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  • Congress Still Has Time Before It Must Deal with the Debt Limit Issue

    As Heritage expert J.D. Foster, Ph.D. noted in his January 2011 paper “Congress Has Time and Options on Debt Limit“, Congress had time to discuss how it wants to proceed on the debt limit.  Secretary of the Treasury Timothy Geithner’s letter of April 4, 2011 estimates that the Federal Government will not reach the statutory debt limit before May 16, 2011 and that the Treasury can use special measures to extend that date to about July 8, 2011.  Thus, it remains clear that Congress has sufficient time to proceed carefully and deliberately in deciding how to best take advantage of the debt limit situation to help bring Federal spending and borrowing under control.

    While Secretary Geithner’s letter makes clear that Congress has more time, the letter also raised once again the bogeyman of a default on the Federal debt.  As Dr. Foster’s paper demonstrated, there will not be a default on the Federal debt when the Treasury reaches the statutory limit on its borrowing of $14.294 trillion.  The Treasury just will not be able to borrow any more money.  The Treasury would still pay debts that come due, putting off temporarily payment of less important obligations as necessary to pay the maturing debt.  Of course, the hope is that conservatives in Congress will be able to persuade a majority of the Senate and President Obama to enact a law that takes strong steps to curb spending and borrowing and starts to get the debt under control, but there is no guarantee that the Senate majority and the President will not force a debt limit crisis instead.

    If the Obama Administration is serious about getting spending under control and about maintaining orderly financial markets, Secretary Geithner needs to help guide his colleagues at the Office of the Management and Budget and in the White House toward near-term substantial reductions in Federal spending, including for entitlement programs, and long-term solutions to ensure that the Federal Government never spends itself again so deeply into debt that it cannot effectively manage its way out.

    Posted in Economics [slideshow_deploy]

    12 Responses to Congress Still Has Time Before It Must Deal with the Debt Limit Issue

    1. Pingback: Big Propaganda

    2. George Colgrove VA says:

      Current debt at the close of March 2011 is $14.217 Trillion ($124,718.09 per taxpayer)

      The Statutory Debt Limit is $14.294 Trillion (Set on Feb 12, 2010 by the 111 congress)

      Available Credit is $76.14 Billion.

      Average monthly debt spending thus far = $139.87 billion. Average interest charge is $38.22 billion.

      By the end of April 2011, the debt will likely be $14.335 trillion at that rate, taking us over the debt limit by $76.14 billion of available debt. By close of business April 21, 2011, we will run out of debt at the current rate of spending.

      So far the feds have brought in more taxes than last year. If we just match last year this is a revenue of $1.208 trillion in expected revenue to the feds.

      If we match 2010 spending, which is what we are doing with the CR's, then expected spending for the rest of the year (if we match 2010) would be $1.785. We have 76 billion in reserved debt. Meaning the federal government is short $501 billion. Rather than increase the debt ciling, let us cut every program, agency and department (permanently) – spread evenly from office to office by 15% – across the board. THIS IS AN EMERGENCY! WE NEED TO DO THIS! NO OPTIONS. This will cut over $500 billion which will allow the federal government to sustain the rest of the year without going deeper into debt.

      By the Continuing Resolutions we have essentially cut $370 billion from the 2011 budget. This is the big benefit of the Democrats incapability of passing a budget in 2010. Fortuanately the Tea Party got in there and saved the day. So with a 15% ABC plus the $370 billion, congress can achieve a $870 billion cut this year. Next year all we have to cut is about $550 billion – which can be done using the 10 year – $5.8 trillion cut proposal of the republicans. Except that I would make it $580 billion permanent annual cuts. I'd hate to think what congress would do 10 years from now when those cuts expire.

      We can only afford a balanced budget of $2.2 to $2.4 billion based on tax revenue. Lets aim for it!

      Then next year we

    3. George Colgrove VA says:

      The other thing that congress has to do is fire the federal workers that were hired assuming the 2011 budget were to be passed.

    4. Jim Z, Somerset, NJ, says:

      The Democrats are Anarchists at heart. Following the Alinski, Cloward-Piven strategy, they have not come to govern – they have come to destroy. The fact that we still do not have a budget for THIS year demonstrates they have abandoned all pretense of responsible governing.

      They started with the Mantra "Hope and Change". Their mantra now is more aligned with the Hindu Vishnu scripture – "Now I am become Death, the destroyer of worlds."

    5. joecool, westbrook, says:

      For the Obama administration and Congress to point fingers at those who are screaming for cuts is totally ludicrous, and overwhelmingly corrupt. Those in power – Obama, Pelosi, Reed did nothing to put a finger in the dyke. They did not even pass a budget!! Their moral authority to question anything today is nil.

    6. Leon Lundquist, Dura says:

      How many crises will Obama create before Republicans 'get it' that Man Caused Disasters are a specialty of the Progressives? Are you kidding? They are bringing the Economy Down again this Spring! "Walk Away" from your Mortgages en mass, this is already in the pipe so there is actually NO Time for "careful considerations" about Strategic Default of Treasury Obligations! Obama will cause another Man Caused Disaster(to take advantage of) as long as he can get some advantage out of it! I see Progressives have set up the TEA Party to take the blame for the very Shut Down they have made inevitable!

      We are in the position of doing something unthinkable like Impeachment for Conspiracy to Treason, or being victim of inevitable Bankruptcy! You would say "Obama can't possibly want to Shut Down the Government" if Obama were a loyal American President. The fact the TEA Party has been set up for two years to take the blame for something, it means the Government Shut Down is coming! Maybe it is just me, but that proves Criminal Intent to prepare to shift the blame!

    7. Bobbie says:

      What makes us think there isn't something up the democrat sleeve for all publically intended purposes, when this shut down happens?

      Democrats have to grow up and hold themselves accountable for these necessary cuts democrats recklessly went out of their way to derive. People do have dignity and the acts of democrats hold them to NONE!

    8. Pingback: Morning Bell: Myth-Busting the Debt Limit | The Foundry

    9. Pingback: Heritage Foundation Asks: Will We Default on Our Debt? | Tennesseans Watching Federal & State Government

    10. Dave in Reno says:

      US military drones are coming to America from Afghanistan's war zones and we sit and discuss a trillion here and a trillion there, which will be irrelevant and immaterial to slaves.

    11. Barbara MacKellar, F says:

      What is wrong with our Republicans in the legislature? I don't think the message is clear. To me it sounds real simple as if you are talking to a teen, No and it isn't up for debate. You can get an advance on your allowance.

      b

    12. Barbara MacKellar, F says:

      I guess my thinking is too simplistic. No you cannot have more money this is the plan. What is wrong with our congress do they believe that no is not an acceptable answer? Do they not know how to explain to their constituents that we have to tighten the belt? No is a simple word but at times involves a struggle.

      If you have the best interest of the people involved you don't let them jump off a cliff or walk out in front of a truck. You say no and yank them back. Too simplistic.

      Barbara

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