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  • Even After Debt Limit Increase, Congress Has Work to Do

    On Thursday, President Obama formally notified Congress that the total federal debt (debt subject to statutory limit) is within $100 billion of the debt limit and requested an increase of $1.2 trillion.

    The announcement comes as no surprise, because such an increase is the anticipated third and final installment of $2.1 trillion in debt limit increases provided under the Budget Control Act of 2011 (BCA), passed at the conclusion of last summer’s debt ceiling debate.

    The BCA states that Congress has 15 calendar days from the President’s notification in which to pass a resolution disapproving the debt limit increase; a House vote is expected on January 18. If the House rejects the President’s request, it is doubtful that the Senate will concur. Even if Congress does pass a joint resolution of disapproval, it is not likely to muster enough votes to override a presidential veto. Put simply, the debt limit increase is practically guaranteed.

    Upon passage of the BCA last August, the debt limit automatically increased by $400 billion, from $14.294 trillion to $14.694 trillion. In late September it was raised again, this time by $500 billion, to the current limit of $15.194 trillion. The President’s request of a $1.2 trillion increase will bring the debt limit to an astounding $16.394 trillion, which is over 100 percent of U.S. GDP.

    The Heritage Foundation chart below illustrates these debt limit increases and shows the proportion of new increases compared to the debt limit prior to the BCA. (Article continued below.)

    While “the level of publicly held debt [debt sold in credit markets] at any one time reflects the extent to which the federal government has engaged in deficit finance,” The Heritage Foundation’s J. D. Foster wrote ahead of last year’s debt limit debate, “the need to raise the debt limit reflects an intention to continue deficit financing.”

    Raising the limit gives Treasury the legal authority to issue more debt; it does not solve our debt problem. This is like time and again receiving a hypothetical parole card in the game of Monopoly rather than a get-out-of-jail-free card. Passing a debt limit increase should not give the federal government cause to sigh in relief and carry on as usual. Indeed, business as usual for Washington amounts to irresponsible spending, larger annual deficits, and mounting debt. The same fiscal problems that the BCA was intended to address persist, and they’re only growing worse.

    It is high time that Washington’s leaders—from Congress to the President—start acting to address our spending and debt problems. When the President releases his budget proposal for fiscal year 2013 in a few weeks, he has yet another opportunity to propose real spending cuts and entitlement program reforms. Whether he will seize it and begin restoring fiscal discipline in Washington or waste it on populist, campaign rhetoric remains to be seen.

    Many distractions will plague Washington during this election year, but it must resist the urge to put off addressing these problems. History shows that its promises to fix things later fail to materialize. America is on a dangerous fiscal path, and we must change course.

    Posted in Economics [slideshow_deploy]

    6 Responses to Even After Debt Limit Increase, Congress Has Work to Do

    1. Bobbie says:

      I don't understand how the President can insist this increase without showing a Constitutional purpose? Where are the constitutional corrections? Why isn't anyone recognizing this take over and why isn't anyone in position, stopping it? The world doesn't need one government. The world needs freedom under the only law that brings order without contention, civil law! For the good of the world and all humanity, please save America!

    2. Paul Stone says:

      Even I know that " someday" never comes. The Debt and Deficit will never get under control by constantly putting off dealing with the issue.

    3. Leon Lundquist says:

      This is what I mean when I whine about RINOs and DINOs in Government. It actually was 'The Budget Out of Control Act of 2011.' Honest to Pete! You cannot trust a single thing these Democrats do. Out of Control spending is the very problem and Obama and his fools set up a slippery slide into Bankruptcy! And the damned RINOs voted for it! I want to scream! They never Voted a Budget, but they managed to Vote in a Budget completely Out Of Control! Please Impeach these criminals. Do it RICO style, do it doggy style, I don't care! Just get rid of them!

    4. TimAZ says:

      No one will accept that the potus intends to economically collapse the American capitalist system until he has completed the act. Pretending that it isn't so will not stop it from happening. Denial allows the abuser to continue until the abused ceases to exist.

    5. Mike, Wichita Falls says:

      At the current rate of spending, another $1.2T in deficit-spending authority should get this bloated federal government through this election year. Here are a few scenarios.

      1. If Obama is re-elected and the GOP at least holds the House, will they have learned from their mistake of last August and hold the line this time? I would think that if they maintain or even increase their House majority, the GOP will not approve another debt-ceiling increase.

      2. If Obama is defeated, no matter what happens in the Congress, will the next President hold the line? Have any of the contenders said they would veto such increases?

    6. Homer N. Jethro says:

      We have not yet seen the "effects/affects" of QE I, & 2. The inflation coming is enormous and will take years to straighten out. All of this borrowed money MAY be eclipsed in such a way as to look small by comparison to the financial troubles at hand as poverty slowly overtakes most of the USA and the middleclass is mostly wiped out due to inflation.

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