Story and video at CNSnews. At least we now know that this issue has the attention of certain high level policy makers.
Geithner’s Treasury Department quietly warned at the end of October that the Treasury would reach current legal limit on the federal government's debt by about the end of the year. In August 2011, President Barack Obama and Congress agreed to lift the legal debt limit by another $2.4 trillion--allowing the government to borrow up to $16.394 trillion. However, as of the close of business on Thursday, the Treasury had only $154.3 billion of that $2.4 trillion in new borrowing authority left. Senate Majority Leader Harry Reid (D-Nev.) said last week that the Senate stands ready to increase the debt limit by another $2.4 trillion. “If it has to be raised, we’ll raise it,” Reid said.Seems like the current timing of an eventual increase in this governmental self-imposed constraint on $NFA creation lines up with the timing of an eventual resolution of the so-called "fiscal cliff" right at calender year end.
Looks like Senate Dems at least are ready to increase this budgetary limit to an amount which may not again be reached until the 2014 mid-term elections.
9 comments:
Am I right in my understanding that the debt ceiling is useful for nothing other than obstructionism? As in, you usually can't avoid deficits by cutting spending and raising taxes - you're still going to get a deficit but with lower growth.
But unfortunately I just can't see any Dems coming out and saying 'you know what, let's scrap the whole thing. We're nearly the only country that has one, and we're not even going to achieve a lower debt level with austerity'.
I guess it's part of the lesson of avoiding measures designed to curtail future legislatures.
Right Alan,
Looks to me a lot of this is based on their perception that they have no absolute fiscal authority and that they have to "borrow money" from the non-govt sector... So as a form of "self-discipline" they put periodic limits on the maximum amount they allow themselves to "borrow"... similar to arranging a HELOC in the household context.
A continuous pattern you see with these morons we have in govt these days is they zealously seek to obtain positions of authority, and once they obtain these positions, they immediately surrender this authority... hard to understand.
We will continue to watch this "debt ceiling" issue here separate from the "fiscal cliff" issue...
rsp,
IIRC not so long ago, when Congress passed its appropriations bills they would include a provision raising the debt ceiling if needed to cover the spending plans. All at once.
IIRC, the initial GOP idea was to pass a law requiring a two-thirds vote of Congress to raise taxes and impose a debt ceiling. This would force spending cuts, which they were sure would not touch the military since military spending is distributed though congressional districts and Dems also have to defend against being seen as weak on defense. In other words, it was a coordinated strategy that goes along with Norquist's tax pledge.
Not much disclosed here wrt the endgame which looks like (for now) will happen towards the end of December Tom...
my concern would be if they do not do as Geithner suggests here and put a big number on it... it would not be good if they took up a policy going forward to only increase this number if ex post fiscal targets were met...
rsp,
"pass a law requiring a two-thirds vote of Congress to raise taxes and impose a debt ceiling"
This would be a humanitarian disaster if implemented.
"the initial GOP idea was to pass a law requiring a two-thirds vote of Congress to raise taxes and impose a debt ceiling."
The trouble is without amending the Constitution, any law passed by the current Congress can be repealed by a future Congress (even a filibustered Senate bill takes fewer votes to pass than two-thirds of both Houses).
Actually Mitch McConnell came up with the golden ticket last year. Give the President authority to raise the debt limit by executive order, subject to a 15 day waiting period to give Congress a chance to vote against it (which he could then veto, no president will lose his own party to the two-thirds veto override, so done and done).
Its clever, it gives the minority party a chance to denounce the president, without them actually getting in the way of him doing his job. McConnell's plan was temporarily approved last year, Congress should make it permanent (since delegating to the president is more politically palatable than getting rid of the ceiling or setting it at kazillion).
Right. The debt ceiling could be changed, too.
I surmise that the assumption was that once passed, it would politically disastrous to advocate repeal of these restraints, and it could be used as leverage against the opposition in coming elections if they tried — "the party of financial irresponsibility."
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