Get: house vote on shutdown w/wo default

the *DON* JONES INDEX…
		GAINS POSTED in GREEN LOSSES POSTED in RED
	10/1/21… 14,369.19 9/24/21… 14,360.48 6/27/13… 15,000.00
*(THE DOW* JONES INDEX: 10/08/21…33,843.92; 9/24/21…34,764.83; 6/27/13… 15,000.00)**

LESSON for October 1, 2021 – “Debt Reckoning!”

WASHINGTON (AP) — With only hours to spare, President Joe Biden on Thursday evening signed legislation to avoid a partial federal shutdown and keep the government funded through Dec. 3. Congress had passed the bill earlier Thursday.

“The back-to-back votes by the Senate and then the House averted one crisis, but delays on another continue as the political parties dig in on a dispute over how to raise the government’s borrowing cap before the United States risks a potentially catastrophic default,” reported the Associated Press.

The House approved the short-term funding measure by a 254-175 vote not long after Senate passage in a 65-35 vote. A large majority of Republicans in both chambers voted against it. The legislation was needed to keep the government running once the current budget year ended at midnight Thursday. Passage will buy lawmakers more time to craft the spending measures that will fund federal agencies and the programs they administer.

“This stopgap measure funds the government through December 3 so that buys Congress some additional time,” Al Jazeera’s Heidi Zhou-Castro reported from Capitol Hill adding, however, that the government funding issue is “just one of two fiscal fires that Congress is confronting at this moment”.

With their energy focused on Biden’s agenda, Democrats backed down from a showdown over the debt limit in the government funding bill, deciding to uncouple the borrowing ceiling at the insistence of Republicans. If that cap was not raised, the U.S. probably will face a financial crisis and economic recession, Treasury Secretary Janet Yellen said.

America’s historic debt default could occur around October 18, Yellen has estimated, if Congress fails to act.

“What that means is that at that point, the US will no longer be able to borrow more money to pay its bills – that has never happened before in history,” Zhou-Castro explained. “And economists are saying if that does happen, it could be disastrous, throwing the US economy into recession and echoing across global markets.”

Presently, America’s national debt… owed to both domestic and foreign creditors… stands at 28 trill. (See DebtClock in our chart below or, since it has undoubtedly risen day-to-day, at http: debtclock.org.)

Team Investopedia defines the National Debt as “a measurement of how much the federal government owes its creditors. (See Attachment One) Specifically, the national debt is a term referring to the level of federal debt held by the public, as opposed to the debt held by the government itself. Since the U.S. government almost always spends more than it takes in, the national debt continues to rise.”

To operate in this manner of spending more than it earns, the U.S. Treasury Department must issue Treasury bills, notes, and bonds. These Treasury products finance the deficit by borrowing from the investors, both domestic and foreign. These Treasury securities also sell to corporations, financial institutions, and other governments around the world.

Said foreign creditors include, at the present time, China and Japan (as expected), but also Russia, Ireland, Hong Kong, and Luxembourg. (See Attachment Two and link)

Despite lingering issues, the deal deadline passed the upper chamber with federal cash set to expire on Thursday at midnight. Sen. Rand Paul (R-Ky.), a fiscal hawk notorious for blocking spending bills, told Politico that he wouldn’t object to quickly passing the continuing resolution, which would keep the government funded through Dec. 3. Once the Senate passes the stopgap bill, the House could move quickly to approve the measure, as well.

White House Press Secretary Jen Psaki had, on Tuesday, told USA Today that Senate Majority Leader Chuck Schumer was pursuing different paths Senate Democrats can take as Republicans refuse to help raise, or suspend, the debt ceiling.

Senate Minority Leader Mitch McConnell, R-Ky., has said for months Republicans will not help Democrats. Republicans also blocked a funding bill Monday that not only addressed raising the debt limit but also extended funding for the federal government.

“It’s also our hope, if Senator McConnell isn’t going to help us avoid a default and a shutdown, at least he’ll get out of the way and let Democrats do it alone so we can avoid a default. So, right now, that question remains up in the air,” Psaki had said.

The quick movement away from a shutdown fight demonstrates Democrats’ distaste for injecting more drama into their attempts to execute President Joe Biden’s agenda. But they haven’t decided whether to simply kick the can on the debt fight with Republicans to October or separate it from the spending bill altogether.

“My sense is that we’ve got a lot of this worked out,” said Republican Sen. John Kennedy, whose hurricane-battered state of Louisiana would receive critical disaster aid through the bill. “I always thought we would get to this point.”

National Debt vs. Budget Deficit

First, say the Investopediatrics, it's important to understand what the difference is between the federal government's annual budget deficit (also known as the fiscal deficit) and the outstanding federal debt, known in official accounting terminology as the national public debt. Simply explained, the federal government generates a budget deficit whenever it spends more money than it brings in through income-generating activities. These activities include individual, corporate, or excise taxes.

Investopedia defines the total amount of money that can be borrowed by the government without further authorization by Congress as the "total public debt subject to limit." (Don Jones and most Americans with a least a passing knowledge of megatrillion sums, but subject to a simpler terminology as disseminated through the mass media call this the “debt ceiling”. Any amount to be borrowed above this level has to receive additional approval from the legislative branch – which approval Democrats were forced to remove from their anti-shutdown measure.

Raising or suspending the debt limit allows the federal government to pay obligations already incurred. It does not authorize new spending. Senate Minority Leader Mitch McConnell has argued that Democrats should pass a debt limit extension with the same budgetary tools they are using to try to pass a $3.5 trillion effort to expand social safety net programs and tackle climate change (which Mitchy has not only opposed, but bribed, muscled or blackmailed every single Republican Senator into condemning). He reiterated that warning as the Senate opened on Thursday, even as Democrats have labeled that option a “nonstarter.”

“We’re able to fund the government today because the majority accepted reality. The same thing will need to happen on the debt limit next week,” McConnell told the AP.

The House.

Before the final vote, the Senate had blocked the House bill with a debt ceiling provision passed on a party-line vote of 220-211 in a procedural vote Monday. Republicans opposed the bill because it included an extension of the debt ceiling, which for political reasons they want to force Democrats to approve on their own. (NBC… CNBC reported that: “The House passed the debt ceiling suspension in a 219-212 vote. All Democrats except Reps. Jared Golden of Maine and Kurt Schrader of Oregon supported it. Every Republican but Rep. Adam Kinzinger of Illinois opposed it.

Once the government is funded, albeit temporarily, Democrats will turn their full attention to the need to raise the limit on federal borrowing, which now stands at $28.4 trillion.

The U.S. has never defaulted on its debts in the modern era, reported the right wing Breitbart (somewhat inaccurately, see Note One) and historically, both parties have voted to raise the limit. Democrats joined the Republican Senate majority in doing so three times during Donald Trump’s presidency. This time Democrats wanted to take care of both priorities in one bill, but Senate Republicans blocked that effort Monday.

Raising or suspending the debt limit allows the federal government to pay obligations already incurred. It does not authorize new spending. McConnell has argued that Democrats should pass a debt limit extension with the same budgetary tools they are using to try to pass a $3.5 trillion effort to expand social safety net programs and tackle climate change. He reiterated that warning as the Senate opened on Thursday, even as Democrats have labeled that option a “nonstarter.”

“We’re able to fund the government today because the majority accepted reality. The same thing will need to happen on the debt limit next week,” McConnell said. And there are further indications that most Republican Senators are quite content with the prospect of destroying America’s economy before the 18^th, simply for the purpose and pleasure of frustrating President Joe, Chuck n’ Nancy, almost all Democrats and even the Wall Street sorts who prop them up and paving the way for a reconquest of Congress in 2022 and the triumphant return of Donald Trump two years later.

Earlier yesterday afternoon, a bipartisan team of legislators passed a bill not dissolving the national debt, not nearly, but doing as Congress has been doing for years – pushing the drop dead deadling back a few weeks… in this case, from October 18^th until December 3rd, giving lawmakers additional time… the New York Times reported… “to reach consensus over the dozen annual bills that dictate federal spending, provide $6.3 billion to help Afghan refugees resettle in the United States and $28.6 billion to help communities rebuild from hurricanes, wildfires and other recent natural disasters. Said legislation now faces a barrage of legal challenges

The Senate, on a 50-to-50 vote along party lines, squelched an amendment by Senator Tom Cotton of Arkansas to cut off aid for things such as housing, food and medical benefits after March 31, 2023, for Afghans who were granted parole to quickly enter the United States because of the urgent humanitarian crisis.

Senator Patrick Leahy (D-Vt), urged his colleagues to “strongly oppose” Mr. Cotton’s proposal and other amendments offered by the Republicans, warning that accepting any could slow down the process and result in a government shutdown.

“It provides critical assistance to Afghan refugees who fled the Taliban in the wake of the U.S. withdrawal from Afghanistan,” he said of the funding bill. “Many of those refugees worked with American forces and helped us.”

The House, as high noon tolled, approved the Senate-passed stopgap funding bill to avert a shutdown by extending government funding through Dec. 3. The legislation passed 254 to 175, clearing it for President Biden’s signature before funding lapses. The Senate earlier Thursday passed the legislation on a 65 to 35 margin, with 15 Republicans joining all Democrats in favor.

“This is a good outcome — one I am happy we are getting done,” said Senator Chuck Schumer of New York, the majority leader, speaking on the Senate floor ahead of the vote. “With so many things happening in Washington, the last thing the American people need is for the government to grind to a halt.”

Lawmakers reached a deal on the spending legislation, said the New York Times, “after Democrats agreed to strip out a provision that would have raised the federal government’s ability to continue borrowing funds through the end of 2022. Senate Republicans blocked an initial funding package on Monday over its inclusion, refusing to give the majority party any of the votes needed to move ahead on a bill to avert a first-ever federal default in the coming weeks.”

Ahead of the first vote earlier this week, Senate Minority Leader Mitch McConnell (R., Ky.) demanded that Democrats “use the reconciliation process to pass a debt-limit increase without Republican votes,” noted the conservative National Review.

“Let me make it abundantly clear one more time: We will support a clean continuing resolution that will prevent a government shutdown … We will not provide Republican votes for raising the debt limit,” Mitchy said at the time.

The pundits and media to the contrary, America has defaulted on its fiscal obligations… twice!

