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The specter of national default is more actual than speculative.Put simply, if they don't raise the ceiling, the country will go into default on its debt. The domino effect would be painful, to say the least.
This is a big, big deal folks.
NEW YORK (CNNMoney.com) -- Congress has raised the debt ceiling four times in the past two years and will probably have to do it again in the next month.
With the government borrowing record amounts of money, the nation's current debt ceiling of $12.1 trillion will be pierced soon.
That ceiling is the cap on how much the country allows itself to have in debt. In credit card parlance, the ceiling is the U.S. credit limit. At the end of August, U.S. debt totaled $11.8 trillion. That's roughly $349 billion shy of the statutory limit.
The ceiling is meant to serve as a brake on spending because lawmakers would have to think very seriously before they breach the limit and take a very difficult political vote to do so. In reality, lawmakers really don't have a choice but to raise the ceiling and they know it.
Put simply, if they don't raise the ceiling, the country will go into default on its debt. The domino effect would be painful, to say the least.
Treasury bonds would come due but the Treasury wouldn't have the authority to borrow more money to pay holders of those securities.
The government might be able to come up with some cash by, for instance, borrowing from the federal employee retirement trust fund.
The Treasury Department also said Wednesday that it was taking steps to "preserve flexibility" in how it manages its debt. It will reduce the amount of money in its financial rescue reserve -- essentially setting aside cash in the event that lawmakers don't raise the ceiling in a timely manner.
But such measures can only stave off the inevitable temporarily. After Treasury exhausts its options, barring an increase in the ceiling, the value of U.S. bonds, would sink, jeopardizing the portfolios of countries and investors around the world who invest in U.S. debt.
"Our credit as a nation would plummet immediately and throw the world economy into a depression," said Charles Konigsberg, chief budget counsel for The Concord Coalition, a deficit watchdog group.
In the hands of Congress
The debt ceiling was implemented decades ago. Lawmakers have raised it 90 times in the past 69 years, according to data from the Office of Management and Budget.
Earlier this year, the House passed a joint resolution that would raise the debt ceiling to $13.029 trillion for fiscal year 2010. The Senate has yet to weigh in.
While lawmakers are almost certain to support an increase, the issue is expected to spark a firestorm on the House and Senate floors.
That's because the statutory debt limit is more of a political hammer used most often by whichever party is in the minority to blame the majority for the soaring debt. Konigsberg said he expects the debates in all likelihood to be "0% substance and 100% politics. It comes down to two parties arguing about who's responsible for the debt."
But one quid pro quo that fiscal conservatives might propose is an amendment to create a deficit reduction commission, which is an idea that could generate bipartisan support, he said.
In any case, the debates over the debt ceiling may be particularly heated because of the unprecedented government interventions that were launched in the past 18 months to curtail the financial and economic crises.
A debate over the debt ceiling will also intersect with the fight over health care reform, which could cost as much as $800 billion to $1 trillion over the next decade.
http://money.cnn.com/2009/09/16/news...ion=2009091610
The specter of national default is more actual than speculative.Put simply, if they don't raise the ceiling, the country will go into default on its debt. The domino effect would be painful, to say the least.
This is a big, big deal folks.
Winehole23: That is an awesome looking burger. I almost don't want to see your post because I always get hungry.
Trust the tasty onion rings behind me. Eat the burger.
Bigger than whatever it was that Glenn Beck was yapping about today???
My children have a fine future to look forward to.
Props to the POTUS and the Dem-controlled congress.
Darrin takes the microscopic view, as usual. This debacle was decades in the making. We have both parties to thank for it, and the re bent, dimwitted American electorate as well. You represent it well, D.
Couldn't be. Could it?
Ok, that was a funny one.My children have a fine future to look forward to.
Props to the POTUS and the Dem-controlled congress.
At least he delivered the line well! I'm all for a bit of comedy, even if lacking in true consideration of the issue.
I'm all for funny. Eye of the beholder, I guess.
TARP is smaller than Repugs' cuts in the estate tax for super-wealthy. (not that I support TARP)
head said (Repug (bogus war)) "deficits don't matter", but non-Repug deficits are horrible.
The stimulus has not all been spent yet, and is probably too small.
That Beck talks about debts and deficits all the damn time. He's annoying when he tries to use stuff like this to support his arguments against the good programs and spending coming out of Washington that will decrease our debt & deficits.
I mean, everyone knows the best way to get out of debt, is to spend more...a lot more. Those tea party folk just don't realize this.
The up-is-downism is getting worse for sure.
Democrats and Republicans alike are in lockstep agreement that the government can borrow and spend it's way into national prosperity.
That's right. Those repugs that are voting right now against all this new spending are just fringe elements. Obama knows that increasing spending more than any other president (or combination of presidents) in our history...is the best, and only way to decrease our debt.
An absolutely amazing development of fiscal consciousness by the republicans considering how they behaved under W............
Sure. Obama's on the hook for what he does now. But where were the principled fiscal conservatives for the last eight years? Only now that the GOP has squandered it's fiscal bona fides and its congressional majorities has it, apparently, rediscovered fiscal prudence. I hope you'll pardon the very many of us who find the act unconvincing, SF.
Absolutely, there were no fiscal conservatives during the BUSH yrs. The fact that they are trying to be so hypocritical now, is absurd.
They should quit being hypocritical, and stop trying to stop our PRESIDENT in all this new spending!!
"where were the principled fiscal conservatives for the last eight years"
multi-$T deficits for bogus wars-for-oil are, like the do in financial sector, "off the books".
Fiscal conservatives/Repugs were also wanting to cut Medicare/Medicaid, but now, they sucker in Medicare/Medicaid people saying Repugs are defenders of Medicare/Medicaid, while Magic Negro wants to cut Medicare/Medicaid.
As always, Repugs, and "Christian" supremacists, assume the total stupidity, ignorance, amnesia of their sheeple, and the assumption is always verified.
The GOP has nothing to do besides stand in Obama's way, so I guess that's a public service. I don't take issue with that. Only with the inference that it stands for something substantially different.
The GOP has a long way to go to convince me of that.
When the GOP regains power, we'll see where its heart really lies.
http://www.washingtonpost.com/politi...5fb_story.htmlThe House approved a year-long suspension of the nation’s debt limit Tuesday in a vote that left Republicans once again ceding control to Democrats after a collapse in support for an earlier proposal advanced by Speaker John A. Boehner (R-Ohio).
In a narrow vote, 221 to 201, just 28 Republicans joined nearly all Democrats to approve a “clean” extension of the government’s borrowing authority — one without strings attached — sending the measure to the Senate for a final vote, probably this week.
Krazy Kruz is still trying to get a filibuster going in the Senate. I really hope he succeeds, it's a great Democratic campaign strategy.
Last edited by boutons_deux; 02-12-2014 at 12:09 PM.
I think the GOP leadership just put a smackdown on the Tea s.
Pass the popcorn.
That schadenfreude aside, hooray for getting done. I feel slightly less pessimistic that the GOP has finished their pogrom of moderates, and some few remain, hiding in attics and coming out to accomplish what they were actually voted into office to do, i.e. conduct the business of the country.
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