Patterico's Pontifications

10/9/2015

Jonathan Chait Has Absolutely No Idea What the Debt Limit Is

Filed under: General — Patterico @ 7:39 am



Jonathan Chait mocks Ben Carson for supposedly not understanding what the debt limit is, in a piece titled Ben Carson Has Absolutely No Idea What the Debt Limit Is. Problem is, Chait apparently doesn’t understand it himself, while Carson understand it just fine, thank you. Here’s the beginning of Chait’s piece:

The debt limit is a routine vote that Congress must periodically make to authorize payment on debts the government has incurred. It has no impact on the budget, but the failure to lift the debt ceiling means the U.S. government would go into default, a potentially disastrous event.

Two sentences in, Chait already has it wrong. Whether he is ignorant or lying is an open question, but he is wrong either way. Peter Ferrara explained this at Forbes in October 2013, but it bears repeating:

As the outstanding federal debt becomes due, it can simply be paid by newly issued debt, without violating the debt limit, as the total outstanding debt would not change. President Obama’s own budget estimates total net interest on the national debt for this year currently totals $223 billion. But his budget also estimates total federal income taxes for this year at $1.7 trillion, or $1,700 billion. So just as you use a small portion of your monthly earnings to pay your credit card bill, current federal tax revenues are more than enough to pay the current interest due on the national debt. So not increasing the national debt does not mean defaulting on the national debt. QED.

But our party controlled press, like the Washington Post and the New York Times, which behave voluntarily in regard to the Obama Administration just as Pravda did under compulsion in regard to the old Soviet dictators, foolishly echo this Obama party propaganda, “reporting” that default on the national debt is imminent unless Congress increases the debt limit. Even some conservative commentators have been buffaloed into lamely repeating that such default is at issue in the debt limit debate. There should be personal liability for commentator malpractice.

Jeffrey Dorfman elaborated in January 2014:

Second, the net debt payments are under $50 billion per month, while total government revenue is expected to average nearly $250 billion per month this year. There is enough money to pay the interest on the national debt. What will actually happen if the debt ceiling is not raised is the Treasury will use accounting gimmicks, which it can do for several months; after that, government would have to cut spending.

Now let’s look at the questions and answers Carson gave. The underlying assumption of the question, asked three times, is that failure to raise the debt ceiling equals default. Carson refuses to fall for the trap:

Ryssdal: All right, so let’s talk about debt then and the budget. As you know, Treasury Secretary Lew has come out in the last couple of days and said, “We’re gonna run out of money, we’re gonna run out of borrowing authority, on the fifth of November.” Should the Congress then and the president not raise the debt limit? Should we default on our debt?

Carson: Let me put it this way: if I were the president, I would not sign an increased budget. Absolutely would not do it. They would have to find a place to cut.

Ryssdal: To be clear, it’s increasing the debt limit, not the budget, but I want to make sure I understand you. You’d let the United States default rather than raise the debt limit.

Carson: No, I would provide the kind of leadership that says, “Get on the stick guys, and stop messing around, and cut where you need to cut, because we’re not raising any spending limits, period.”

Ryssdal: I’m gonna try one more time, sir. This is debt that’s already obligated. Would you not favor increasing the debt limit to pay the debts already incurred?

Carson: What I’m saying is what we have to do is restructure the way that we create debt. I mean if we continue along this, where does it stop? It never stops. You’re always gonna ask the same question every year. And we’re just gonna keep going down that pathway. That’s one of the things I think that the people are tired of.

Each of those bolded questions assumes that Obama would have to default if the debt ceiling were not raised. That is propaganda. Chait knows that, or should.

I don’t have a problem with a single word of Carson’s answer. I do have a problem with someone like Jonathan Chait spreading false memes like this without being challenged.

36 Responses to “Jonathan Chait Has Absolutely No Idea What the Debt Limit Is”

  1. It’s all narrative, Patterico. There will be lots of posts on Facebook and Twitter, and folks liking or retweeting or sharing.

    And it always fits the preconceived notion.

    Remember the Howard Stern business, where he had someone asking Obama supporters if they would agree to all kinds of Republican ideas…if they were championed by Obama? Same thing.

    It’s sadly alphabetism.