The newly approved funding ensures that federal agencies do not need to close down on Friday and hundreds of thousands of government employees will not have to take unpaid leave.

“Of particular concern, given the ongoing Covid-19 pandemic,” noted the BBC, “was the potential hit that health services could take. A plan prepared by the Health and Human Services Department (HHS) found that it may have been forced to send up to 43% of its staff home in the event of a shutdown.”

Defaulting could have triggered an economic downturn, causing millions of Americans who rely on paycheques or aid from the federal government to go without. The House, which is controlled by the Democrats, had already voted last week to pass a dual measure that would keep the government open and suspend the debt ceiling.

But Republicans in the Senate blocked the bill from advancing; the Brits (who have a few economic problems of their own) “citing the Biden administration's plans to pass trillions of dollars in new spending as a reason not to raise the debt ceiling.”

From the National Review (See Attachment Five)

The Treasury has taken steps to preserve cash, but once it runs out, it will be forced to rely on incoming revenue to pay its obligations. That would likely mean delays in payments to Social Security recipients, veterans and government workers, including military personnel. The Bipartisan Policy Center, a think tank cited by both Breitbart and the A.P, projects that the federal government would be unable to meet about 40% of payments due in the several weeks that follow.

And the financial tipsters, touts and scammers blossomed like the first weeds of April… “This is the only place,” the Outsider Club trumpeted (See Attachment Six) where “you'll be able to learn how hitting the debt ceiling and a U.S. government default will:

· Affect the Department of the Treasury and the entire U.S. government

· Create a credit crunch far worse than the subprime mortgage crisis

· Drive a market collapse before and after the Treasury starts bouncing checks

· Immediately put a vast swath of Americans in danger, on the streets, or in lines at local soup kitchens.”

Lawmakers now have just three days to avert a possible government shutdown by midnight Thursday, the end of the current fiscal year. Failure to have extended this deadline could have results in furloughs for hundreds of thousands of federal workers in the middle of a public health crisis.

Fiscal brinkmanship has become a regular feature of U.S. politics thanks to partisan polarization, so the nation's largest lender, JPMorgan Chase & Co (JPM.N), had begun scenario planning for how a potential U.S. credit default would affect its operations, Chief Executive Jamie Dimon told Reuters on Tuesday.

"This is like the third time we've had to do this. It is a potentially catastrophic event," Dimon said. "We should never even get this close."

The liberal, so called “Progressive” Democrats held their circular fire on this one with minimaldissent?

Government funding was set to expire at midnight. The bill now heads to President Biden's desk to be signed.

In addition to funding the government, the stopgap bill will "provide funding to help process and resettle Afghan refugees and finally deliver on critical disaster aid for Americans battered by storms and wildfires this summer," Senate Majority Leader Chuck Schumer said.

Congressional Democrats had initially attempted to address the government funding issue alongside the debt limit, a strategy that was thwarted by Republicans in the Senate who have insisted that Democrats must act alone on the debt limit.

But, once the issues were separated, Speaker Pelosi… who, as in the case of the infrastructure bills, had sworn that she would not bring legislation to a vote unless assured of victory… banked on the warnings of Treasury Secretary Janet Yellin, among and above all others, that a default on the national debt would wreak havoc on everyday Americans.

“I think it would be catastrophic for the economy and for individual families,” Yellen told lawmakers during a hearing.

“Nearly 50 million seniors could stop receiving Social Security payments or receive them delayed,” Yellen said. “Our troops would not know when they would get their next paycheck. We have 30 million families who rely on the monthly child tax credits and they would not receive that relief, at least not on time.”

Yellen told CNN that the 2011 debt ceiling impasse showed how waiting until the last minute to raise the debt ceiling can hit investor and consumer confidence, rattle the stock market and raise borrowing costs. The Dow, accordingly tanked.

Senate Minority Leader Mitch McConnell insisted tha the kick the can measure did not represent a Republican retreat on the deficit. "On government funding, what Republicans laid out all along was a clean continuing resolution without the poison pill of a debt limit increase. That's exactly what we'll pass today," McConnell told CNN.

Majority leader Schumer said that the Senate could take up the House-passed bill to suspend the nation’s debt limit “as early as next week.” The bill is expected to be blocked in the Senate by Republicans, who oppose helping Democrats address the debt ceiling.

The debt ceiling, which is the amount of money lawmakers authorize the Treasury Department to borrow to pay for spending already authorized, stated Marketwatch, “must be suspended or raised by Oct. 18, according to Treasury Secretary Janet Yellen, or the U.S. likely will default on its debt.

“It’s important to note that no one knows precisely when the U.S. Treasury will run out of money to pay its bills, including bondholders, let alone what would happen next. U.S. sovereign debt generally has been considered the safest and most liquid to own in the world, and all kinds of financial market products and processes have been pegged to the orderly functioning of the nearly $21 trillion Treasury market.

“Still, after a couple of topsy-turvy years in which the previously unthinkable became real, some Washington and Wall Street professionals have been girding for a worst-case scenario.”

“I see it as an exceedingly slim chance, although with all the theatrics, the possibility has been ramped up,” said Ben Koltun, director of research for D.C.-based Beacon Policy Advisors. “If it does happen, it turns a manufactured political crisis into an economic crisis. The full faith and credit of the U.S. would no longer be full.” (See Attachment Three)

“We’re able to fund the government today because the majority accepted reality. The same thing will need to happen on the debt limit next week,” McConnell said.

“Republicans want to tie the debt ceiling increase to Democrats’ massive legislation as they make their counterparts’ taxing and spending proposals a central plank of their 2022 midterm election strategy,” observed Marketwatch. “The GOP banks on Democrats holding the blame if the U.S. defaults because they control the White House and Congress.

“Raising the debt ceiling, however, does not authorize future spending. The U.S. would be unable to pay its current obligations if it does not increase or suspend the limit.” And the G.O.P. candidates in 2022 would be able to exploit President Joe’s failure to perform to recapture control of the House, Senate and, in 2024, the Presidency (probably under the auspices of You Know Who).

In that event, expect a cabinet chock full o’nuts, flakes (like Sen. Jeff) and squirrely talk radio conspiracy theorists, pizzeria probers and neo-nazi militia (except for those few Oath Keepers who backtracked on their Oaths and pizza-ratted out their comrades).

And perhaps, with Gen. Milley on the sidelines and the Joint Chiefs under the guising hand of somebody like convicted (and pardoned) Gen. Flynn, war?

“While the debt can be measured in trillions of dollars, it is usually measured as a percentage of gross domestic product (GDP), the debt-to-GDP ratio. That's because as a country's economy grows, the amount of revenue a government can use to pay its debts grows as well.” (Investopedia)

SEPTEMBER 24 – SEPTEMBER 30

Friday, September 24, 2021

Infected: 42,853,604

Dead: 687,084

Dow: 34,798.00

Four Trump aides and allies… Meadows, Scavino, Steve Bannon and Kash Patel indicted in Capitol riot probe amd the Feds announce they’re “just getting started.”

“Nurses across the country are fuming,” warns Deborah Burget of the Naitonal Nurses’ Association after CDC experts recommend (on a 9 to 6 vote) that healthcare workers, first responders, fast food janitors and such not be given access to booster shots, so CDC Director Rochelle Walensky overrules her own panel of experts and includes them into the ranks of the favoured few.

Congess holds hearings on air ragers after another cockpit storming nearly takes down a plane. They find that 3199 of 4385 incidents are mask-related. Delta reveals that it has a dossier of 1,600 violent passengers.

Two of the four “View” co-hosts get it moments before Vice President Harris is to appear on set for an interview… she is hustled off to a “zoom room” to do her duty. Subsequent medical exam reveals false positive. A Florida ferret also gets it and veteranarians warn of an impending outbreak of “dog flu” while Dog the Bounty Hunter (actually, just a human) declares he will mount his own search for purported killer Brian Laundrie, believed to be rompin’ in a swamp.

Saturday, September 25, 2021

Infected: 42,930,458

Dead: 687,751

China outlaws bitcoin speculation and America ponders at least some form of regulation as futures drop 10%. “We can’t have the wild west out there,” experts warn.

Out in the real wild west, Republicans admit that the Arizona voting recount that they sponsored, paid for and controlled actually gave President Joe 99 more votes… pushing the total up to a majority. Djonald Unconvinced holds a rally at the state fairgrounds in Perry, GA and reiterates that the 2020 election was fraudulent – not only in Georgia and Arizona, but everywhere. In better news, cooling temperatures allow firefighters to beat back some of the worst of the Western wildfires. And the Del Rio campsite, now purged of migrant encampment, opens for business again, although a backlog of trucks, container ships and Chrismas toys persists nationwide.

The consequences include a lack of computer chips that paralyzes the auto industry… cars used to run fine without computers, teenagers sang songs about them, but not now. CostCo admits more shortages and panic buying of toilet paper.

Sunday, September 26, 2021

Infected: 43,064,100 Dead: 689,898

Today is murdered blonde cutie Gabby Petito’s funeral – thousands converge on service and at her parents’ home; more flock to not-a-suspect, only-a-person-of-interest Brian Laundrie’s parents’ home to shout and throw thing. The POI said to be hiding out in an alligator-infested nature preserve, allegedly meditating or… perhaps… was left behind on his parent’s camping trip to the DeSoto wilderness across the state. Or is exploring the mountains of North Carolina.

Crackdown on government refuseniks hits New York, where government employees, healthcare workers and teachers are fired, most declaiming their rights to “freedom” (not mentioning Trump). “We’re not monsters,” an angry nurse responds, “we’re not selfless.” Oops. New NY Governor Hochul promises to bring in the National Guard to replace them.

Monday, September 27, 2021

Infected: 43,116,438

Dead: 690,434 Dow: 34,869.37

Congress goes back to work, facing stern deadlines: 1T Infrastructure One (which liberal “progressives” vow to destroy unless 3.5T InfraTwo passes) on Thursday and America runs out of money on Friday (actually, we can limp on til’ Oct. 18^th, but the damage will be done. Republicans reject ploy to extend debt ceiling deadline. (See above)

The plague blamed for biggest life expectancy drop since WW2. States reportedly battle one another for miracle monoclonal antibody treatments that refuseniks argue is a better alternative than masks and vaxxes – unless and until Djonald comes out agin’ em.

