House Votes On Debt Ceiling Suspension Wednesday As Pelosi Calls It "Gimmick Unworthy Of Challenges We Face"

Tyler Durden's picture

While it is not news that the GOP has proposed a temporary debt ceiling extension that would suspend the provisions of the debt ceiling target until May 19, as was reported last week, however which would demand that the Senate do something unthinkable, and something it has not done for 4 years, namely pass a budget by April 15, it is news that as The Hill reports, the vote to suspend the debt ceiling in the House will take place "as soon as Wednesday."

From The Hill: "While past measures to address the debt limit have simply increased the borrowing cap, the House bill would actually suspend the debt limit for three months. Then, on May 19, the debt limit would be automatically increased from $16.4 trillion to accommodate whatever additional borrowing the Treasury had done during that time frame. The House Rules Committee posted the text of legislation as Washington prepared for President Obama’s second inauguration. In addition to preventing default, the bill would withhold members' pay if Congress fails to pass a budget by April 15."

As we explained last week, this is merely a plan to shift fiscal (ir)responsibility into the Democrat camp, as it is virtually impossible that America can have a budget now or ever again. After all with $1 trillion deficits as far as the eye can see, the possibility to bluster and claim one is fiscally responsible while demanding $4 trillion in debt until 2016, will hardly fool the majority of the people any more of the time. Sure enough, Pelosi's response has made it quite clear this entire plan is DOA: "the proposed three-month debt- limit increase does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face.

That clears it up.

More from The Hill:

House Republican leaders are using the bill to put pressure on Senate Democrats to pass a budget, which they have failed to do for over four years.

 

“Before there is any long-term debt limit increase, a budget should be passed that cuts spending,” Speaker John Boehner (R-Ohio) told the Republican conference Friday in remarks to close the party’s three-day retreat in Williamsburg. “The Democratic-controlled Senate has failed to pass a budget for four years. That is a shameful run that needs to end, this year.”

 

Leading Senate Democrats have said they will produce a budget resolution that will included increased revenues, and will consider the debt limit boost set to come from the House.

 

House Republican leaders have billed their measure as "no budget, no pay." But the bill would not actually eliminate pay for members of Congress if there is no budget in place by April 15. Rather, if a chamber of Congress, such as the Senate, fails to pass a budget by April 15, all income earned by members of that chamber would be set aside. Members would receive that pay in full once a budget is passed, or on the final day of the 113th Congress at the end of 2014.

 

This arrangement was struck as a way to avoid running afoul of the 27th Amendment of the Constitution, which states that no law varying the compensation of members of Congress can take effect until a new Congress is in place — members cannot vote to give themselves raises or pay cuts.

Needless to say, the word "budget" to the democratically-controlled senate is like garlic stew to a graveyard of vampires:

Senate Majority Leader Harry Reid’s spokesman, Adam Jentleson, said in a statement that the House must pass a “clean” debt-limit increase. He didn’t address Cantor’s statement about requiring members of Congress to forfeit their pay if a budget isn’t adopted.

 

House Democratic leader Nancy Pelosi’s spokesman, Drew Hammill, said in a statement that the proposed three-month debt- limit increase “does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face.”

 

Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending, Budget Committee Chairman Paul Ryan of Wisconsin told reporters at the retreat two days ago.

 

Ryan said Republicans want “a two-way discussion between Democrats and Republicans and out of that hopefully some progress being made on getting this deficit and debt under control.”

 

The last time the Democratic-led Senate adopted a budget was in April 2009. The Senate and House are supposed to pass budget resolutions early each year to set a spending framework, though there is no enforcement mechanism. Without a budget resolution, appropriations bills allocate money for the federal government.

 

Leaders said the tactic of short-term debt-limit increases was used in the 1980s during the presidencies of Ronald Reagan and George H.W. Bush as a prelude to broader agreements on spending cuts.

 

“No one is talking about default, no one wants to default,” South Carolina Republican Mick Mulvaney, who voted against the 2011 debt-ceiling deal, said in an interview yesterday with Bloomberg Television’s “Capitol Gains” program airing tomorrow. There is a “lot of support growing” among the rank and file for a short-term debt limit, he said.

Finally, Obama has been quite clear on the issue:

Obama has said he won’t negotiate the terms of a debt-limit legislation the way he did in 2011, and he is demanding more tax revenue to accompany further spending cuts. House Speaker John Boehner, an Ohio Republican, has said that any increase in the debt ceiling would have to be accompanied by commensurate spending cuts.

At the end of the day, the debt ceiling will naturally pass, as otherwise the market's ascent to new all time highs may be hindered.

