Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities

By Eric Tymoigne

The public debt is the outstanding U.S. Treasury securities (USTS). It includes both marketable (T-bills, T-notes, T-bonds, TIPSs, and a few others) and non-marketable securities (United States notes, Gold certificates, U.S. savings bonds, Treasury demand deposits issued to States and Local Gov., all sorts of government account series securities held by Deposit Funds). What are the means to reduce the public debt?

To answer this question it is best to start with the flow of funds accounts. Flow of Funds data are divided in three broad sectors: Domestic Private, Government, and Foreign. They each have a balance sheet:


FA: Financial Assets, FL: Financial Liabilities, RA: Real Assets, NW: Net Worth

It is trivial that every lender there is a borrower so:

(FADP – FLDP) + (FAG – FLG) + (FAF – FLF) ≡ 0

Simplify by assuming a closed economy with no debt in private sector and only the Treasury in the government sector:

Simplify by assuming a closed economy with no debt in private sector and only the Treasury in the government sector:

FADP ≡ FLGT

The financial liabilities of the Treasury (Public Debt) is the financial asset of the domestic private sector. Remember this board in NY city:

Well you could change it to this: (Suddenly I feel $119,027 richer!)

Now let’s assumed that the Treasury wants to eliminate all its financial liabilities: no more public debt! (FLGT = 0). What are the means to do so?

  1. Let securities mature and do not repay securities holders: 100% tax => FADP = 0 (the U.S. domestic private sector lost a bunch of financial assets!)
  2. Switch to a Treasury financial instrument not considered a liability (Coins are treated as equity by the Federal Accounting Standards Advisory Board): FADPFLGT => FADP NWGT
  3. (If one adds the monetary authorities, aka Federal Reserve in the government sector) Switch to another liability of the government: repay with Federal Reserve liabilities (Credit the bank accounts of treasuries holders and inject reserves in banks, or pay with FRNs): FADPFLGT => FADP FLGFR (Main way today)

What if the Treasury does not want to reduce it public debt but want to bypass a debt ceiling?

1-First, coin issuance to Fed (∆ refers to change in assets or liabilities):

2-Second: buys back treasuries from Fed with coins: debt-equity conversion (now the Treasury can issue more treasuries)

3-Third: issues a treasury liability not subject to the debt limit. Examples are United States notes, which look exactly like federal reserve note except for the color.

45 Responses to Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities

  1. Only United States notes accrue to the gov’t account. The Federal Reserve Note has to be borrowed by the Treasury issuing Treasuries. The difference in seigniorage is in the billions/year.
    See here:
    http://www.change.org/petitions/end-the-debt-crisis-with-debt-free-united-states-notes
    and here:
    tommpaintoo.com under v. treasury (my petition above is exhibit B in the lawsuit against Treasury).

    • sb, whats the lawsuit about you mention on the petition page? couldn’t find a link.

      btw, is this petition seperate from HR2990?

      • The link is here tompainetoo.com, under v. Treasury. The author – Cliff Johnson – has his supporting articles there too. Basically, the plaintiff alleges that the Treasury is making a false claim on its website and supporting materials that there is an equivalency betw’ U.S. Notes and Federal Reserve Notes, which, as a simple matter of accounting fact, there never can be. This is costing the taxpayers – of which, Johnson is one – billions in lost seigniorage. The GAO is complicit in this as well.
        The case is on appeal, but naturally, the gov’t lawyers have tried to suppress it, claiming lack of standing. all the counter-responses are there too.

        • Scott, i’m a fan of no interest/debt u.s. notes/us money over fed bank notes. the hr2990 seemed like a really good place to start, http://www.monetary.org/wp-content/uploads/2011/12/32-page-brochure-sept20111.pdf,
          even though i don’t fully understand all. The tdc was also good interim option as it points out the fallacies in the current system of spending having to be funded by indebting the govt to banksters.

          On one had, the debt ceiling has spurred debate. but the repubs are slighly miss guided as they want to reduce spending because people are sick of looking at what we give away in interest. It has brought to light the fact that there are strucural ways to fund spending without debt, for our sovereign govt. this is the one reason i have changed my opion on removing the debt ceiling completely…the question is would repubs change from spending cuts to monetary structure reform?

  2. I don’t think that private investors should get stiffed by the US government :-).

    Half of the Federal Debt of $16 trillion is in fact intergovernmental and therefore just $8 trillion is in the hands of investors domestic and foreign.