One in, one out. R. Kelly guilty, faces life in prison. Reagan assassin John Hinckley gets “unconditional” freedom: can he go back to lusting for Jodie Foster again? And Britney’s parasitic papa guilty of hiring blackbox ninjas to install and monitor spyware… everywhere that Britney went, the spooks were sure to follow!

Tuesday, September 28, 2021

Infected: 43,277,743 Dead: 692,985

Dow: 34,299.99

It’s National Voter Registration Day (except in Texas, Florida and a few other reddish places). Democrats “scrambling” to cut deals with Sinemanchin duo while a smirking Sen. McConnell doubles down on his crusade to destroy President Joe and pave the way for… you know…

Gen. Mark Milley testifies about Trump’s final (?) days, calls Biden a liar and warns of ISIS/AlQaeda terror within six months (proof: the Taliban are banning barbers, forcing all Afghan men to grow their beards out). Ex-SecPress Stephanie Grisham writes another Trump expose (I’ll Take Your Questions Now”) which discloses, among other things, that when Ol’ 45 flew into one of his frequent and frenetic rages, staffers calmed him down by singing songs from “Cats”. Apropo: Broadway reopening featuring biomusicals of Tina Turner and the Temptations while “Moulin Rouge” scoops up Tonys.

And… oh yeah!… TreaSec Yellin’s yelling about the coming fiscal Armageddon finally resonates with Wall Street, causing the Dow to plunge by almost 600 points. And the authorities lock up a fugitive caught sleeping in a pile of chicken fingers and meth.

Wednesday, September 29, 2021

Infected: 43,349,280

Dead: 695,113

Dow: 34,258.32

It’s National Coffee Day. Crop failures and logistical logjams are causing prices for the Jones’ morning joe to jump skywards. Maybe the felon, above, was just out of Chock Full o’ Nuts.

Investors have to be chock full o’ nuts too; the Dow bouncing back and the plutocrats scoffing “Default? What default?”

Dr. Fauci, asserting that we are “turning the corner” on the ΔV, advises booster-ers to wait another two weeks before mixing and matching their vaxxes. Don’t look now, but another variant, R-1 (50 cases in California already) on the way, presumably to be renamed the Rho plague. Refusenickery persists: polls say only 56% of parents would make their 5 to 11 year olds take the shot (polls also say that President Joe is now unpopular by a margin of 61 to 38% – ABC.

Thursday, September 30, 2021

Infected: 43,459,843

Dead: 697,848

Dow: 33,843.92

Confident that they have a deal (glossing over the debt ceiling surrender), Democrats go to the Congressional Baseball Game after a 2020 Covid cancellation. Rep. Greg Steube (R-Fla.) hits the first home run in forty years.

Dr. Fauci says we are “turning the corner” on ΔV, but adds that mixing and maxxing original and booster vaxxes is a bad idea – better to wait two weeks. The CDC now says that pregnant women should get shot as soon as possible… any side effects negligible comparable to plague effects on newborns. And no sooner does “Aladdin” reopen on Broadway than numerous positive tests shut it down.

The Palma volcano is joined, on the other side of the world, by Mount Kilauea on Hawaii. Twenty three more species go extinct. Prior to hibernation, human beings hold a “fat bear” contest.

Debt ceiling and shutdown panic send the Dow reeling downwards, the Don too. But a thousand point loss occurred before the kick the can keep the government open vote, and Friday’s indications were for a revival.

And, on the other hand… McDonald’s brings back the McRib.

THE DON JONES INDEX CHART of CATEGORIES w/VALUE ADDED to EQUAL BASELINE of 15,000 (REFLECTING… approximately… DOW JONES INDEX of June 27, 2013) See a further explanation of categories here… ECONOMIC INDICES (60%)

DON JONES’ PERSONAL ECONOMIC INDEX
(45% of TOTAL INDEX POINTS)

CATEGORY	VALUE	BASE	RESULTS			SCORE	SCORE	OUR SOURCES and COMENTS
INCOME	24%	6/17/13	LAST	CHANGE	NEXT	9/24/21	10/1/21	SOURCE
Wages (hourly, per capita)	9%	1350 points	9/24/21	+0.15%	10/08/21	1,471.95	1,471.95	*https://tradingeconomics.com/united-states/wages* 25.99
Median Income (yearly)	4%	600	9/24/21	+0.03%	10/08/21	674.02	674.22	*http://www.usdebtclock.org/* 35,661**
*Unempl. (BLS – in millions	4%	600	9/24/21	-3.85%	10/08/21	386.04	386.04	*http://data.bls.gov/timeseries/LNS14000000/ 5.2% nc*
*Official (DC – in millions)	2%	300	9/24/21	+0.02%	10/08/21	465.15	465.04	http://www.usdebtclock.org/ 8,396 398
*Unofficl. (DC – in millions)	2%	300	9/24/21	-0.10%	10/08/21	404.36	404.76	http://www.usdebtclock.org/ 14,315
Workforce Participtn. Number Percent	2%	300	9/24/21	+0.01% -0.08%	10/08/21	318.31	318.07	In 153, 226 Out 100,063 Total: 253,289 *http://www.usdebtclock.org/* 60.49
WP % (ycharts)*	1%	150	9/24/21	+0.16%	10/08/21	152.48	152.48	*https://ycharts.com/indicators/labor_force_participation_rate* 61.70 nc
OUTGO	(15%)
Total Inflation	7%	1050	9/24/21	+0.3%	10/08/21	977.27	977.27	http://www.bls.gov/news.release/cpi.nr0.htm +0.3 nc
Food	2%	300	9/24/21	+0.4%	10/08/21	275.04	275.04	http://www.bls.gov/news.release/cpi.nr0.htm +0.4
Gasoline	2%	300	9/24/21	+2.8%	10/08/21	255.00	255.00	http://www.bls.gov/news.release/cpi.nr0.htm +2.8
Medical Costs	2%	300	9/24/21	+0.3%	10/08/21	285.34	285.34	http://www.bls.gov/news.release/cpi.nr0.htm +0.3
Shelter	2%	300	9/24/21	+0.2%	10/08/21	288.19	288.19	http://www.bls.gov/news.release/cpi.nr0.htm +0.2
WEALTH	(6%)
*Dow* Jones Index	2%	300	9/24/21	-2.65%	10/08/21	377.46	367.46	*https://www.wsj.com/market-data/quotes/index/DJIA* 33,843.92
Home (Sales) (Valuation)	1% 1%	150 150	5/21/21	-1.84% -0.89%	10/08/21	170.87 179.52	170.87 179.52	https://www.nar.realtor/research-and-statistics Sales (M): 5.88 Valuations (K): 356.7
Debt (Personal)	2%	300	9/24/21	+0.06%	10/08/21	270.87	270.71	http://www.usdebtclock.org/ 65,153

	AMERICAN ECONOMIC INDEX (15% of TOTAL INDEX POINTS)
NATIONAL	(10%)
Revenue (trilns.)	2%	300	9/24/21	+0.23%	10/08/21	329.59	330.35	debtclock.org/ 3,863
Expenditures (tr.)	2%	300	9/24/21	+0.09%	10/08/21	218.43	218.24	debtclock.org/ 6,865
National Debt tr.)	3%	450	9/24/21	+0.09%	10/08/21	319.63	319.34	http://www.usdebtclock.org/ 28,822
Aggregate Debt (tr.)	3%	450	9/24/21	+1.54%	10/08/21	367.16	372.82	http://www.usdebtclock.org/ 84,811

GLOBAL	(5%)
Foreign Debt (tr.)	2%	300	9/24/21	+5.01%	10/08/21	290.11	275.58	http://www.usdebtclock.org/ 7,619
Exports (in billions)	1%	150	9/24/21	+2.46%	10/08/21	189.01	189.01	*https://www.census.gov/foreign-trade/index.html* 212.8 nc
Imports (bl.)	1%	150	9/24/21	- 0.18%	10/08/21	116.36	116.36	*https://www.census.gov/foreign-trade/index.html* 282.9
Trade Deficit (bl.)	1%	150	9/24/21	+1.43%	10/08/21	98.63	98.63	https://www.census.gov/foreign-trade/index.html 70.1
SOCIAL INDICES (40%)
ACTS of MAN	(12%)
World Affairs	3%	450	9/24/21	-0.1	10/08/21	384.80	384.42	Frau Merkel out in Germany, but nobody knows who’s in. Beijing follows Japan in banning foreign fans from 2022 Olympics.
Terrorism	2%	300	9/24/21	-0.3	10/08/21	220.74	220.52	Gen. Milley pivots, calls President Joe a liar for claiming he didn’t know that pulling troops from Afghanistan would cause chaos and calamity and predicting ISIS/AlQaeda resurgence within six months.
Politics	3%	450	9/24/21	+0.1	10/08/21	437.72	438.16	Senator Joe (Manchin) blocks infrastructure and says America faces a “brutal fiscal reality.” Ex-Presidents get busy: Ex-Pres. Obama starts construction on his Chicago library, fending off poor residents facing gentrification and evictions. Trump holds S.S. (super spreader or that German word) rally at the Georgia State Fair. New book by Melania press secretary reveals Ol’ 45’s disappearance due to a colonoscopy; doctos pulling millions of MAGAmen out of his butt.
Economics	3%	450	9/24/21	-0.5	10/08/21	407.91	405.87	After the slowest week conceivable (down 0.01 of a point), the Dow seethes with volatility as default panic comes and goes and comes again like a fart in the wind (but the government still abides). Semiconducter chip, cargo ship and long haul trucking woes impact auto, electronic and… well… mostly everything. But inflation is also migrating to Don Jones necessities like gasoline, coffee and bacon. Face throws in the towel on creepy “Instagram for Kids”.
Crime	1%	150	9/24/21	-0.3%	10/08/21	239.22	238.50	Killer roundup: third-party-vendor, probably “disgruntled” at Kroger in Memphis; school and domestic shootings in Alabama, Ecuadorian prison riot and massacre kills hundreds, haunted house actor stabs 11 year old with fake knife that wasn’t fake in Ohio. Cute white Gabby-killer Brian Laundrie still on the run. Orlando cops attacked by a man with a brick, shoot bow and arrow carjacker in Atlanta. Lady Firebug busted for setting Fawn Fire north of Redding, CA… motive unknown.