Recall the sequence of events:

  1. Fed monetizes deficit, issues trillions in debt as collateral for reserves
  2. Banks use reserves, transformed under shadow banking, to boost risk assets, and otherwise invest in the capital markets
  3. The stock markets grinds higher, as the economy does not grow, generating even more deficits
  4. Even more deficits mean even more debt has to be monetized by the Fed, going back to step 1.
  5. Sometimes the market has to plunge just to remind Congress who is in charge and that without a debt ceiling hike, there will be no more under the table pennies on a dollar kickbacks from Wall Street to D.C.

And that, in a nutshell, is the game.

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Zer0head's picture

And that, in a nut, is the shell game

hedgeless_horseman's picture

 

 

This is a gimmick unworthy of the challenges we face.

We need a worthy gimmick, like a trillion dollar coin, or another FASB change to asset valuation!

A L I E N's picture

what could go wrong?

FASB is an independent entity, there to protect everyone.... Until things look really bad for the banks.

Pladizow's picture

This is a predicament not a problem.

Problems have solutions!

ziggy59's picture

Amazing the miracles botulin can do, no?

TruthInSunshine's picture

Nancy "Let Me Summon The Will To Furrow My Botox'd Brow" Pelosi & Chuck "Fuck Flyover Country" Schumer screed "[h]ow dare you try & pin the lack of any spending limits/discipline/reasonableness on us, bitchez!"

Freddie's picture

I wish TEPCO (Tokyo Electric Power Company) would dump a load of MOX waste from Fukashima on her vineyards in Nor Cal.

No way I will drink Calif or West Coast win because it is being dusted by Fukashima. 

HoofHearted's picture

"the proposed three-month debt- limit increase does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face.

Kind of like not having a budget for four years?

Ignorance is bliss's picture

Cali wine pre-2011 will be a great investment when the grapes start to glow on the vine.

A Nanny Moose's picture

Thesis. Antithesis. Synthesis.

Pegasus Muse's picture

John Williams

No. 496: ALERT GAAP-Based U.S. Budget Deficit

Actual 2012 Federal Budget Deficit Hit $6.9 Trillion

http://www.shadowstats.com/article/no-496-alert-gaap-based-us-budget-deficit 

 

inevitablecollapse's picture

i liked your 'assholes' comment better

brockhardman's picture

We should pass a 10,000 page bill that the people create which discloses the details of Pelosi's (and others) salaries.  But we need to pass it first before we are able to fully read it.  I got page 1.

Kaiser Sousa's picture

hey ya'll i thought this deserve to be thrown somewhere near the top...hope u dont mind but i think this is kinda huge...shit is getting serious.......

 

 

"The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on Jan. 18. It has secured vault space at Hong Kong International Airport to store the gold, he said.  Investors disillusioned with government money printing to service “insurmountable” public debt may seek alternatives to fiat currencies, Kaye said. Asset managers, includingSoros Fund Management LLC, Paulson & Co. and Sprott Inc., are betting on the precious metal even after a 12-year rally has cemented the longest bull market in at least nine decades.

“Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued,” Kaye said. “We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”  Fiat currencies have no tangible backing, such as gold or silver, except governments’ good faith and can become worthless due to hyperinflation or loss of public faith." Ownership of gold through financial instruments based on it, such as Comex futures contracts, now represents more than 100 times the physical gold that exists above ground worldwide, Kaye said, citing the Pacific Group’s own analysis." “All you actually need for a major upward revaluation of gold is for a small fraction of people to physically reclaim from major central banks or other depositories that are holding your gold and using it for their purposes,” he added.
http://mobile.bloomberg.com/news/2013-01-21/pacific-group-to-convert-one... and ....http://www.silverdoctors.com/repatriation-avalanche-gaining-momentum-aze... FUCK YOU BERNANKE YOU BITCH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

Everybodys All American's picture

Pelosi is unfit for office and in any other job with this kind of record debt she would have been fired. It's that simple. Just another legislator who can't face reality.

Buck Johnson's picture

Yea but I think this time the game is going to get complicated by the market.

docj's picture

SanFran Nan said... "the proposed three-month debt- limit increase does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face.

True. But more than a little ironic coming from the House leader of the party who's Senate counterparts haven't passed, or even supported, a budget in almost 4-years.

But the media won't tell anyone about that, so it's all good. Nothing to see here. All Hail King Putt. Carry on, sheeple.

max2205's picture

Dems should show their colors and say: here's the budget, we spend whatever we want

inevitablecollapse's picture

this is the worst movie i've ever seen, and i've seen some shitty ones mind you

Dr. Engali's picture

I would like to be the first to say( on this thread anyway).... Fuck you Bernank! And fuck you Obama!