    This debt exists as US Treasury Bills, which will become due for payment at some future date. It would be a simple matter to swap these US Treasury Bills for US Treasury notes ( the equivalent of US Federal Reserve notes aka dollar bills) merely by printing them at the cost of the paper they are written on.

    Problem solved, no coins needed.

    • Eric Tymoigne

      Frank: Simply switching to US Notes won’t change the level of the public debt. US notes are part of the public debt

      • US notes are part of the public debt Eric Tymoigne

        A strange sort of debt then since:

        1) US Notes pay no interest.
        2) The only “liability” of the US government is to accept those US Notes back for the payment of taxes and fees and as payment for the limited goods and services the US government provides (e.g. National Parks).
        3) If the US government never runs a budget surplus and sometimes run budget deficts without borrowing (US Notes) then the sum total of those budget deficts is only a virtual liability since they can never be redeemed.

        • Eric Tymoigne

          A debt does not mean you promise to deliver something or that you will paid interest. A debt only means you promise to do something. The only promise that is made here is to take back U.S. notes in payments (your point 2). U.S. notes are redeemed when these payments are made or, for example, when they are converted to Federal Reserve note (change the color of the notes and you eliminated some public debt!)

      • The current debt will still exist, but it could be paid off gradually by the US Treasury, by printing up debt free Treasury Notes. They could be in denominations of $1,000 and up as required. They would be freely exchangeable with Federal Reserve Notes.

        Please see the two examples of notes in the article above. One is a Federal Reserve Note and the other is a US Treasury Note. The public would accept the latter without even realizing the switch.

        This is what happened when Germany was reunited, when Ostmarks were exchanged for Deutsche at par.

        • Was looking at a link above but not sure I click the right one. Are we referring here to the 1862 notes and the like? If so these are still a liability of the Treasury. They are the old form of the United States notes that are non-convertible and do not pay interest.
          Like FRNs (liabilities of the Fed) they do not promise to pay anything, do not pay any interest, but they contain a promise: Fed will take them back in payment (Usually indirectly via banks. Maybe there is a gift shop at the Fed when you visit it and they accept cash payment? do no know).
          There is not such thing as debt-free monetary instrument. They are financial instruments so they are the liability of someone. If you mean by “debt-free” that they are non-convertible and do not pay interest, fine, but they won’t decrease the public debt.

          • They won’t increase the debt either. That is what is meant by debt-free money.
            Actually, they WILL decrease the debt indirectly, by being put into the real economy, to provide real public works jobs – which produce real wealth (money is NOT wealth; ask the average Zimbabwe millionaire). Those newly paid workers and businesses, will pay taxes. Then, those taxes can be partly used to pay down the debt. That’s how we can pay off the debt AND grow the money supply AND grow the economy. There is no other way.
            Sovereign Money should be the rallying cry of all true reformers.

          • If you would simply stop using the term ‘debt’ to describe something that does not fit the monetary definition of a debt, then we could begin to clear all this stuff up a bit.
            Greenbacks were never a debt.
            A debt is something that is owed.
            Greenbacks were printed, issued, circulated and mostly retired without any record of their being any debt associated with Greenbacks.
            Greenbacks were debt-free money.
            A monetary instrument that is a debt has an obligation of the issuer (the promissory note and security agreement for a loan) to repay the AMOUNT of the debt.
            The national debt is made up of a storehouse of certificates of public indebtedness.
            A debt is something owed, and a monetary debt is an agreement between parties that one must pay to the holder a certain amount of a certain currency by a specific time with or without interest due.
            Greenbacks are on the liability side of the Treasury’s balance sheet, along with other equities and debt.
            Being on the liability side of a financial balance sheet has nothing to do with the legal quality of being a debt.

            If you first recognize what a debt IS, then you would never need to again make the statement that a monetary instrument must be a debt.
            Greenbacks are monetary instruments.
            Greenbacks are not a debt.
            Neither are coins a debt.
            And they are monetary instruments as well.

            • Two ways to look at this:
              1- There is today a non-convertible, zero-interet note: federal reserve notes. They are the liability of the Fed. U.S. notes are the equivalent on the Treasury side (see discussion with Scott above although I am not sure if he got the point that issuing U.S. notes raise the public debt).
              2- Again debt does not mean one borrowed money that need to be reimbursed. This is just one form of debt. A debt is just a promise to do something. Some promise to deliver interest and repay capital, some promise to pay you if your house burns down, some give you a free pizza if you present them to the pizza maker. In the case of the greenback, the treasury promised to take back the greenback if someone presented one to pay the treasury. The same holds for all other non-covertible zero interest notes.

