Tag Archives: debt ceiling

Economy at Risk with short-term deal on debt

Oooh..there are groups wanting citizens to be active in this debt-ceiling theatrical production.  What fun and opportunity to have your voice heard.  I’m filled with excitement and hope.  What a terrific opportunity for folks to separate political theatre from actual governing.  For example, I stumbled upon this link

Tell Boehner: Do Your Job
Sign up & Tell Boehner – “It’s Time
to Compromise On The Debt Celing!”
www.DSCC.org/Boehner-Do-Your-Job New Window

I’m sure there are others on all sides of the political belief spectrum.  Point is,  “Whatcha doin’?” Are you getting involved, gathering information about this issue,  talking to those who share your beliefs and those who do not, owning your beliefs;  taking time to really let yourself feel the emotions about the political theatre versus  the budget policy?  And then doing something about it?  Own It, Feel It, Live It, Love It.

There are so many places to get started.   The reality is that the debt ceiling is being used as political theatre for back-room deals.  Meanwhile, the Nation is facing some serious negative outcomes if the debt ceiling is not raised and the government is not transparent about the budget.

For example, at CBS News reports:

The first is market stability – the perilous nature of the current talks have spooked rating agencies which are threatening to downgrade the U.S. credit rating, which would spike interest rates, making it harder and more expensive for everyone to borrow money and pay back loans, especially the federal government. Preventing that possibility for as long as possible is a good thing. Stability in knowing that Washington won’t be going through another debt debate again soon will help calm the market and investors.

(Credit: AP Photo/Manuel Balce Ceneta)

The White House reiterated its opposition today, saying that “a short-term extension could cause our country’s credit rating to be downgraded, causing harm to our economy and causing every American to pay higher credit cards rates and more for home and car loans.”

A close second reason: Simply not having to go through this again. The morass that has overwhelmed Washington looks bad for all sides, and shows that the federal government is not functioning well. The president believes that going through this debate for a second time in the near future would be a futile exercise, made even more difficult by the fact of 2012 being an election year.

And third? Yes, politics. Keeping the debt and spending issue away off the front pages and out of the election season will be a good thing for the White House, just as much as getting a big debt deal done would help show that President Obama is serious about getting the nation’s financial health in order.

While the president may wish to avoid the politics of another debt ceiling increase until after the next election, the White House is hoping that stability in the debt issue will take away one nugget of uncertainty that could be dragging down the economy. With certainty in the markets, their hope is that the economic recovery could get back on track. They fear going through another debate like this wouldn’t help.

“What we’re not going to do is to continue to play games and string this along for another eight, nine months, and then have to go through this whole exercise all over again. That we’re not going to do,” said the president, optimistically.

After Republicans backed out of the latest rounds of talks, an angry president charged them with going for a short term goal to play politics with the debt issue.

“How serious are you actually about debt and deficit reduction? Or do you simply want it as a campaign ploy going into the next election?” he said Friday night.

via Why Obama wants to avoid short-term deal on debt – Political Hotsheet – CBS News.

 

The Educating Gossip™ wants to know:   “Whatcha doin’?”

Political Theatre: Debt Ceiling and Back Room Deals

Oh joy!  I like to follow the headlines and separate the political theatre from the national policy that’s at stake.

The political theatre behind the debt ceiling theatrical production currently playing for the American public is political posturing.  We should all ask our selves: Do we want government that plays political games behind the “debt ceiling,” or do we want government to get to the business of raising revenue, cutting spending (including international “conflicts”), improving infra-structure, restoring financial market protections, etc.?

Me, I say, cut the comedy; get to the business of governing.  And, not through back room “debt ceiling” deals.  We want to know exactly who is asking for what concessions, what are going to be the costs, upsides, downsides, trade offs, etc….and would it be too much to ask for a national discussion or conversation about these domestic policies?

Playbill for the Debt Ceiling Production:  the excerpt below  is all you need to know about the debt ceiling.

The debt ceiling is a legal cap on the amount of money the U.S. Treasury can borrow to fund existing government functions. It essentially authorizes the Treasury to borrow the money necessary to pay the bills incurred by the federal government.

Where it came from: Before 1917, Congress authorized the Treasury to issue bonds for specific purposes. But that meant approving every bond separately. To fund World War I, Congress decided to give the Treasury more latitude by instituting caps on how much it could borrow through each type of bond, rather than forcing it to get every new bond approved separately. In 1939, this was changed so that most bonds were bound by the same limit, effectively creating the general debt ceiling we have today.

How it has worked: The debt ceiling has traditionally been raised as a matter of course whenever Congress passes spending bills requiring more borrowing, though the opposition party has often voted against increases to signal its opposition to the majority’s deficit spending. Between 1940 and 2010, we have increased the debt limit more than 70 times, and from 1979 to 1995, a House rule proposed by Rep. Dick Gephardt made increases automatic by raising the ceiling whenever new spending is approved. The new Republican majority repealed this rule in 1995 to use raising the debt ceiling as leverage in getting President Clinton to agree to spending cuts.

Why it’s an issue now: Currently, the debt limit is set at $14.3 trillion. Around Aug. 2, the Treasury will exhaust that borrowing authority. Because spending currently exceeds revenues by almost 45 percent, if that happens, we will either have to default on our debt or stop funding a substantial portion of the government. Congress could simply choose to raise the debt ceiling, but like the 1995 House GOP, the 2011 House GOP is insisting that it will not increase the debt ceiling without large spending cuts from President Barack Obama.

Do we need a debt ceiling? Strictly speaking, no. The debt ceiling is unique to America. In other countries, when the legislature passes a law, the Treasury is given automatic authority to carry it out. A number of former Treasury secretaries have said it should be abolished, including Larry Summers, who said, “I think that given that Congress has to approve all spending and all tax changes, there is not much logic to the debt ceiling.”

Does the debt ceiling reduce deficits? In general, no. The nonpartisan Congressional Budget Office examined this issue and concluded that “setting a limit on the debt is an ineffective means of controlling deficits because the decisions that necessitate borrowing are made through other legislative actions. By the time an increase in the debt ceiling comes up for approval, it is too late to avoid paying the government’s pending bills without incurring serious negative consequences.”

Is the debt ceiling unconstitutional? A number of commentators have suggested that the 14th Amendment, which states that “the validity of the public debt of the United States … shall not be questioned,” renders the debt ceiling unconstitutional. Others have disagreed, saying the Constitution gives Congress the sole power “to borrow money on the credit of the United States.”

— The Washington Post

via Too late for a debt deal? | | The Bulletin.