ACTS of GOD	(6%)
Environment/Weather	3%	450	9/24/21	-0.1%	10/08/21	400.86	400.46	De-recalled Gov. Newsome (D-Ca) predicts 8° rise in temperatures in a generation – asks for money.
Natural/Unnatural Disaster	3%	450	9/24/21	-0.1%	10/08/21	402.76	402.36	Evil escalator injures nine in Boston. Drowning victim found with winning lottery ticket in his pocket.
LIFESTYLE/JUSTICE INDEX (15%)
Science, Tech, Education	4%	600	9/24/21	+0.2%	10/08/21	684.78	686.15	90 year old William Shatner will be on board next Blue Origin space flight. Older Nazi Ilsa, 96, flees court, out-of-shape police finally run her down. Oldest human footprints in North America found in New Mexico. (But didn’t they have to cross an ocean to get there?)
Equality (econ/social)	4%	600	9/24/21	-0.2%	10/08/21	557.50	556.38	Ritzy Amherst U. in Mass. called “a hotbed of racism,” Northwestern U. in Chicago for drug-raping women. Liz Cheney pivots on gay marriage. ESPN hires first female baseball announcer. Critic accuses Bezozos of misogyny and toxicity, says: “You cannot create a culture of safety and one of fear at the same time.” (The stock market disagrees,)
Health Plague	4%	600	9/24/21	-0.3% nc	10/08/21	491.70 - 103.33	490.22 - 103.33	CNN’s Christiane Amanpour is cured of cancer, but plague blamed for first drop in life expectancy since WWII. Disfigured model Linda Evangelista sues Cool Sculpting for 50M. Ceramic ware recalled for lead poisoning (as opposed to the Chicago variant). Yet another new peril… dog flu! Tons of toxic DiGiorno pizzas recalled… labeled “pepperoni”, they also contained sausage and Canadian bacon! Texas amoeba splashpads infect children. Suntree cashews recalled for their secret ingredient – glass. States, even red ones, rassle each other for Federal monoclonal antibody treatments as the latest variant, “R-1” cuts down 50 in California. President Joe goes on TV to get a booster shot, but NYC teachers win lawsuit de-mandating vaxx mandates for even one. A few NBA stars remain Refusenik…
Freedom and Justice	3%	450	9/24/21	-0.1%	10/08/21	461.41	460.95	Reagan killer John Hinckley kicked out of Arkham, goes free, but R. Kelly faces decades behind bars for various crimes. Olympic swimmer Klete Kellar gets 27 months for “brushing” a Capitol cop. Eleven women issued subpoenas for supporting Stop the Steal riot/rally.
MISCELLANEOUS and TRANSIENT INDEX (7%)
Cultural incidents	3%	450	9/24/21	+0.1%	10/08/21	527.74	528.27	Britney’s parasite papa accused of illicit surveillance. Naomi Osaka returns to tennis, saying: “It doesn’t matter if I win or lose.” (With that attitude, she’ll lose.) Lori Loughlin, out of jail, goes back to TV. Talking Head David Byrne compares rock concerts and Trump rallies: both exhibit “collective efflorescence”. RIP child actor Tommy Kirk.
Miscellaneous incidents	4%	450	9/24/21	nc	10/08/21	486.94	486.94	CostCo re-imposes toilet paper rationing. New “Message Monsters” stamps include what appears to be a red Covid virus in a blue diaper. Speaker Nancy floats a solution to debt crisis… trillion dollar platinum coins. Big coins.

The Don Jones Index for the week of September 24th through September 30, 2021 was DOWN 24.02 points.

The Don Jones Index is sponsored by the Coalition for a New Consensus: retired Congressman and Independent Presidential candidate Jack “Catfish” Parnell, Chairman; Brian Doohan, Administrator. The CNC denies, emphatically, allegations that the organization, as well as any of its officers (including former Congressman Parnell, environmentalist/America-Firster Austin Tillerman and cosmetics CEO Rayna Finch) and references to Parnell’s works, “Entropy and Renaissance” and “The Coming Kill-Off” are fictitious or, at best, mere pawns in the web-serial “Black Helicopters” – and promise swift, effective legal action against parties promulgating this and/or other such slanders.

Comments, complaints, donations (especially SUPERPAC donations) always welcome at feedme@generisis.com or: speak@donjonesindex.com

ATTACHMENT ONE – FROM investopedia

The National Debt Explained

By THE INVESTOPEDIA TEAM

Reviewed by MICHAEL J BOYLE on April 25, 2021

TABLE OF CONTENTS

EXPAND

· National Debt vs. Budget Deficit

· Forms of Government Borrowing

· A Brief History of U.S. Debt

· Understanding the National Debt

· How Bad Is National Debt?

· What the Government Spends Money On

· What Makes the Debt Bigger?

· Possible Consequences of the Growing National Debt

· Methods Used to Reduce Debt

· A Polarizing Topic

The national debt level of the United States is a measurement of how much the federal government owes its creditors. Specifically, the national debt is a term referring to the level of federal debt held by the public, as opposed to the debt held by the government itself. Since the U.S. government almost always spends more than it takes in, the national debt continues to rise.¹

While the debt can be measured in trillions of dollars, it is usually measured as a percentage of gross domestic product (GDP), the debt-to-GDP ratio. That's because as a country's economy grows, the amount of revenue a government can use to pay its debts grows as well.

In addition, a larger economy generally means the country's capital markets will grow and the government can tap them to issue more debt. This means that a country's ability to pay off debt, and the effect that debt might have on the country's economy, is dependent on how large the debt is as a proportion of the overall economy, not the dollar amount.

KEY TAKEAWAYS

· The national debt level of the United States (or any other country) is a measure of how much the government owes its creditors.

· The ratio of debt to gross domestic product is more important than the dollar amount of debt.

· As of April 8, 2021, the U.S. national debt is $28.1 trillion and rising.²

· Some worry that excessive government debt levels can impact economic stability with ramifications for the strength of the currency in trade, economic growth, and unemployment.

· Others claim the national debt is manageable and no cause for alarm.

National Debt vs. Budget Deficit

First, it's important to understand what the difference is between the federal government's annual budget deficit (also known as the fiscal deficit) and the outstanding federal debt, known in official accounting terminology as the national public debt. Simply explained, the federal government generates a budget deficit whenever it spends more money than it brings in through income-generating activities. These activities include individual, corporate, or excise taxes.

By issuing these types of securities, the federal government can acquire the cash that it needs to provide governmental services. The national debt is simply the net accumulation of the federal government's annual budget deficits. It is the total amount of money that the U.S. federal government owes to its creditors. To make an analogy, fiscal or budget deficits are the trees, and the national debt is the forest.

Forms of Government Borrowing

Government borrowing which adds to the national debt shortfall can take other forms. Governments can issue financial securities or even borrow from international organizations like the World Bank or private financial institutions.⁴⁵ Since it is borrowing at a governmental or national level, it is termed national debt. To keep things interesting, other terms for this obligation include government debt, federal debt, or public debt.

The total amount of money that can be borrowed by the government without further authorization by Congress is known as the "total public debt subject to limit." Any amount to be borrowed above this level has to receive additional approval from the legislative branch.

The public debt is calculated daily. After receiving end-of-day reports from about 50 different sources, such as Federal Reserve Bank branches, regarding the number of securities sold and redeemed that day, the U.S. Treasury calculates the total public debt outstanding, which is released the following morning.⁶ It represents the total marketable and non-marketable principal amount of securities outstanding (i.e., not including interest).

The national debt can only be reduced through five mechanisms: increased taxation, reduced spending, debt restructuring, monetization of the debt, or outright default.⁷ The federal budget process directly deals with taxation and spending levels and can create recommendations for restructuring or possible default.

A Brief History of U.S. Debt

Debt has been a part of this country's operations since its beginning. The U.S. government first found itself in debt in 1790, following the Revolutionary War.⁸ Since then, the debt has been fueled over the centuries by more war and economic recession.

Periods of deflation may nominally decrease the size of the debt, but they increase the real value of debt. Since the money supply is tightened, money is valued more highly during deflationary periods. Even if debt payments remain unchanged, borrowers are actually paying more.

The Congressional Budget Office estimated that the federal debt held by the public will equal 98.2% of GDP by the end of 2020. As of Q3, 2020, it was 99.4%, with a peak at Q2 of 105%. That is the highest level since 1946.⁹¹⁰ Since 1970, when the national debt stood at about 26.7% of GDP, debt has gone through a few different periods, staying fairly steady through the 1970s, rising drastically through the 1980s and early 1990s under the Reagan and Bush Presidencies. It peaked in Q1 1994 at 48.3% of GDP, before falling again under the Clinton administration to a low of 30.9% in Q2 2001. It started climbing under George W. Bush again, slowly at first, and then sharply.⁹

As the financial crisis hit with the worst recession since the Great Depression, government revenues plummeted and stimulus spending surged to stabilize the economy from total ruin. This economic catastrophe, combined with an enormous reduction in revenue from the Bush tax cuts and the continued expenses of the Afghanistan and Iraq Wars, caused the debt to balloon. Under the two terms of the Obama administration, federal debt held by the public rose from 43.8% of GDP in Q4 2008 to 75.9% in Q4 2016, a 73.3% increase.⁹

Under former president Trump, the national debt rose by 4% in his first three years in office.⁹ While Trump further slashed federal revenue with his Tax Cuts and Jobs Act, the national debt didn't expand sharply as the economy had largely recovered from the 2008 financial crisis. However, in 2020, when the COVID-19 pandemic hit and spread unchecked, the U.S. economy was sent into recession.¹¹ The virus forced widespread quarantines, shutdowns, enormous stimulus and relief expenditures, and drastically lowered government revenue. The level of federal debt held by the public will have grown by approximately 48% under Trump's four years in office.¹²

Political disagreements about the impact of national debt and methods of debt reduction have historically led to many gridlocks in Congress and delays in the budget proposal, approval, and appropriation. Whenever the debt limit is maxed out by spending and interest obligations, the president must ask Congress to increase it.¹³ For example, in September 2013, the debt ceiling was $16.699 trillion, and the government briefly shut down over disagreements on raising the limit.¹⁴

From a public policy standpoint, the issuance of debt is typically accepted by the public, so long as the proceeds are used to stimulate the growth of the economy in a manner that will lead to the country's long-term prosperity. However, when debt is raised simply to fund public consumption, the use of debt loses a significant amount of support. When debt is used to fund economic expansion, current and future generations stand to reap the rewards. However, debt used to fuel consumption only presents advantages to the current generation.