  3. Yesterday, White House spokesman Jar Carney categorically refused to consider the coin idea, saying the president is only looking for Republicans to either increase the debt ceiling, or let the U.S. go into default. Another showdown is coming.
    Look for the markets to sell off next week on this news.

  4. “Coins are treated as equity by the Federal Accounting Standards Advisory Board”

    Can you elaborate on that – i.e. does MMT think this is a reasonable accounting classification?

    • Eric – your statement “The public debt is the outstanding U.S. Treasury securities (USTS). It includes both marketable (T-bills, T-notes, T-bonds, TIPSs, and a few others) and non-marketable securities (United States notes, Gold certificates, U.S. savings bonds, Treasury demand deposits issued to States and Local Gov.” is wrong when it comes to United States Notes.
      See the monthly report on the debt from the Treasury, footnote 30, on the United States Notes Wikipedia page: http://en.wikipedia.org/wiki/United_States_Note
      and you’ll see that U.S. Notes, like the Kennedy Silver Dollars, are specifically excluded form the debt calculations of the United States. The banks, going back to when U.S. Notes were first issued in 1862 by Lincoln did NOT want their debts to be repaid in money the U.S. could just produce on its own. It would have destroyed their monopoly and they feared it to death (and perhaps to Lincoln’s death – their is strong evidence from the suppressed evidence of Lincoln’s assassination trial that bankers bankrolled the dozen-member conspiracy to kill Lincoln, Stewart and VP Johnson). Chart figures in million:
      Other Debt:
      Not Subject to the Statutory Debt Limit:
      United States Notes………………………………………………………………………………………………………… 239
      National and Federal Reserve Bank Notes assumed by the United States on deposit of lawful money for their retirement …………. 65
      Silver Certificates (Act of June 24, 1967)………………………………………………………………………………………………………………………………. 171
      Other………………………………………………………………………………………………………………………………… 11
      Total Not Subject to the Statutory Debt Limit……………………………………………………………………………………………………………………………… 486
      Subject to the Statutory Debt Limit:
      Mortgage Guaranty Insurance Company Tax and Loss Bonds………………………………………………………………………………………………….. c f 40
      Other……………………………………………………………………………………………………………………………. 780
      Total Subject to the Statutory Debt Limit…………………………………………………………………………. 820
      Total Other Debt………………………………………………………………………………………………………….. 1,306
      Total Nonmarketable……………………………………………………………………………………………… 5,379,528
      Total Public Debt Outstanding ………………………………………………………………………………. 16,432,730

      • Eric Tymoigne

        Yes they are part of the public debt but not subject to the debt limit.

        • No, they are not part of the debt. Read the whole report. They are excluded from any consideration toward the debt, and have never been used to repay it. Period. The bankers clearly wanted this, as a truly sovereign gov’t that can “coin Money” as it says in Art. 1, Sec. 8 of the constitution, would have no need to borrow money from a private central bank.

          • Scott, what the Treasury likes to call things does not particularly mean anything, except if the classification has real world effects, like the debt limit. It could classify only debt incurred on leap years as debt subject to the limit. That wouldn’t make leap year debt, “true debt” and others not. It could have a line, debt owed to C’thulhu , which will otherwise be paid by human sacrifice. That wouldn’t make C’thulhu exist, or make human sacrifices a Pain which we must have the courage to inflict – on other people.

            Eric & MMT & other good economists are right. Because what they say makes sense, has a good scientific theory behind it and accords with common usage as best it can. The Treasury is wrong, because it is making meaningless, arbitrary classifications like the above. Why they do so is only of historical interest.

            • It is not only of “historical interest.” It is of current interest too, since United States Notes are not to be counted towards paying the debt, whether we have $239 million in circulation, as now, or $239 billion, or more. Actually, this is probably unconstitutional, though SCOTUS in Julliard v. Greenman (1884) only ruled (8-1) favorably on the constitutionality of the gov’t issuing its own paper money. Interestingly, they ruled it was constitutional under the borrowing clause, but than since there are no constitutional limits to the amount of U.S. Notes that can be issued, or limits to how long they can be in circulation before they are “repaid,” than they are in effect, simply money introduced into the money supply, debt-free (I have a 1934 $5 U.S. Note I bought on eBay, which the government has not asked for back yet).
              The rules of double-entry accounting notwithstanding – which are not natural laws anyway, but man-made, and therefore repealable/amendable like any other man-made laws – Congress can “coin Money” at any time, in any amount, for any reason. It doesn’t need to pay interest for it, or even repay the principal, ever.
              Since we are still $3 trillion short of money in circulation since the crash, according to the Fed itself, this would be a good opportunity for the Congress to “coin Money” directly into public works projects, in the manner of FDR, but without the debt.
              There are always and everywhere, millions of jobs to be done, and millions of people who want to do them. The only thing standing in the way is money and natural resources. Both are monopolized, often by the same parties. Tax the second one to encourage more efficient use. But produce the first one – money – in sufficient quantities to meet the productive capacity of the nation.
              The national debt is entirely unnecessary, destructive to the economy, a burden on the productive classes, and a gift to the elite 1% who controls money and resources. When people finally understand how money is actually created, they will rise up and demand a public option for money.