    Simon Jester (c8876d)

  2. the debt ceiling kabuki does serve to keep all the regime’s priorities in place, ignoring chaitred is the better part of valor,

    narciso (ee1f88)

  3. is this Ryssdal the NPR propaganda whore Ryssdal?

    he’s just a bought and paid for puppet

    happyfeet (a037ad)

  4. “Ryssdal: I’m gonna try one more time, ”
    He’s going to try one more time?
    This is the same type of crap that other Rep. candidates are
    undergoing to (eg Trump w/ Don Lemon).
    He’s going to try one more time because he is not getting the answer he wants?
    Barack or Hillary ever have to go through this? Answering the same question
    3+ times?

    jb (9cf899)

  5. There would need to be an absolute cut, but in addition, there would be times during the year where you would also need very significant deferrals as tax revenue does not track with spending. There are times during the year where tax receipts are significantly less than outlays (because we have set times during the year when filers who have non-W-2 income are required to pay their non-wage taxable income)

    Just wanted to interject this caveat also. Otherwise what P. said above in the blog post was correct.

    JeffreyL (2eddb6)

  6. Carson should have said something like “The debt limit is just like your credit card limit. Why do we need to increase that? Most people don’t. Most people live within their means. Why shouldn’t the government?”

    David Aitken (e0d788)

  7. Each of those bolded questions assumes that Obama would have to default if the debt ceiling were not raised. That is propaganda. Chait knows that, or should.

    Chait is just playing the odds. If Carson was a RINO he’d agree to the premise. And if the RINO wanted to burnish his credentials, he’d say that we’re doing it to embarrass the person in the White House. This embellishment would be considered a concession to the “conservative base.” And with that, Chait would have the story of the month. And the RINO would be very proud of himself. It’s a win-win.

    And revenues each month would be sufficient to pay the interest assuming the Treasury tucked away a bit in the high revenue months to cover the lean revenue months. It’s called budgeting. In any event, this would require cuts in other parts of the government, which is the whole point. And it is why the RINOs are incapable of thinking about this alternative. Their credibility on “K” Street is on the line, and they don’t want to risk their future employment prospects.

    Heck, if the administration wanted to default tomorrow, the incumbent could just write an executive order as he has been more than willing to do for any number of harmful activities. Default is an administration option.

    BobStewartatHome (a52abe)

  8. Jonathan Chait is a liar and an idiot.

    In other news, water is wet.

    tops116 (d094f8)

  9. The only reason I can see for them making this mistake about Carson is racism.

    Gee, it’s fun pretending to be a liberal! No thought required, just stupid knee-jerk reactions.

    CrustyB (69f730)

  10. Ben Carson (and Patterico) are correct. Not raising the debt ceiling would not by itself cause a default. In that situation, the government could make payments on the interest. It would, however, have to prioritize what payments to make and when.

    Arguably, however, it could cause significant parts of the government to shut down. (I know, feature or bug?) “Mandatory” programs like Social Security, Medicare, and the like would probably still operate and payments made. Those payments are legally “owed” as long as there is a positive balance in the non-existent trust funds.

    However, discretionary agencies (includes both Defense and non-Defense agencies) are not “owed” money, even if authorizations and appropriations have been passed. If the government cannot borrow additional funds, and payments are prioritized to mandatory programs and interest, discretionary agencies can only work to the degree that it would not cause the government to owe more money than it has available to pay out in salaries, grants, services, etc. on a rolling basis. Otherwise, the government still is indebted to an amount greater than authorized by law, even if the debt is not issued in Treasury securities. Now, given that our annual deficit of ~$450 billion is funded almost solely through debt issuance, it would mean that nearly half of all discretionary spending would have to be shut down.

    Bottom line- The debt ceiling issue is another one of the issues that Amash was talking about that should be addressed well before they are at a crisis point. You can’t feasibly cut spending in one year to the degree that no additional debt needs to be issued. However, you can take use tools such as the Budget Control Act (aka BCA, aka the sequester) to start to cut spending and/or make more targeted cuts as well as entitlement program reforms so that in a few years the deficit is eliminated.

    Thus, if Carson is serious that he would not sign a single bill that would raise the debt ceiling under any conditions, then he is proving once again that he is not fit to be President.* If, however, he would only sign an increase to the debt ceiling if it is attached to significant entitlement and spending reforms, that is another matter. Unfortunately, he seems to indicate the former, not the latter.