Understanding the National Debt

Because debt plays such an integral part of economic progress, it must be measured appropriately to convey the long-term impact it presents. Unfortunately, evaluating the country's national debt in relation to the country's gross domestic product (GDP), though common, is not the best approach, for several reasons.

For one thing, GDP is very difficult to accurately measure. It's also too complex. Finally, the national debt is not paid back with GDP, but with tax revenues (although there is a correlation between the two). Comparing the national debt level to GDP is akin to a person comparing the amount of their personal debt in relation to the value of the goods or services that they produce for their employer in a given year.

Using an approach that focuses on the national debt on a per capita basis gives a much better sense of where the country's debt level stands. For example, if people are told that debt per capita is approaching $75,000, it is highly likely that they will grasp the magnitude of the issue. However, if they are told that the national debt level is approaching 70% of GDP, the magnitude of the problem might not register.

Another approach that is easier to interpret is simply to compare the interest expense paid on the national debt outstanding in relation to the expenditures that are made for specific governmental services, such as education, defense, and transportation.

How Bad Is National Debt?

Economists and policy analysts disagree about the consequences of carrying federal debt. Certain aspects are agreed upon, however. Governments that run fiscal deficits have to make up the difference by borrowing money, which can crowd out capital investment in private markets. Debt securities issued by governments to service their debts have an effect on interest rates. This is one of the key relationships that is manipulated through the Federal Reserve's monetary policy tools.

Proponents of the Modern Monetary Theory (MMT) believe that not only is a long-term budget deficit sustainable, but it is also preferable to a government surplus; however, this view is not held by the majority of economists.

Keynesian macroeconomists believe it can be beneficial to run a current account deficit in order to boost aggregate demand in the economy. Most neo-Keynesians support fiscal policy tools like government deficit spending only after the monetary policy has proven ineffective and nominal interest rates have hit zero.

Chicago and Austrian school economists argue that government deficits and debt hurt private investment, manipulate interest rates and the capital structure, suppress exports, and unfairly harm future generations either through higher taxes or inflation.

What the Government Spends Money On

As indicated above, debt is the net accumulation of budget deficits. It is important to look at the top expenses, as they constitute the major factors of the national debt. The top expenses in the U.S. for 2021 are as follows:

Medicare/Medicaid and Other Healthcare Programs

For 2021, a total of $1.4 trillion is allocated to healthcare benefit programs, which include Medicare and Medicaid.¹⁵

Social Security Program and Disability Pensions

Aimed at providing financial security to the retired and disabled, total Social Security and other expenditures are approximately $1.1 trillion.¹⁵

Defense Budget Expenses

This represents the portion of the national budget that is allocated for military-related expenditures. $752 billion is earmarked for the U.S. Defense Budget in 2021.¹⁶

Other Miscellaneous Expenses

Transportation, veterans' benefits, international affairs, and public education are also government expenses. Interestingly, the common public belief is that spending on international affairs consumes a lot of resources and expenses, but in truth, such expenditures lie within the lower rung in the list.¹⁵

What Makes the Debt Bigger?

History tells us that among the top expenses, the Social Security program, defense, and Medicare were the primary expenses even during the times when the national deficit levels were low, as they last were in the 1990s.⁹ ¹⁷ Then how did the situation worsen? There are various opinions on the matter.

The Overburdened Social Security System

Some argue the mechanism to finance Social Security has led to increased expenditures without obvious payoff. Payments are collected from present-day workers and used for immediate benefits; that is, payments to existing beneficiaries.

Due to the increasing number of retirees and their longer life spans, the size and cost of payments have skyrocketed. Parents having fewer kids are limiting the pool of present-day contributing workers.¹⁸ Recent economic downturns have also led to stagnant pay.¹⁹ Overall, limited incoming and more outgoing cash flows are making Social Security a big component of the national debt.

Social security, retirement, and payroll contributions have been the second-largest sector for government income, but contributions do not necessarily increase each year and even dipped significantly in 2010 and 2011.²⁰

While Social Security generated a record high total income of $1 trillion in 2019, it paid out nearly the same amount in benefits, leaving the program with the smallest annual net increase since 1983.²¹ Limited jobs and lower or stagnant salaries have been the blockade for increases in this stream of government income. One major problem is that payroll taxes are not collected on income beyond a certain level: $142,800 in 2021.²² This means that the more money you make above the cap, the lower your effective payroll tax rate, making the tax regressive as well as limiting revenue.

Healthcare

The U.S. spends far more than other rich nations on healthcare, a full 17% of our GDP versus the 11% spent by Germany or the 9.6% spent by the U.K. While a much larger percentage of the U.S. healthcare system is run by the private sector than in other countries, the U.S. government alone still spends more on healthcare than the governments of Canada or Italy. Healthcare spending takes up roughly a quarter of government spending, up from 12% in 1990. The hugely disproportionate amount the U.S. spends on healthcare is a major contributor to the national debt.²³

Continued Tax Cuts

Tax cuts introduced by multiple presidential administrations have continued to grow the national debt. The most recent examples were the Bush tax cuts of the early 2000s and the Tax Cuts and Jobs Act passed in 2017 under the Trump administration.²⁴

Individual income taxes are the topmost contributor to Uncle Sam's revenues: Individual taxpayers contribute nearly half of annual tax receipts.²⁵ The challenge, along with the aforementioned Trump tax cuts, has been slow-to-grow U.S. salaries, resulting in limited tax collection.¹⁹

The third-largest piece of the pie in the government income chart, corporate tax inflow, peaked in 2007 but has since shown a sharp decline, particularly after the passage of the Tax Cuts and Jobs Act.²⁶

Similar to corporate taxes, excise taxes have shown dismal collections as well. The collection of excise taxes totaled $99 billion in 2019, or just 0.5% of GDP.²⁷ Additionally, the federal excise tax on gasoline, which is the largest source of funding for roads, has been stuck at 18.4 cents per gallon for more than two decades, despite huge changes in the economy, roads, and the price of gas.²⁸

Wars in Iraq, Syria, Pakistan, and Afghanistan

Primarily within the defense budget, continued involvement in these engagements has cost the U.S. massively, adding to the national debt. Around $5.9 trillion has been spent on these engagements since 2001.²⁹ Additionally, the U.S. spends more on defense than the next 10 biggest spenders combined.³⁰

Possible Consequences of the Growing National Debt

Given that the national debt has grown faster than the size of the American population, it is fair to wonder how this growing debt affects average individuals.³¹ ³² While it may not be obvious, national debt levels may directly impact people in at least four direct ways.

Increased Risk of Government Default

As the national debt per capita increases, the likelihood of the government defaulting on its debt service obligation increases, and the Treasury Department will thus have to raise the yield on newly issued Treasury securities in order to attract new investors. This reduces the amount of tax revenue available to spend on other governmental services because more tax revenue will have to be paid out as interest on the national debt.

Over time, this shift in expenditures will cause people to experience a lower standard of living, as borrowing for economic enhancement projects becomes more difficult.

Forced Coupon Increase of Corporate Debt Offerings

As the rate offered on Treasury securities increases, corporate operations in America will be viewed as riskier, also necessitating an increase in the yield on newly issued bonds. This, in turn, will require corporations to raise the price of their products and services in order to meet the increased cost of their debt service obligation. Over time, this will cause people to pay more for goods and services, resulting in inflation.

Increased Costs to Borrow Money

As the yield offered on Treasury securities increases, the cost of borrowing money to purchase a home will also increase because the cost of money in the mortgage lending market is directly tied to the short-term interest rates set by the Federal Reserve and the yield offered on Treasury securities issued by the Treasury Department.

Given this established interrelationship, an increase in interest rates will push home prices down because prospective homebuyers will no longer qualify for as large of a mortgage loan. The result will be more downward pressure on the value of homes, which in turn will reduce the net worth of all homeowners.

Loss of Investment in Other Market Securities

Since the yield on U.S. Treasury securities is currently considered a risk-free rate of return and as the yield on these securities increases, investments such as corporate debt and equities, which carry some risk, will lose appeal.³³

This phenomenon is a direct result of the fact that it will be more difficult for corporations to generate enough pre-tax income to offer a high enough risk premium on their bonds and stock dividends to justify investing in their company. This dilemma is known as the crowding-out effect and tends to encourage the growth in the size of the government and the simultaneous reduction in the size of the private sector.

Perhaps most importantly, as the risk of a country defaulting on its debt service obligation increases, the country loses its social, economic, and political power. This, in turn, makes the national debt level a national security issue.

Methods Used to Reduce Debt

Governments have many options when trying to reduce debt, and throughout history, some of them have actually worked.

Monetization

A country with its own fiat currency can always simply create as much currency as it owes in order to pay its debts if those debts are denominated in its currency. This is referred to as debt monetization.

However, there is a limit to how much debt can be monetized before a country starts suffering from inflation, or even hyperinflation. Efforts to monetize debt have often pushed countries well past that point. Monetizing debt can also make creditors less likely to lend to a country if inflation significantly lowers the value of what creditors are repaid.

Interest Rate Manipulation

Maintaining low interest rates is one method that governments seek to stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Low interest rates make it easy for individuals and businesses to borrow money.

In turn, the borrowers spend that money on goods and services, which creates jobs and tax revenues. Low interest rates have been employed by the United States, the European Union, the United Kingdom, and other nations with some degree of success.³⁴³⁵³⁶ That noted, interest rates kept at or near zero for extended periods of time have not proved to be a panacea for debt-ridden governments.

Spending Cuts

One way to cut debt is to cut spending. This can be difficult in two ways.

First, each government expenditure has its own constituency that will fight efforts to cut that expenditure, making spending cuts politically difficult. Secondly, if done during a severe economic downturn, spending cuts can damage the economy through a negative multiplier effect. This can cut revenue enough that it can actually impair the ability to repay debts, so spending cuts must be done carefully.

Raise Taxes

On the other side of the ledger are tax increases. In the United States, federal government revenues have been below their 50 year average of 17.4% for 14 of the last 20 years.³⁷³⁸ However, just like cutting spending, raising taxes can be politically difficult as various interest groups will defend their own tax exemptions. Raising taxes can also have a negative multiplier effect, which can complicate efforts to reduce debt.