              • Scott, I think this illuminates the point of disagreement. In an MMT framework, anything the USG will accept in taxes is a liability.

                “(I have a 1934 $5 U.S. Note I bought on eBay, which the government has not asked for back yet)”

                I have no idea whether the IRS would accept your 1934 note; if not, then there is no liability associated with it. Regardless, to frame it as a public liability = something the govt can demand back gets the accounting backwards. That would be a USG asset and private sector or state or local govt or international liability. Thinking of money as a sovereign liability means it’s an asset to the non-sovereign holders of it, who can use it for lots of things, including extinguishing a tax liability to the sovereign issuer.

                • Well, this is where the MMT folks have an imagination failure. If we had truly sovereign money that the government could produce at will (hopefully under some sort of control to prevent inflation), than taxes would only be needed to control inflation and perhaps to control monopolies (but I would do that on the local level mostly). The government doesn’t need to tax for what it can simply create. This ends both the dependence and the massive endemic corruption of the army of tax-loophole lobbyists, lawyers and accountants, living on K Street. They would have to get real jobs, while government again became the servant of the People. Government could spend its money on public works, while private industry produced money for its own purposes. The credit-starvation we are currently having could than be offset by stimulative policy of the government, but without incurring debt that fattens up the rentier class, who have done nothing to deserve it.
                  Ideally, there should be a land value tax to prevent land bubbles like the one we are still digging out of, but that is probably the best basis for local and state taxes, not nationally.

                • The government won’t ask for the note back. The treasury just promises to take it back if presented to the treasury. The treasury however will only take back the us notes at face value (chceck the treasury’s website for more). Their market value is much higher so nobody will use them as means of payment to the treasury.

                  • No, their market value is much higher because that is what the market supply and demand creates. Absent a controlling force like taxation to reduce their value to face value, and due to a lack of new supply, people are willing to pay 2X face value for a $5 U.S. Note. Also, they realize that this was something unique and grand in U.S. History, and they want a part of it.

                  • “Absent a controlling force like taxation to reduce their value to face value,”

                    Are you saying taxing them away (making them scarcer) would lower their value-??

                  • Only because the government would than set the price to $5 by way of taxation. It’s hard to imagine people valuing them above their tax value IF that was all the government accepted. Of course, the government is happy (happier?) to accept Federal Reserve Notes, so they have the face value on them already.

          • Eric Tymoigne

            They are in the “other” component of the non-marketable component in Table 1 of the monthly statement (outstanding amount is $1,306). Page 11 is a more detailed decomposition that you copied up there. Notice that your copied part starts with “other debt” with details the composition of the $1306.

    • Eric Tymoigne

      This is a totally arbitrary, and in my view incorrect, way to classify coins. Coins are metallic US notes. Coins should be counted as a liability of the treasury.

      • By the way, the treatement of coins as equity is why the $1t coin issuance helps to solve the debt ceiling problem. Otherwise the coin would raise the public debt by $1t (but there could be a provision not making coins subject to the debt limit…)

        • Is that FASB’s informal description of an equity characteristic (as opposed to debt), or a formal accounting classification? I’m guessing the former, but stand to be corrected.

          thx

  5. Increasing the debt limit of the US government will be of great benefit to the banking industry, since the banker owned Federal Reserve Bank will just create the extra as needed out thin air and will then lend this to the US government at interest. The US government will then have to not only pay back the principal, but also the interest. In this way the banks are skimming off a $trillion per year from the real economy.

    For the taxpayer it is a lose lose, and for the banks it is a win win. If only the Republicans realized this, the debt ceiling would be raised tomorrow. However, they are so fixated on having the poor and middle class pay this money to the banks, that they will not agree that easily.

