Quotes of the day

The United States government hit its $14 trillion borrowing limit Monday, forcing the Treasury Department to begin taking a series of extreme steps to stave off default, including suspending payments into public employee pension plans. Treasury Secretary Timothy Geithner sent letters to congressional leaders Monday to explain that his money shuffle will buy them until August 2 to reach a deal on the debt limit. After that, the government will default on its debts.--MEREDITH SHINER

...isn't that thing about history? You rarely see it coming. Who saw the Smoot-Hawley Tariff act coming?--Joe Posnanski

... the ARRA [Obama stimulus bill] created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.--Tim Conley and Bill Dupor

The federal government will take in $2.173 trillion in 2011. That’s their income, and it sounds pretty good. Until, that is, you factor in that the federal government will spend $3.818 trillion during the year. So, just like many families, the government’s outgo exceeds their income—to the tune of $1.645 trillion in overspending. That’s called the deficit. Altogether, the government has $14.2 trillion in debt. What would happen if John Q. Public and his wife called my show with these kinds of numbers? Here’s how their financial situation would stack up: If their household income was $55,000 per year, they’d actually be spending $96,500—$41,500 more than they made! That means they’re spending 175% of their annual income! So, in 2011 they’d add $41,500 of debt to their current credit card debt of $366,000! What’s the first step to get out of debt? Stop overspending! But that means a family that is used to spending $96,500 a year has to learn how to live on $55,000. That’s a tough pill to swallow. Those kinds of spending cuts seriously hurt, but it’s the only way out of debt for John Q. Public.--Dave Ramsey

Our output gap is not a measure of economic underperformance or “lost output.” We might not be underperforming at all. We’re very likely performing at exactly the capacity appropriate for a people with the combination of assets, liabilities and skills we actually have. What the Output Gappers miss is that a lot of the productive capacity built during a boom —whether that’s machinery, skills, business relationships, or financial products — might not be very useful when the bust comes around. Having the government spend more or pump out more dollars won’t somehow reverse this process. Stimulus spending and monetary easing won’t overcome an output gap if it is caused by an actual reduction in the productive capacity of the country. And a shift in demand away from what we’re equipped and skilled at making is the equivalent of a reduction in productive capacity. We have relatively less capacity to make what’s actually in demand because so much of our capacity is dedicated to making what’s fallen out of favor.--John Carney

... the admirers of Greg Mankiw are most liberal, and the admirers of Paul Krugman are the least liberal (and remarkably preponderantly Democratic).--DAVIS, FIGGINS, HEDENGREN, AND KLEIN

Do we take market prices seriously? Since Treasury rates are still low, low, low, arguably we can infer that the market does not think the Republican stance is so catastrophic. Paul Krugman does not take a consistent position on the relevance of low rates. They are allowed to indicate that the U.S. government should spend more, but not allowed to indicate that we should diminish the blame to be leveled at Republicans. One cannot have it both ways.--Tyler Cowen

Has there ever been a socialist government in which the people at the top didn't live at least as well as the coupon-clipping plutocrats of capitalism?--Steve Bainbridge

The [NIH Chemical Genomics Center] folks realize that they have some problems, and are willing to put in the work to help clean things up. The problem is, they'd already published on this list, calling it "definitive, complete, and nonredundant", which now seems to be a bit premature ...--Derek Lowe

You’re an eagle, so why do you want to be with these chickens who can’t fly? You’ll get the chicken flu.--Bala Balachandran, warning Raj Gupta of his business partners

Photo link here.