Bailout

A number of countries have been given debt bailouts, either by the IMF, in the case of many countries through the past several decades, or by the EU, as was most prominently the case for Greece during the European debt crisis.³⁹ These bailouts often come with the requirement to impose harsh reforms on a country's economy, and there is substantial debate as to whether or not the structural adjustments the IMF or EU imposed on bailed-out countries had an overall positive or negative effect.

Default

Defaulting on the debt, which can include going bankrupt and or restructuring payments to creditors, is a common and often successful strategy for debt reduction.

A Polarizing Topic

Debt reduction and government policy are seriously polarizing political topics. Critics of every position take issues with nearly all budget and debt reduction claims, arguing about flawed data, improper methodologies, smoke-and-mirrors accounting, and countless other issues.

For example, while some authors claim that U.S. debt has never gone down since 1961, others claim it has fallen multiple times since then, depending on whether you measure the dollar amount or the debt-to-GDP ratio. Similar conflicting arguments and data to support them can be found for nearly every aspect of any discussion of federal debt reduction.

While there are a variety of methods countries have employed at various times and with various degrees of success, there is no magic formula that works equally well for every nation in every instance.

ATTACHMENT TWO – FROM the balance.com

US National Debt by Year Compared to GDP and Major Events

Why the U.S. Debt Has Risen Dramatically Since 1929

•••

BY KIMBERLY AMADEO Updated September 09, 2021 REVIEWED BY MICHAEL J BOYLE

The U.S. national debt hit a new high of more than $28 trillion on March 1, 2021, and it continues to hover at or just below $28 trillion.¹ That's greater than the annual economic output of the entire country.²

Throughout the years, recessions have increased the debt because they have lowered tax revenue. At the same time, Congress has spent more to stimulate the economy. Military spending has also been a big contributor, as has spending on benefits such as Medicare. In 2020 and 2021, spending to offset the effects of the COVID-19 pandemic also added to the debt.

Although investors aren't currently worried about a U.S. debt default, that could change once the pandemic ends. In that case, ways to reduce the debt, such as raising taxes or cutting spending, will need to be considered.

Key Takeaways

· The U.S. national debt hit a new high of $28 trillion in March 2021.

· The debt-to-GDP ratio gives insight into whether the U.S. has the ability to cover all of its debt.

· A combination of recessions, defense budget growth, and tax cuts has raised the national debt-to-GDP ratio to record levels.

· The U.S. cannot afford to default on its debt without major global economic consequences.

How to Look at Debt by Year

It's best to look at a country's national debt in context. During a recession, expansionary fiscal policy, such as spending and tax cuts, is often used to spur the economy back to health. If it boosts growth enough, it can reduce the debt. A growing economy produces more tax revenues to pay back the debt.

The theory of supply-side economics says the growth from tax cuts is enough to replace the tax revenue lost if the tax rate is above 50% of income. When tax rates are lower, the cuts worsen the national debt without boosting growth enough to replace lost revenue.

Major events, like wars and pandemics, can increase the national debt.

During national threats, the U.S. increases military spending. For example, the U.S. debt grew after the September 11, 2001 attacks as the country increased military spending to launch the War on Terror. Between fiscal years 2001 and 2020, those efforts cost $6.4 trillion, including increases to the Department of Defense and the Veterans Administration.³

The national debt by year should be compared to the size of the economy as measured by the gross domestic product. That gives you the debt-to-GDP ratio. That ratio is important because investors worry about default when the debt-to-GDP ratio is greater than 77%—that's the tipping point.

The World Bank found that if the debt-to-GDP ratio exceeded 77% for an extended period, it slowed economic growth. Every percentage point of debt above this level costs the country 0.017 percentage points in economic growth.⁴

You can also use the debt-to-GDP ratio to compare the national debt to other countries. It gives you an idea of how likely the country is to pay back its debt.

Debt by Year Compared to Nominal GDP and Events

In the table below, the national debt is compared to GDP and influential events since 1929.⁵ The debt and GDP are given as of the end of the third quarter (unless otherwise noted) in each year to coincide with the end of the fiscal year. That's the best way to accurately determine how spending in each fiscal year contributes to the debt and compare it to economic growth.⁶

From 1947-1976, debt and GDP are given at the end of the second quarter since, during that time, the fiscal year ended on June 30. For years 1929-1946, debt is reported at the end of the second quarter, while GDP is reported annually since quarterly figures are not available.

End of Fiscal Year	Debt (in billions, rounded)	Debt-to-GDP Ratio	Major Events by Presidential Term
1929	$17	16%	Market crash
1930	$16	17%	Smoot-Hawley reduced trade
1931	$17	22%	Dust Bowl drought raged
1932	$20	34%	Hoover raised taxes
1933	$23	40%	New Deal increased GDP & debt
1934	$27	40%
1935	$29	39%	Social Security
1936	$34	40%	Tax hikes renewed depression
1937	$36	39%	Third New Deal
1938	$37	42%	Dust Bowl ended
1939	$40	51%	Depression ended
1940	$43	49%	FDR increased spending & raised taxes
1941	$49	44%	U.S. entered WWII
1942	$72	48%	Defense tripled
1943	$137	70%
1944	$201	91%	Bretton Woods
1945	$259	114%	WWII ended
1946	$269	119%	Truman's 1st term budgets & recession
1947	$258	103%	Cold War
1948	$252	92%	Recession
1949	$253	93%	Recession
1950	$257	86%	Korean War boosted growth and debt
1951	$255	74%
1952	$259	71%
1953	$266	68%	Recession when war ended
1954	$271	69%	Eisenhower's budgets & Recession
1955	$274	64%
1956	$273	61%
1957	$271	57%	Recession
1958	$276	58%	Eisenhower's 2nd term & recession
1959	$285	55%	Fed raised rates
1960	$286	54%	Recession
1961	$289	52%	Bay of Pigs
1962	$298	50%	JFK budgets & Cuban missile crisis
1963	$306	48%	U.S. aids Vietnam, JFK killed
1964	$312	46%	LBJ's budgets & war on poverty
1965	$317	43%	U.S. entered Vietnam War
1966	$320	40%
1967	$326	40%
1968	$348	39%
1969	$354	36%	Nixon took office
1970	$371	35%	Recession
1971	$398	35%	Wage-price controls
1972	$427	34%	Stagflation
1973	$458	33%	Nixon ended gold standard & OPEC oil embargo
1974	$475	31%	Watergate & budget process created
1975	$533	32%	Vietnam War ended
1976	$620	33%	Stagflation
1977	$699	34%	Stagflation
1978	$772	33%	Carter budgets & recession
1979	$827	32%
1980	$908	32%	Volcker raised fed rate to 20%
1981	$998	31%	Reagan tax cut
1982	$1,142	34%	Reagan increased spending
1983	$1,377	37%	Jobless rate 10.8%
1984	$1,572	38%	Increased defense spending
1985	$1,823	41%
1986	$2,125	46%	Reagan lowered taxes
1987	$2,350	48%	Market crash
1988	$2,602	50%	Fed raised rates
1989	$2,857	51%	S&L Crisis
1990	$3,233	54%	First Iraq War
1991	$3,665	58%	Recession
1992	$4,065	61%
1993	$4,411	63%	Omnibus Budget Act
1994	$4,693	64%	Clinton budgets
1995	$4,974	64%
1996	$5,225	64%	Welfare reform
1997	$5,413	63%
1998	$5,526	60%	LTCM crisis & recession
1999	$5,656	58%	Glass-Steagall repealed
2000	$5,674	55%	Budget surplus
2001	$5,807	55%	9/11 attacks & EGTRRA
2002	$6,228	57%	War on Terror
2003	$6,783	59%	JGTRRA & Iraq War
2004	$7,379	60%	Iraq War
2005	$7,933	61%	Bankruptcy Act & Katrina.
2006	$8,507	61%	Bernanke chaired Fed
2007	$9,008	62%	Bank crisis
2008	$10,025	68%	Bank bailout & QE
2009	$11,910	82%	Bailout cost $250B ARRA added $242B
2010	$13,562	90%	ARRA added $400B, payroll tax holiday ended, Obama Tax cuts, ACA, Simpson-Bowles
2011	$14,790	95%	Debt crisis, recession and tax cuts reduced revenue
2012	$16,066	99%	Fiscal cliff
2013	$16,738	99%	Sequester, government shutdown
2014	$17,824	101%	QE ended, debt ceiling crisis
2015	$18,151	100%	Oil prices fell
2016	$19,573	105%	Brexit
2017	$20,245	104%	Congress raised the debt ceiling
2018	$21,516	105%	Trump tax cuts
2019	$22,719	107%	Trade wars
2020	$27,748	129%	COVID-19 & CARES Act

ATTACHMENT THREE – FROM Marketwatch qf

What happens if the U.S. defaults on its debt?

Last Updated: Sept. 30, 2021 at 4:15 p.m. ETFirst Published: Sept. 27, 2021 at 12:44 p.m. ET By Andrea Riquier

Even as Washington managed to avoid an imminent government shutdown Thursday, here’s why the status of the nation’s debt ceiling may ignite more worry in financial markets.

Sept. 30 marks the end of the federal government’s fiscal year, and the deadline for Congress to pass a funding measure. Thursday’s stop-gap measure keeps the government funded until early December.

The debt ceiling, which is the amount of money lawmakers authorize the Treasury Department to borrow to pay for spending already authorized, must be suspended or raised by Oct. 18, according to Treasury Secretary Janet Yellen, or the U.S. likely will default on its debt.

It’s important to note that no one knows precisely when the U.S. Treasury will run out of money to pay its bills, including bondholders, let alone what would happen next. U.S. sovereign debt generally has been considered the safest and most liquid to own in the world, and all kinds of financial market products and processes have been pegged to the orderly functioning of the nearly $21 trillion Treasury market.

Still, after a couple of topsy-turvy years in which the previously unthinkable became real, some Washington and Wall Street professionals have been girding for a worst-case scenario.

In a research note published Sept. 22, Barclays analyst Joseph Abate noted there’s additional uncertainty over the debt ceiling now because it coincides with a funding package Congress needs to pass. What’s more, changes brought by the pandemic have made it far more difficult to assess the state of the Treasury Department’s expected payouts and inflows.