    • Mark Robertson

      Frank there is some confusion regarding the word “borrow” when applied to the U.S. government.

      The U.S. government creates all its money from nothing, and sends part of it through the Fed’s Open Market process before final disbursal. If the U.S. government borrowed all its money from the Fed, as you claim, then Congress would have no real say in the federal budget, and the “debt ceiling” charade would come from the Fed, not from Congress.

      The U.S. government expects to spend about $3.8 trillion during FY 2013 (which began on 1 Oct 2012) and also expects to have a budget deficit of $901 billion by the end of FY 2013. Federal laws dating from the gold standard days require the US Treasury to sell various T-securities whose aggregate total equals the federal budget deficit each year. Hence by the end of FY 2013, the Treasury will be required to have sold $901 billion worth of T-securities. The remaining $2.9 trillion in the federal budget will be dispensed with no connection to the sale of T-securities, although most of it will be stolen back from the economy via federal taxes.

      The U.S. government could disburse all monies via direct deposit (like it does with Social Security) without selling any T-securities. But because politicians want to serve banks and the 1%, politicians will let $901 billion in public funds go through the Open Market process.

      Thus, the Treasury will create $901 in T-securities out of nothing, sell those securities to investors, and then disburse the sales proceeds into the economy. That $901 will be lent by investors, but this is by government choice, not by necessity. The “borrowing” of that $901 billion will be strictly voluntary. The “loan money” (i.e. T-securities purchased) will come from investors, not the Fed.

      I agree with you that the Fed and the big banks are raping us, but this is because politicians want to reduce federal spending on social programs, thereby forcing us to seek loans from greedy banks (e.g. $1 trillion in student loan debt).

      My point is that I disagree with people who say the Fed runs the whole show. In reality, politicians and bankers cooperate to keep the 99% impoverished and enslaved.

      • Yes, some US Treasury Bills are sold to the public via the Federal Reserve and some are held by the Federal Reserve.

        Why is it necessary for the US Treasury to sell T bills ? Is it to take money out of circulation in order to reduce inflation ?

        If the US Treasury just conjured up the money like a bank, inflation could be controlled by taxation, whereby the money could then be destroyed as required.

        • Mark is generally right – some nuances e.g. what is called government “borrowing” is not borrowing. Not because the government is the government, but because what the government is doing: IS. NOT. BORROWING. The phrase “government borrowing” is used for “swapping of government-issued financial-assets” (from the POV of the gov, it is “government-liability swapping”). Asset-swapping is not borrowing, as the word “borrowing” is normally used, as it is used in any other context. Basically, the “loan money” comes from investors who get it from “the government spending” supposedly financed by the “loan” though.

          some US Treasury Bills are sold to the public via the Federal Reserve The Fed has nothing really to do with it. And the Fed is a paper tiger. The maestro is the Wizard of Oz.

          Why is it necessary for the US Treasury to sell T bills ? It isn’t. The only T-bills necessary for the government to issue are called “dollar bills”, reserves, HPM, FR notes or any number of (near)synonyms. A quaint vocabulary whose only usage is to mystify. Those maximally mystified by their own economic vocabulary are called “economists”.

          Is it to take money out of circulation in order to reduce inflation ? That is sort of the idea. Doesn’t usually work that way, especially nowadays. The main reason to issue bonds is this possible increasing-saving-desires-during-full-employment effect, which is not at all always operative or dominant. But it can work this way, as it did during WWII with war bonds, when a shortage of “economists” made everyone understand economics better. :-)

          • “Why is it necessary for the US Treasury to sell T bills ? It isn’t. The only T-bills necessary for the government to issue are called “dollar bills”, reserves, HPM, FR notes or any number of (near)synonyms. A quaint vocabulary whose only usage is to mystify. Those maximally mystified by their own economic vocabulary are called “economists”.”

            Lets differentiate between Bills and Notes:

            US Federal Reserve Notes are non interest bearing promises to pay the bearer whatever the amount of money is printed on the face, good for all debts private and public. What the public considers cash are in fact non interest bearing Federal Reserve Notes ( unless you deposit them in a savings account at a bank)

            US Treasury Bills have an embedded interest rate, since they are sold at a discount to their face value.

            The Federal Reserve Bank “buys” US Treasury Bills with money created from thin air and credits the US Treasury account with US dollars aka Federal Reserve Bank dollar notes.

            What should happen is that the US Treasury should create US Treasury Notes rather than Bills, which are non interest bearing and created debt free, without the involvement of the banker owned Federal Reserve.