The Gooch's picture

All of these fucks should be dangling from the debt ceiling.

buzzsaw99's picture

I wish they would all shut their collective pie holes.

yogibear's picture

Yeah Pelosi, get rid of the debt limit. A credit card with no limit.

The plan is infinite debt, infinite spending and infinite printing by Bernanke and the Federal Reserve (infinite debt enabler) .

Trash the US dollar until nobody wants it. 

tango's picture

We should start a lottery - the person closes to the debt when we default / dollar collapses / panic starts wins....something - an Obama button with Hope & Change (also doubles as flashlight)

Accounting101's picture

So you think this will end soon? Japan has been at this game for over twenty years. Stop with the default nonsense. The United States cannot be forced to default on debt denominated in its own currency. That is just a basic fact. I know your radio is telling you something different, but don't listen.

ShrNfr's picture

Actually, I suspect that the suspension of the debt limit is unconstitutional. The Constitution does not allow these guys to run open end. They have to affirmatively meed and pass authorizations for borrowing and those must be specific.

yogibear's picture

These democrats will change that. The republicans are scared now and the democrats know this. 

They already tried to remove the president's 2 term limit. Next repeated attemps to remove the debt limit.

CrashisOptimistic's picture

I don't think there is a debt limit specified in the Constitution.

Brokenarrow's picture

They'll take this deal and run the dia up 1000 pts in your face. James Cramer will be a hero. Ben Bernanke will be getting a medal. GS will "have saved the world."

Being "smart" is the dumbest thing I ever did.

I was long 15,000 axp at $14 and sold them for .10 profit.

Oh, yeah, I forgot....."fuck bernanke!" He fucked you.

Im done being "smart"

azzhatter's picture

Yep, good news your dollars are increasing. Bad news, your dollars won't buy anything.

azzhatter's picture

Pelosi  "Believe me I know gimmicks and this one is unworthy"

Gimp's picture

You know the saying - " If their lips are moving, they are...."

pods's picture

not dead yet and must be left hanging a bit longer?

pods

Racer's picture

A three month extension? It is January now... and they want to delay it until May?

No wonder they can't manage to do a budget

CrashisOptimistic's picture

The present ceiling, with emergency measures, will expire mid Fed.

MrSteve's picture

If Democrats in Congress are decrying financial "gimmicks" then responsible leadership must be just a day away.

I hope Inauguration Day doesn't morph into a Groundhog Day-like ritual where we get another 4 years of economic winter no matter what the giant rodents in DC do, see or say.

HaroldWang's picture

"while demanding $4 trillion in debt until 2016, will hardly fool the majority of the people any more of the time."

You really think that?? They've been fooling the majority of the people all of the time and will continue to do so. To think otherwise is extremely naive.

hedgeless_horseman's picture

 

 

They've been fooling the majority of the people all of the time and will continue to do so. To think otherwise is extremely naive. 

I hang with Wang on this one.

espirit's picture

They're not fooling a majority of the people, the people have chosen the blue pill over the red pill on purpose because resistence to change is basic human nature.

I know, because I've been married to her for almost 30 years. 

shovelhead's picture

Budget?

 

We doan need no steenking budget.

yogibear's picture

You already know the plan.

Bernanke said his weapon was the printing press. He intends on printing away debt.

Until there is a currency crisis.  Zimbabwe here we come. Default by currency trashing.

lunaticfringe's picture

I actually read a piece on Huffpo on how King Obama had cut the deficit and that in fact- was his first term LEGACY.

You cannot make shit like that up. To hear San Fran Nan say that a suspension of the debt ceiling is a non starter defies belief. It reminds one of that lofty and oxygen free level of unconsciousness that must be necessary in order to babble insane gibberish like that in light of what she has done. When we drag out the guillotines- we must be sure to position that one's head just right- or it will surely damage the blade, perhaps rendering the device inoperable.

CrashisOptimistic's picture

Boehner did one thing (and only one thing) right in Aug 2011.  When the debt ceiling deal was done then, there was 2.2 Trillion in baseline cuts defined.  The Sequester was 1.2T of that. 

What people forget is the other 1T.  That was up front.  It's already embedded in law.  It was backloaded with only 4B of it in 2012 to protect the election.  But now it is 2013 and over 100B of cut has to happen this year in the CR extension that will occur in late March (there will be no agreed budget -- the Senate will pass no signif cuts and tax increases that are not specific in their budget).  That March CR has to use the new baseline so there will be a 100+B GDP drag in 2013 that no one has remembered in the analysis. 

The drags are 120B Payroll tax increase, (the millionaire's tax increase just passed was erased by Sandy pork), the 110B 2013 portion of the 10 year Sequester, and this extra 100+B I just mentioned. 

This should still be over 2% GDP drag in 2013.