Monday, November 16, 2009

Raising the federal debt limit amidst spending induced economic turmoil

Shadows of 1995’s government shutdown loom, but are likely to be dispersed by year’s end. The Obama administration had asked Congress to approve a debt ceiling increase by at least $1 trillion dollars or up to $1.5 trillion.

Record high budget deficits caused in-part by two ineffective stimulus spending packages, are driving the national debt closer to its $12.1 trillion statutory limit. The administration’s proposed expansion has already passed in the House of Representatives and would get the government through the November 2010 midterm congressional elections without requiring another raise.

Preceding a 2006 Senate vote to extend the debt limit, then Senator Obama said in a floor speech, “Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.”

And now that Senator Obama is President Obama, those critiques no longer apply. Having already spent $787 billion on a stimulus package that has yet to produce any marked results, the President continues to champion a $1 trillion health care reform plan and has talked about passing another stimulus. In August, United States Treasury Secretary Timothy Geithner sent a letter to congressional leaders asking them to promptly raise the existing $12.1 trillion debt limit, cautioning then the debt could have hit its ceiling as early as October.

The national debt ceiling already has been hiked three times in the past two years (Congress last upped the debt limit in February when it passed the $787 billion stimulus package) and passage in the House thereafter will raise the ceiling to $13 trillion. The fiscal year deficit for 2009 came in at a record $1.42 trillion, which is more than three times the record set just last year.

With polls consistently showing Congressional approval ratings in the tank and the Senate’s Majority Leader in jeopardy of losing his reelection bid and unemployment over 10%, the American people aren’t likely to react favorably, so Hill democrats are trying to add the ceiling increase to a Defense Authorization Bill.

Candidate Obama decried the reckless spending of his predecessor, and promised a new era of fiscal responsibility, President Obama now finds himself partnered with a democrat controlled Congress on the biggest spending spree in American history. Just as with most of Candidate Obama’s criticisms, President Obama has found it much harder to quarterback from the Oval Office than from the campaign trail.

-- Killswitch Politick

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