    * I admire Carson for his work as a surgeon and willingness to take stands on issues no matter how they poll. However, he has repeatedly shown that he does not really understand how the federal government operates, and it would not be a pretty learning curve were he to actually win the election.

    Virginia SoCon (8eb3c5)

  11. Unfortunately, in this exchange Carson does not come out and state that there would be no problem servicing current debt even if there was no debt limit increase. His answers could be interpreted as agreeing that such a default is a realistic possibility if other spending cuts are not implemented.

    His answers are an improvement over what an establishment type would say, but he’s not there yet.

    Compro Christie (93a763)

  12. The right answer from Ben would be “There is no need to increase the debt ceiling if we had no deficit. So, what I propose is eliminating the deficit in order to not have this debate to being with. Which deficit reduction programs do you think we can create Mr Reporter?”

    Rodney King's Spirit (ab8c0d)

  13. yes yes i agree this Dr. Ben Carson character is kind of a fruit loop

    but he makes that case way better than i can

    happyfeet (a037ad)

  14. Virginia, you are welcome to your every increasing federal government, just get it on a diet.

    happy, you can have Chait, you are both worthy of each other.

    Steven Malynn (4bc33a)

  15. you’re just saying that for to try and get my goat

    happyfeet (a037ad)

  16. There’s a debt limit?

    Kevin M (25bbee)

  17. Yes, Kevin, but it is now nothing more than one of those “line in the sand” kind of things these days.

    felipe (b5e0f4)

  18. Steven, increased debt does not automatically mean larger government. The entitlement programs are so massive that they and the interest on the debt consumed over $2 trillion for FY2015 that just ended. Even with higher debt levels, the interest paid last year decreased from FY2014 because the cost to borrow is so low right now. If average interest rates rise even just 1%, you’ll see an additional $140 billion or so per year in interest expense.

    I think the federal government should shrink and do less. However, that doesn’t happen in a year, as it will entail major entitlement reforms that don’t kick in on year one. Heck, that’s way I’m for the sequester, even though that is one of the most ham-handed ways to actually reduce discretionary spending, and I oppose the GOPe’s and defense hawk efforts to circumvent the caps for DOD. All spending must be on the table.

    Virginia SoCon (8eb3c5)

  19. I oppose the GOPe’s and defense hawk efforts to circumvent the caps for DOD.

    My problem with that statement is DoD is the one thing I can agree the Govt should be doing and spending ore on.

    It is all the other crap I have a problem with.

    Rodney King's Spirit (ab8c0d)

  20. My problem with that statement is DoD is the one thing I can agree the Govt should be doing and spending ore on.

    Rodney King’s Spirit (ab8c0d) — 10/9/2015 @ 12:24 pm

    Yeah, except that DOD spends billions on stuff that is not related to its core mission, and it’s current budget is still massive even though we’ve more or less ended our missions in Iraq and Afghanistan. The ~$562 billion DOD spent on military programs last year (which doesn’t include its civilian programs) is still more than any year prior to 2008 (when we were in full engagement in both countries and shoveling DOD money as quickly as we could). Now, I know that the historical figures aren’t adjusted for inflation, but still, that’s a hell of a lot of money.

    DOD has to bite the bullet, too. No spending should be off the table.

    Virginia SoCon (8eb3c5)

  21. It is nice to say “no spending off the table,” until someone mentions entitlements. Then, the madness begins.

    felipe (b5e0f4)

  22. What I prefer to hear is “no spending cuts off the table.” Do that, and you’ve got something.

    felipe (b5e0f4)

  23. barack*out: intransitive verb: to withdraw especially from a commitment or contest; abandon; mince; see haughty; see Brave Sir Barack;

    Colonel Haiku (0f4bb0)

  24. Say… wasn’t Chait an *OJBM?

    *Original JuiceBox Mafia

    Colonel Haiku (0f4bb0)

  25. 21.It is nice to say “no spending off the table,” until someone mentions entitlements. Then, the madness begins.
    felipe (b5e0f4) — 10/9/2015 @ 12:59 pm

    You have a point, but note that entitlements are definitely on the table for me.

    Hell, I’ll even accept tax reform that projects to raise total revenues as part of the deal if it broadens the tax base and gets rid of all of those bizarre tax breaks (NASCAR tracks and Maine lobster boats, anyone?). For that matter, I’d even consider reducing or eliminating deductions for charitable contributions and mortgage interest if it resulted in a simpler, broader tax code.