While most analysts expected a mid-October “X date,” when Treasury will run out of money to pay bills, Yellen on Tuesday told Congressional leaders that it would be Oct. 18. “At that point, we expect Treasury would be left with very limited resources that would be depleted quickly,” she wrote in an update.

Beacon’s Koltun, among others, thinks markets will start to get antsy even earlier than that.

The very idea of a U.S. default remains so incongruous that the reaction in financial markets isn’t the only unknown. The current showdown in Washington also has raised big questions about the financial-systems infrastructure. It’s a bit like Y2K — no one knows how the computers will respond.

“We do not believe and the market does not believe it’s a likely scenario,” said Rob Toomey, SIFMA managing director, capital markets and associate general counsel. “But it would be a real problem scenario for the system generally and operations and settlement specifically.”

SIFMA, the Securities Industry and Financial Markets Association, is the industry association that deals with the mechanics of how securities like sovereign bonds trade and settle. The group has worked with financial infrastructure providers including Fedwire and FICC to try to devise some sort of playbook. For now, there are two possible scenarios:

If the Treasury Department knows that it will miss a payment, it would ideally announce that at least a day in advance. That would allow the maturity dates of the bonds in question to be changed: a Monday maturity date would be changed to Tuesday, a Tuesday maturity would be changed to Wednesday, and so on. These revisions would happen day by day.

While that sounds relatively orderly, it still leaves many unknowns. For one thing, it could bifurcate the market for Treasury bonds and bills into those that are clearing normally and those whose maturity dates are being massaged, SIFMA told MarketWatch. That means a great deal of uncertainty around pricing and what it means for all the downstream securities pegged to Treasury rates.

In a second scenario, which SIFMA said would be very remote, Treasury cannot, or does not, give any advance warning of a failure to make a payment, and it just happens. That would be far more chaotic, “a real problem scenario,” as SIFMA says.

Strangely, the securities in question would probably simply disappear from the system. That’s because if a bond is supposed to mature — and be paid — on a particular day, the system assumes it has been. “It just illustrates the fact that the system wasn’t designed for this,” SIFMA notes.

If that happens, there would be a holder of record for the debt on the day before the maturity was scheduled, who would be entitled to get paid. However, it’s also likely that Treasury might pay some additional interest to make the bondholder whole.

Many analysts, including Moody’s Analytics Chief Economist Mark Zandi, think it’s highly likely that a financial market freak-out — think of the day in 2008 when Congress initially failed to pass the Troubled Asset Relief Program legislation meant to address the financial crisis — would stop any of the scenarios SIFMA envisions before they happen, or a few minutes after midnight on the day they will.

What Koltun calls a “game of chicken” also may already be denting the economy. The last two times Congress came close to not raising the debt limit, in 2011 and 2013, Moody’s Analytics found, “heightened uncertainty at the time reduced business investment and hiring and weighed heavily on GDP growth. If not for this uncertainty, by mid-2015, real GDP would have been $180 billion, or more than 1%, higher; there would have been 1.2 million more jobs; and the unemployment rate would have been 0.7 percentage point lower.”

Uncertainty rippling through the Treasury market in 2013 cost taxpayers anywhere from $40 million to $70 million, Barclay’s reckons.

Also from Market Watch…

Here’s who owns a record $21.21 trillion of U.S. debt

Published: Aug. 23, 2018 at 11:26 a.m. ET By Jeffry Bartash

223

Americans own 70% of U.S. debt, but China, Japan loom large

Who owns the huge and growing U.S. national debt? By and large, Americans.

Some 70% of the national debt is owned by domestic government, institutions investors and the Federal Reserve. A shade under 30% is owned by foreign entities, according to the latest information from the U.S. Treasury.

The nation’s debt climbed to a record $21.21 trillion at the end of June, a 6.9% increase from a year earlier.

American institutions such as private and state pension funds as well as individual investors were the biggest holders. They owned $6.89 trillion in debt and absorbed about four-fifths of the increase over the past year.

The Chinese government or Chinese investors likely own even more U.S. debt purchased through entities in other countries such as Hong Kong, Luxembourg or the Cayman Islands, all of which are havens for tax shelters.

Notably, Russia has slashed its Treasury holdings to a mere $15 billion from a peak of $153 billion in mid-2013 amid worsening tensions with the U.S.

So far there’s little evidence that other countries will follow suit to strike back at the U.S. amid ongoing trade disputes. Many need or want Treasury bonds and notes as a safe place to park their savings.

The U.S. government, for its part, owned $5.73 trillion in debt, mostly via Social Security and federal pension funds.

The Federal Reserve owned $2.38 trillion in debt, but it trimmed its holdings by $85 billion since June 2017. The Fed last year began to partly sell off the vast hoard of Treasurys it snapped up to lower interest rates and flood the economy with cash during and immediately after the Great Recession.

ATTACHMENT FOUR (A) – FROM the WashPost

As Treasury scrambles to pay bills, pandemic fuels uncertainty over calamitous ‘X Date’

Administration officials rule out more heterodox ideas, such as minting $1 trillion coin, to resolve debt ceiling impasse

Yellen, U.S. treasury secretary, arrives at a Eurogroup meeting of European Union finance ministers in Brussels, on July 12. (Valeria Mongelli/Bloomberg)

Jeff Stein

Yesterday at 6:00 a.m. EDT

NEW! Gift this article to share free access

Treasury officials face an unusually difficult task this fall in projecting precisely when the federal government will no longer be able to pay its bills, a lapse that could trigger a default and plunge America into an economic recession.

Traditionally, Treasury staff rely on historical trends of government spending and economic activity to estimate the cash balance of the federal government. But that task is significantly more complicated this year. The United States and world economies remain in an unusual state of flux because of the pandemic, leading to unpredictable fluctuations in monthly tax receipts. And the U.S. is currently administering dozens of new covid-related economic programs that have no precedent, making the amount of cash they will spend hard to model.

The uncertainty in Treasury’s projections over when the government will default — a deadline known by budget experts as the “X Date” — exacerbates the danger of the ongoing congressional brinkmanship over the nation’s fiscal soundness.

Congressional Republicans are refusing to help Democrats raise or suspend the debt ceiling to authorize the amount of borrowing required by laws already passed into law by both parties. Treasury has deployed a series of “emergency measures” to allow it to meet its current obligations, such as delaying certain payments until the matter is resolved. But it is rapidly running out of these options amid the prolonged legislative standoff.

“It’s always very hard to predict the cash flow of the government, but it’s important to understand that it is particularly hard to do projections now,” said one senior Treasury official, who spoke on the condition of anonymity to describe internal matters.

Shutdown risks rise as White House tells agencies to prepare.

Some lawmakers have said the Treasury Department is bluffing, essentially trying to scaremonger Congress. Sen. Patrick J. Toomey (R-Pa.) has said the Treasury would prioritize payments on its debt even if the debt ceiling isn’t increased so that it wouldn’t technically default if Congress doesn’t act. In the past, Treasury officials have looked at whether they could prioritize these payments and delay other payments as a way to manage its cash flow in a crisis-type situation. But even steps like those aren’t expected to calm investors. The closer Treasury comes to the X Date, the more investors tend to dump short-term Treasury debt, a move that can lead to panic on Wall Street and in Washington.

The federal government spends more money every year than it collects in revenue, and it makes up the difference by borrowing. Congress sets a ceiling on how much the Treasury can borrow — a limit lawmakers typically then raise, or suspend, when they approve legislation that also requires Treasury to spend more. And the Treasury Department makes millions of payments each month, making it difficult to prioritize some over others.

The most recent debt ceiling suspension, enacted under President Donald Trump in 2019, lapsed at the end of July but raised the debt ceiling to cover all of the new debt issued during its suspension. That meant the United States has a new debt ceiling, $28.4 trillion. But congressional spending by both parties requires Treasury to take on more debt, even if those programs were created months or years ago. Treasury likely needs at least a debt ceiling of $29 trillion to make it through this year alone.

Former GOP Treasury secretaries tried defusing debt ceiling bomb in talks with McConnell, Yellen

Since the debt ceiling came back into effect, Treasury has funded its outstanding obligations without new borrowing primarily through accounting gimmicks that amount to shuffling funds. These “extraordinary measures” can give Treasury some breathing room but can last only a few months absent congressional action.

Budget experts are confident the government can still issue debt until the first week of October — and almost certainly the second — with little adverse consequence. But estimates become hazier after that. Treasury has said only that the debt limit will be breached “sometime in October.” The Bipartisan Policy Center, a nonpartisan think tank, has said the date is likely somewhere between Oct. 15 and Nov. 4. Several Wall Street forecasters have guessed more precise dates but acknowledge those only represent approximate ranges. Mark Zandi, chief economist at Moody’s Analytics, said the date is likely Oct. 20 but could come as early as Oct. 15.

Any number of covid-related programs could suddenly alter Treasury’s cash balance. Billions of dollars in covid relief funding for state and local governments have gone out on an unpredictable schedule. Money for natural disasters and weather-related catastrophes could also suddenly and unexpectedly drain government coffers.

“There’s so much volatility with these payments,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center. “There’s always uncertainty in estimating the ‘X Date’ because it involves millions of payments that go out the door. But it’s particularly heightened this year. There are a number of programs that are new and spend out in unpredictable ways.”

Economist: U.S. default this fall would cost 6 million jobs.

Treasury said this week that it has roughly $300 billion on hand. This may sound like a lot, but roughly $150 billion will go out the door Oct. 1 — when it is required to make Social Security payments to millions of seniors and replenish a Department of Defense trust fund.

As its cash has dwindled, Treasury has pulled financial assets out of various government accounts and essentially sold them to the public for cash, according to Akabas. It has done so primarily by pulling U.S. Treasury bonds out of a fund for federal employees while also suspending the purchase of new securities for the Civil Service Retirement and Disability Fund and some similar measures. Once the debt ceiling impasse is resolved, Treasury will replenish the funds it pulled out of the accounts, holding beneficiaries harmless. Yet these options are narrowing as the congressional standoff continues.

The Biden administration has been adamant that the only way to avoid calamity is for Congress to approve a debt ceiling hike or suspension. Administration officials have rejected more heterodox economic ideas to do so unilaterally, such as having the Treasury mint a “trillion-dollar coin” to bypass the borrowing limit.

