The Federal Debt subject to statutory limits authorized by Congress was raised in February of 2009 to 12.1 trillion dollars in conjuction with the passage of the $787 billion American Recovery and Reinvestment Act (aka the Stimulus Bill). Ten months later, this debt limit is already in trouble and the Obama Administration is not sure they convince Congress to raise it further.
The Obama administration, concerned about the possibility of a big political fight over the national debt, is looking at how it can continue funding the government in the event that Congress hinders its ability to borrow money.
Treasury Department officials are examining tools employed by previous administrations, including disinvesting government retirement funds and suspending interest payments to federal accounts, according to people familiar with the matter. They are also looking at what to do in the unlikely event of a government shutdown.
At issue is the debt ceiling, a dollar limit controlled by Congress that dictates how much the U.S. can borrow. Treasury Secretary Timothy Geithner told the Senate in a letter last month that the $12.1 trillion ceiling could be hit as early as mid-October, and said it needs to be increased so the U.S. can continue funding operations and making debt payments. Mr. Geithner didn't indicate the increase he was seeking.
With the U.S. borrowing about $30 billion a week, some economists say the Treasury will need an increase of as much as $1.5 trillion if it wants to avoid another request before the 2010 midterm elections.
The $12.1 trillion dollar limit was an increase from an $11.3 trillion limit authorized by Congress in October of 2008 along with the TARP program to bail out troubled banks.
Ten years ago the debt limit stood at just under $6 trillion, less than half of what it is today and much less then the $13 trillion limit sitting on the table in Congress.
The House passed a debt-limit increase to $13.029 trillion earlier this year, but the measure has languished in the Senate. Senate Democrats say they haven't put together a strategy for passing the increase. It could be added to other must-pass legislation, such as a short-term spending measure to keep the government running when the fiscal year ends Sept. 30. The Senate could also take up the issue on its own.
And this number, $13 trillion, is only in response to what we have going on today: It does not account for whatever healthcare reform plan the Congress passes.
In response, many Americans are very worried
In a Gallup Poll conducted Aug. 31-Sept. 2, 9% of respondents overall and 10% of independents now mention the deficit spontaneously as their biggest worry. That compares with 2% of respondents and 3% of independents a year ago. It is now in the top five among the public's concerns.
And according to a new Associated Press-GfK poll
Half of those surveyed said deficit reduction should be a national priority over increased spending on health care, education or alternative energy.
"I know a lot of people who don't have health care and really can't afford it," said Judy Purkey, a 57-year-old grandmother from Morristown, Tenn., who has raised four grandchildren and is living on disability payments. But she added: "The economy is so bad. You've heard the expression getting blood out of a turnip? — Well, that's what's going on."
So it is no surprise that tens of thousands descended upon Washington DC yesterday to protest what the government is doing fiscally.
Tens of thousands of people marched through Washington Saturday to protest President Obama's proposed health care plans. The rowdy pilgrimage capped a series of conservative "Tea Party" rallies across the country.
As the demonstrators walked along Pennsylvania Avenue toward the U.S. Capitol, the line stretched as far as the eye could see in either direction. The crowd was so thick in places that it was difficult to move.
The Democrats want to play down and discredit these folks as shills for the Republicans while the Republicans want to co-opt the movement, But while many of these folks have indeed voted Republican in the past (what? you think many Democrats think like this?) most if not all are very aware that between 1994 (when Republicans took over both houses of Congress) and 2006 (when Republicans lost control of Congress), the debt ceiling was raised six times and went from just under $4.9 trillion in 1996 to $8.9 trillion in March of 2006.
And under Bush's watch, the Democrat controlled Congress was allowed to raise the debt limit from that $8.9 trillion to the $11.3 trillion it was when he left office.
The Republicans can point to the fact that the Democrats have raised the debt limit 4 times so far in the 3 years they have been in control as compared to six times in 12 years for the Republicans.Each raised the debt by $3 trillion but it took 12 years for the Republicans to do what the Democrats have done in 3. And we all know that if Congress gets what they want, it's not over yet.
But that is little more than a fig leaf: The Republicans can only sheepishly squeak that they weren't as bad as the other guys.
Now even with tens of thousand protesting in Washington, it is difficult to say how widespread the unrest is really among the population after all we saw tens of thousand protesting the war in Iraq and that made little difference politically. We won't really know until about this time next year when a new Congress is selected.
But if it is a real, deep movement, the best the Republicans can hope for is that these voters give them a second chance and the worst is that a new Party arises to unseat them (which is, really, what they deserve).
All economic indicators show that people have learned a lesson with this past recession and they are paying down their debt and becoming more frugal.
The government is doing quite the opposite and I have to believe that large numbers of people are wondering why.
And they see the mounting pile of government debt and in their gut think that this is not good.
It just can't go on.
High water risin', six inches 'bove my head
Coffins droppin' in the street
Like balloons made out of lead
Water pourin' into Vicksburg, don't know what I'm going to do
"Don't reach out for me," she said
"Can't you see I'm drownin' too?"
It's rough out there
High water everywhere
Update: It seems it was more like hundreds of thousands marching in DC, not tens of thousands.