            The Federal Reserve is obsolete and a drain on the US economy, whereby the banking elite rip off the general public. Eliminate the Federal Reserve, but it might take a revolution.

            • Yes, this is correct, and confirmed by the co-founder of the MMT, Warren Mosler, in an email to me, and by Rodger Mitchell, founder of the cousin movement, Monetary Sovereignty. Raising money via Treasuries is an anachronism.
              As Edison said a hundred years ago “If the Government can issue a dollar bond, it can issue a dollar bill.”

      • “The U.S. government creates all its money from nothing,”
        Actually, the private bankers create and issue all of the nation’s money from nothing, only coins are excepted from the ‘create’ part.(c.e.)

        Calling a spade a spade here – what is money?
        Money is the stuff that the government ‘uses’ to pay for goods and services that it purchases. Before it purchases those goods and services the government must already have the money in its account – it never creates money when it spends. In order for the money to be in its account for the government to make the payment, the money must have been created earlier by someone – as indeed it was by the private bankers.
        If anyone on this blog can prove that is incorrect, please do so.
        Otherwise, the statement that the government creates all the money it uses is bogus operandus.

        • “Before it purchases those goods and services the government must already have the money in its account – it never creates money when it spends. In order for the money to be in its account for the government to make the payment, the money must have been created earlier by someone – as indeed it was by the private bankers.
          If anyone on this blog can prove that is incorrect, please do so. Otherwise, the statement that the government creates all the money it uses is bogus operandus.”

          From http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1825303:
          “The self-imposed constraint requiring the U. S. Treasury to have a positive balance in its account prior to spending combined with the Federal Reserve’s desire to achieve its federal funds rate target result in six transactions being necessary when the U. S. Federal Government runs a deficit. This paper explains these six transactions by combining the Social Fabric Matrix and Social Accounting Matrix methodologies.”

          (Granted, the debate goes on, e.g.: http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP279.pdf)

  6. Potomac Oracle

    Repealing the debt ceiling is the best play for both sides now that 14th Amendment and Coin Seigniorage are ‘maybe’ “off” the table.

    http://tinyurl.com/cl9rplw

    • But the right wing will demand cuts in Medicare and Medicaid as a quid pro quo.

      They will even demand cuts in Social Security retirement and disability payments, even though they have nothing to do with the US Treasury deficit. The SS trust fund contains $2.7 trillion invested in interest bearing US Treasury Bills.

      Wall Street would love to get their hands on it and rip off the old folk.

    • Mark Robertson

      The debt ceiling was repealed in 1979 as part of the “Gephardt Rule,” and for the next 16 years we lived free of this nonsense until 1995 when Republicans took back control of both Congressional houses. One of the first tings the Republicans did was re-insitute the debt ceiling, in order to get cuts in social programs that benefit the 99%.

      Today, Democrats and Republicans both love the debt ceiling, since both parties work for the 1%, which wants to cut social programs. The elimination of social programs not only widens the gap betwen rich and poor, it makes the public dependent on the rich, rather than on each other through their government.

      With the debt ceiling charade, Democrats can pretend that they are “forced” to cut social programs.

      • “The elimination of social programs not only widens the gap betwen rich and poor”

        You could argue that the direct and increasingly excessive taxation used to ‘fund’ entitlement programs has (already) had a far greater effect on inequality.

    • Eric Tymoigne

      Did you guys notice what happened recently in the senate? Mcconnel proposed a bill that would have let the president lift the debt ceiling but then he filibustered his own bill. http://tpmdc.talkingpointsmemo.com/2012/12/mcconnell-filibusters-his-own-bill-to-lift-debt-limit.php
      So pathetic…

      • Common sense prevailed for a few seconds in McConnell’s brain before he realized his “mistake.”

  7. The Gephardt rule is interesting (http://www.csmonitor.com/USA/Politics/2011/0104/Five-ways-Republicans-will-change-the-House/Repeal-of-the-Gephardt-rule). I hadn’t known about that until now.
    The debt ceiling is just another way Republicans can help the elite get even richer, by making everyone else poorer by comparison. Monetary wealth is a relative thing, after all.
    The 1% wants not just fascism, which they already have, but feudalism, with permanent debt from the moment people are born until they die. We haven’t lived in a democracy for some time, well, maybe never, but there are degrees, and it is getting worse.
    Treasuries don’t need to exist. They are a way to hobble government and make it dependent on the banking cartel, while impoverishing millions and saying There Is No Alternative (TINA – thank you, Margaret Thatcher for that one).