Some liberal advocates have also urged Biden to consider simply ignoring the debt ceiling law and instead invoking the Constitution, which appears to require the government to meet its payment obligations. Section 4 of the 14th Amendment of the U.S. Constitution states: “The validity of the public debt of the United States, authorized by law … shall not be questioned.”

“Yes, it may be a violation of the Constitution for the president to simply ignore the debt ceiling. But it’s even more serious for him to obey the debt ceiling and have default in violation of Section 4,” said Harvard law professor Laurence Tribe, whose legal advice the administration has repeatedly sought, in an interview.

Treasury has rejected this approach as well, according to a spokeswoman. Some experts say such a maneuver would do little to assure creditors of the reliability of the U.S. government to meet its obligations. Only Congress can assure the world the U.S. political system is functional enough to be a safe haven for investors worldwide, said Zandi, of Moody’s Analytics.

“That is not going to make an investor feel comfortable we have this under control,” Zandi said. “It not only would not work but it would also threaten our system of government.”

AND…

ATTACHMENT FOUR (B) – Also From the WashPost

As Treasury scrambles to pay bills, pandemic fuels uncertainty over calamitous ‘X Date’

Administration officials rule out more heterodox ideas, such as minting $1 trillion coin, to resolve debt ceiling impasse

Jeff Stein

Yesterday at 6:00 a.m. EDT

Shutdown risks rise as White House tells agencies to prepare.

Former GOP Treasury secretaries tried defusing debt ceiling bomb in talks with McConnell, Yellen

Economist: U.S. default this fall would cost 6 million jobs.

“That is not going to make an investor feel comfortable we have this under control,” Zandi said. “It not only would not work but it would also threaten our system of government.”

ATTACHMENT FIVE – FROM – ny times

America’s Need to Pay Its Bills Has Spawned a Political Game

Republicans and Democrats have long sparred over raising the debt ceiling. But this time, the odds are growing that the U.S. could default.

By Jim Tankersley Published Sept. 26, 2021Updated Sept. 27, 2021, 1:25 p.m. ET

WASHINGTON — For nearly two decades, lawmakers in Washington have waged an escalating display of brinkmanship over the federal government’s ability to borrow money to pay its bills. They have forced administrations of both parties to take evasive actions, pushing the nation dangerously close to economic calamity. But they have never actually tipped the United States into default.

The dance is repeating this fall, but this time the dynamics are different — and the threat of default is greater than ever.

Republicans in Congress have refused to help raise the nation’s debt limit, even though the need to borrow stems from the bipartisan practice of running large budget deficits. Republicans agree the U.S. must pay its bills, but on Monday they are expected to block a measure in the Senate that would enable the government to do so. Democrats, insistent that Republicans help pay for past decisions to boost spending and cut taxes, have so far refused to use a special process to raise the limit on their own.

Observers inside and outside Washington are worried neither side will budge in time, roiling financial markets and capsizing the economy’s nascent recovery from the

If the limit is not raised or suspended, officials at the Treasury Department warn, the government will soon exhaust its ability to borrow money, forcing officials to choose between missing payments on military salaries, Social Security benefits and the interest it owes to investors who have financed America’s spending spree.

Yet Republicans have threatened to filibuster any attempt by Senate Democrats to pass a simple bill to increase borrowing. Party leaders like Senator Mitch McConnell of Kentucky want to force Democrats to raise the limit on their own, through a fast-track congressional process that bypasses a Republican filibuster. That could take weeks to come to fruition, raising the stakes every day that Democratic leaders decline to pursue that option.

The problem is further compounded by the fact that no one is quite sure when the government will run out of money. The Covid-19 pandemic continues to ravage the United States in waves, frequently disrupting economic activity and the taxes the government collects, complicating Treasury’s ability to gauge its cash flow. Estimates for what’s known as the “X-date” range from as early as Oct. 15 to mid-November.

Amid that uncertainty, congressional leaders and President Biden aren’t even attempting to negotiate a resolution. Instead, they are sparring over who should be saddled with a vote that could be used against them, raising the odds that partisan stubbornness will propel the country into a fiscal unknown.

It all adds up to an impasse rooted in political messaging, midterm campaign advertising and a desire by Republican leaders to do whatever they can to protest Mr. Biden’s economic agenda, including the $3.5 trillion spending bill that Democrats hope to pass along party lines using a fast-track budget process.

Republicans say they will not supply any votes to lift the debt cap, despite having run up trillions in new debt to pay for the 2017 tax cuts, additional government spending and pandemic aid during the Trump administration. Democrats, in contrast, helped President Donald J. Trump increase borrowing in 2017 and 2019.

“If they want to tax, borrow, and spend historic sums of money without our input,” Mr. McConnell said on the Senate floor this week, “they will have to raise the debt limit without our help.”

Thus far, Mr. Biden and Democratic leaders in Congress have declined to do so, even though employing that process would end the threat of default.

Jon Lieber, a former aide to Mr. McConnell who is now with the Eurasia Group, a political-risk consultancy in Washington, wrote in a warning to clients this week that there is a one-in-five chance the standoff will push the country into at least a technical debt default — forcing the government to choose between paying bondholders and honoring all its spending commitments — this fall.

“That’s crazy high for an event like this,” Mr. Lieber said in an interview, noting that the odds are significantly higher than in past standoffs. “But I feel really confident that’s the level of panic we should be having.”

Under President George W. Bush, Democrats, including Mr. Biden, voted in 2006 against a debt limit increase, citing Mr. Bush’s budget deficits that were swollen by tax cuts and wars in Iraq and Afghanistan. They did so despite warnings from administration officials that a default would hurt the nation’s credit rating and economy.

Mr. Biden, like many other Democrats, said he could not abet Mr. Bush’s fiscal decisions. But his party did not filibuster a vote and Republicans were able to pass a debt limit increase along party lines. White House officials say Mr. Biden’s vote was symbolic, noting that the ability of Republicans to raise the debt ceiling was never in question.

Leaders of both parties have, at times, made a version of the core argument in favor of raising the limit: that it is simply a way to allow the government to pay bills it has already incurred. Both parties also have shown no sign of slowing the nation’s borrowing spree, which accelerated last year as lawmakers approved trillions of dollars of aid for people and businesses struggling through the pandemic recession. Each party has recently occupied the White House and controlled Congress, but neither has come close in recent years to approving a budget that would balance — which is to say, not require additional borrowing and a debt-limit increase — within a decade.

Biden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.

“I think it’s scary for consumer confidence and for confidence in U.S. businesses and potential credit ratings if we don’t make sure that we raise that debt ceiling,” Andy Jassy, the chief executive officer of Amazon, said on CNBC earlier this month.

Democrats say Republicans have a responsibility to help raise the limit, noting that they helped when Mr. Trump needed to do it. White House officials called Mr. McConnell’s position hypocritical.

“Republicans in Congress have spent a decade ushering in a new era where the prospect of default and a global economic meltdown has become a dangerous political football,” Michael Gwin, a White House spokesman, said in an email. “As we rebound from the deep recession caused by the pandemic, it’s more important now than ever to put partisanship aside, remove this cloud from over our economy, and responsibly address the debt limit — just like Democrats did three times under the previous administration.”

Continue reading the main story

Mr. Lieber and other analysts worry party leaders are talking past each other. Experts suggest it would take a week or two for Democratic leaders to steer a debt limit increase through the fast-track budget process. That could leave the government vulnerable to a sudden crisis. On Friday, the independent Bipartisan Policy Center, a Washington think tank, said the government could run out of cash to pay its bills by mid-October.

Mr. Lieber said he is worried about “the risk of miscalculation of both sides,” in part because this standoff is not the same as the ones under Mr. Obama. “The Republicans aren’t asking for anything,” he said. “So their position is, there’s nothing you can do to get us to vote for a debt ceiling increase. That’s a dangerous situation.”

Goldman Sachs researchers warned in a note to clients this month that the volatile nature of tax receipts this year, a product of the pandemic, makes the debt limit “riskier than usual” for the economy and markets. They said the standoff was at least as risky as in 2011, when brinkmanship disrupted bond yields and the stock market.

Other financial analysts continue to believe that, as they have in the past, the sides will eventually find an agreement — largely because of the consequences of failure.

“We believe Congress will raise or suspend the debt ceiling,” Beth Ann Bovino, S&P U.S. chief economist, wrote this week. “A default by the U.S. government would be substantially worse than the collapse of Lehman Brothers in 2008, devastating global markets and the economy.”

In the meantime, Republicans are awaiting a vote by Democrats to raise the limit. Senator Rick Scott of Florida, who heads the Republicans’ campaign arm in the Senate, told an NBC reporter he was eager to highlight Democratic support for raising the limit in midterm advertisements.

ATTACHMENT SIX – From the Outsider Club

Because you’ll never be on the inside…

The Debt Ceiling “Nightmare Scenario” Explained

September 27th, 2021

Economists all agree on one thing: If the U.S. government hits the debt ceiling and defaults on its debts, we will be in a global "nightmare scenario" where economies will collapse worldwide.

But the reasons for this are never explained... We're just supposed to take it on faith that those in the ivory towers of finance are right.

If someone told you that in the next couple days, you'd suffer a crippling accident, wouldn't your first thought be, "Wait, what exactly is going to happen?"

Knowing the outcome pales in comparison to knowing exactly what will happen. You need to know what will fail first, and how it will send a shock wave through the entire economy.

In our new report, “The Debt Ceiling 'Nightmare Scenario' Explained,” that is exactly what we do.

The implications go far beyond closed national parks and furloughed workers.

This is the only place you'll be able to learn how hitting the debt ceiling and a U.S. government default will:

· Affect the Department of the Treasury and the entire U.S. government

· Create a credit crunch far worse than the subprime mortgage crisis

· Drive a market collapse before and after the Treasury starts bouncing checks

· Immediately put a vast swath of Americans in danger, on the streets, or in lines at local soup kitchens

Take a look at what can happen and exactly how it will destroy the national and global economies. Simply drop your email address in the box below, and we'll send you “The Debt Ceiling 'Nightmare Scenario' Explained,” right now.

In addition to the report, we'll start sending you the expert analysis of our editors at Outsider Club. Our analysts and editors are constantly researching what is going on behind the scenes and how it affects the markets, our economy, and you.