    Virginia SoCon (8eb3c5)

  26. Trump would have wrestled the NPR stooge to the ground before he could finish the ‘I’m going to try one more time sir’ line. That’s what I call justice.

    East Bay Jay (c65ac0)

  27. Patterico, I don’t have a specific problem with, or criticism of, Dr. Carson’s answers either. But I don’t quite know how much credit to give him for it.

    Do you have an opinion regarding the likelihood that Dr. Carson understood the distinction Ferrara’s and Dorfman’s quotes make? If Dr. Carson does understand that distinction, why didn’t he say that directly, instead of giving the somewhat oblique and more vague responses he actually did?

    He didn’t fall into the trap, I’ll grant you. But did he know it was there, and exactly where its edges were, and what kind of trap it was? I don’t have a sense for that at all.

    I like Dr. Carson. He’s affable, and I think his instincts are good. But he’s still very fuzzy on a whole lot of fairly important policies, and I’m not yet impressed by the depth of his factual knowledge. As a consequence, I’m still unpersuaded that he’s someone I could enthusiastically support. He’s still not among my own top seven or eight favorites, actually.

    Beldar (fa637a)

  28. This issue is related to the budget “cuts” that are always hurting the poor and the children. The “cuts” of course are cuts in the increasing spending that is “baseline budgeting.”

    I think Carson understands this on some level but could have gone back on the interviewer and said “What is default ” When you stop spending more “

    Mike K (90dfdc)

  29. #20 I am in agreement with what you write but if the DoD is wasteful doing something in general it is was meant to do based on our Constitution then what do you call the rest of the Agencies?

    Sadly, 2MM workers making avg of $120K per = $240 Billion just in salaries. The rest is transfer payments so where do you start?

    My view is best way to control this is to literally freeze spending at these levels. And by freeze means 0% nominal increases for 10 years with the exception of Medicare and Social Security indexed to inflation.

    Then find some real men (and women) who will move the dollars around to make better use of what we are spending.

    At least you slow down debt piling up and maybe actually be able to retire some in years 7/8/9/10.

    But that actually requires some cojones to do it and you have to be willing to make lots of enemies and harangue and anger and berate and humiliate and mock and target lots of scummy politicians to get this vote in place.

    Rodney King's Spirit (ab8c0d)

  30. But that actually requires some cojones to do it and you have to be willing to make lots of enemies

    Sort of like Carly did at HP while saving the company ?

    Romney did it too with good results but was never able to explain it like she can.

    Mike K (90dfdc)

  31. I recall Chait calling Rick Perry stupid.

    Gerald A (949d7d)

  32. I don’t think Carson did badly, but he hasn’t got the subject under command.

    That said his instincts are suspect:

    http://www.breitbart.com/video/2015/10/09/carson-i-like-paul-ryan-hopefully-hell-decide-to-run-for-speaker/

    DNF (077971)

  33. The question was “raise the debt ceiling” and Carson thought it meant “raise the budget ceiling”. He was given another chance to clear that and he muffed it. He confused the two. Sure the government can roll over debt and has plenty of of interest coverage but if there is no resolution THEY LOSE THE AUTHORITY to do so. By his is exactly why Republicans have continually use it. If receipts could be rolled from statutory payments to interest coverage it wouldn’t be used by Republicans. But they essentially cause detente. Whether this d bag author knows that or not is meaningless but she’s still a shill.

    Dru9 (4cdf5c)

  34. The US government just upped the total domestic debt(private & public) to $350 Trillion.

    DNF (4a9f41)

  35. life imitates art,

    In fact there are three freely convertible currencies in the Galaxy, but none of them count. The Altarian Dollar has recently collapsed, the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads, and the Triganic Pu has its own very special problems. It exchange rate of eight Ningis to one Pu is simple enough, but since Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Nigis are not negotiable currency, because Galactibanks refuse to deal in fiddling small change. From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.

    narciso (ee1f88)

  36. 33. I’m not sure Carson doesn’t understand the difference by this interchange, I am sure he’s refusing to play nice with a mendacious interviewer on a tendentious argument.

    We keep hearing that revenues at $1.7 Trillion are an all-time record but elide the fact that Federal spending is $3.5 Trillion.

    Carson’s ‘cut spending’ is the ineluctable response.

    DNF (4a9f41)


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