbursements
  • fewer cancer care specialists taking Medicare patients
  • higher costs for hospital-based cancer treatments, as private offices with lower costs are closed due to reimbursement cutbacks
  • fewer hospital-based surgeries being approved because as of October 2012, Obamacare rules incentivize hospitals (i.e., paid more by Medicare) to do fewer surgeries and procedures.
  • Medicare patients who sign the Advance Beneficiary Notice (ABN) agreeing to pay for services Medicare does not cover will find that they now have higher out-of-pocket costs to pay for these non-covered services.
  • Patients over 80 are already finding reduced approvals for certain procedures and medicines. Expect to see more of this age-based rationing as the Medicare cuts increase over the next decade.
Dr Jerome's picture

debt and deficit

I am still amazed that the majority of sheeple in this nation do not understand the difference between debt and deficit. Apparently Obama doesn't even understand the difference, or he lied to America again. No need to explain it to this group. But even talking with professors at the University, and other educated people, I find they do not grasp the difference. When I see the national debt clock start ticking backwards, then I will have hope. Until then, what is the difference if we zoom off the cliff at 1 trillion mph or at 900 billion mph, or at 1 mph? Even if the US balanced the budget, but still did not pay down the debt, we are mortally vulnerable to the slightest rise in interest rates. And the Fed buying more treasuries to hold down rates only increases the deficit. But if they let the rates rise, our deficit will rise.

The financial health of this nation is doomed. And it is "all the Republicans fault" (latest meme) according to Obama. I hope that a representative government will be able to rise from its wreckage.

I would read and analyze his speech, but I think our colleagues above have revealed the heart of it, and it would make me sick to my stomach and angry the rest of the day. 

Wizard's picture

A Lobbyist And A Senator Walk Into A Restaurant

Love This. It is hilarious Probably because it is true

https://www.youtube.com/watch?feature=player_embedded&v=Hy9_fsL6uS8#t=17

Bugzy's picture

Debt

Thing is, if debt is paid down then the currency supply dries up (as all currency is debt). Would this not cause deflation? It has to keep expanding on this system or it will collapse.

So collapse is baked in, just a matter of extreme contraction or hyper inflation IMO.

We need a new global system, but try telling that to the IMF who now want to tax every ones savings. For the greater good of course.

Bollocks's picture

Dr Jerome

"I am still amazed that the majority of sheeple in this nation do not understand the difference between debt and deficit. Apparently Obama doesn't even understand the difference, or he lied to America again."

They do the same in the UK. The deficit is presented as the debt and the sheep say "oh, that's good, isn't our government fantastic!" when there's an (apparent, cough!) drop in the deficit, which has been presented as a drop in the debt.

Cameron did this quite recently and sheep were inteviewed afterwards and the MSM made a big thing of it.

Pure deception.

Dr Jerome's picture

Just received an email

YES, HE MAULED SIX PEOPLE WEARING OBAMA T-SHIRTS, 

SNAPPED AT FOUR LOCAL BANKERS, 

BIT FOUR PEOPLE WEARING PELOSI T-SHIRTS,

ATTACKED SEVERAL REPUBLICANS WHO CAVED IN,

AND CHASED NINE TEENAGERS WITH PANTS HANGING PAST THEIR CRACK, 

FOR THE LAST TIME... THE DOG IS NOT FOR SALE !!! 
NO, I DO NOT APPROVE OF HIS SMOKING, BUT - HE SAYS IT 
HELPS GET THE "BAD TASTE" OUT OF HIS MOUTH!! 

Bollocks's picture

Wizard

That is brilliant. It IS true - it's perfect - there's no 'probably' about it!

edit: let's embed it here...

AugmentedFourth's picture

"Would this not cause

"Would this not cause deflation?"

An essential part of the big lie is the universal and unqualified assumption that deflation is "bad". 

Human Mushroom's picture

@ Mr. Fix "according to the

@ Mr. Fix

"according to the scumbag who lives in the White House, there was a lot of damage done to our economy in the past two weeks, but the impact will not be apparent immediately.

He continues to inform us that all that is wrong with the world is the direct result of conservatives in the house,

and without them, we would be the most prosperous nation in the world with unparalleled growth."

-----------------------------------------------------------

It seems that the scapegoat has been established. From now on, anything negative that happens in our pseudo-economy will have been the result of the republicans in the House. Therefore, any action the President has to take going forward will be for countering the effects caused by the recent government shutdown.

This means, of course, that the puppet-masters of the "Office of the Dictator" (President) can proceed with their agenda to destroy the U.S.A. and have all the negative effects blamed on the scapegoat, the republicans of the House.

As a side note, the abbreviation U.S.A. no longer has any meaning. It used to mean the United States of America. It was the States that formed our Republic; they came together, united.

The States now just sit back and get run over by the Federal government. The States don't even have any representation in the Senate anymore. It used to be the States decided who would represent them in the Senate. That was removed my the 17th Amendment. Senators are now elected by the people of the State, so the Senators now have to pander to the people of the state instead of being chosen my the States' governments to represent their interest in the laws that are created for America.

Since the Federal government has turned the majority of the people of this country into recipients of social welfare of many types, the people are beholden to the Federal government to just survive. The bottom line is that the Federal career politicians can now do whatever they want with the country, even destroy it, by orders from the elite banking system.

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