More political theater, On February 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money.
Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher debt ceiling to replace current law.
Just understand that the two weeks until the deadline we should be prepared for all sorts of lies, threats, and forecasts of doom if the debt ceiling is not increased.
Like the U.S. Treasury will likely hit the debt ceiling earlier than first thought, Treasury Secretary Jack Lew said, setting the stage for another fiscal showdown.
“When I previously wrote to you in December, I estimated that Treasury would exhaust extraordinary measures in late February or early March,” Lew wrote in a letter to House Speaker John Boehner, R-Ohio, and the other top three congressional leaders.
“Based on our best and most recent information, we believe that Treasury is more likely to exhaust those measures in late February,” said the letter, which can be found at tinyurl.com/UPI-Lew-letter.
A surge of February spending, mainly for 2013 tax refunds, will leave the Treasury with little room to maneuver after the official debt limit is reached Feb. 7, he said in the letter.
Boehner spokesman Michael Steel said in a statement Republicans would need concessions from Democrats before they’d agree to raise the borrowing limit.
“The speaker has said that we should not default on our debt, or even get close to it, but a ‘clean’ debt limit increase simply won’t pass in the House,” Steel said. “We hope and expect the White House will work with us on a timely, fiscally responsible solution.”
President Obama has said he will not negotiate over the debt limit, calling it a congressional responsibility, not a bargaining chip.
White House senior adviser Dan Pfeiffer told “Fox News Sunday” that President Obama will “not pay ransom” for getting Congress to fulfill its duty to increase the ceiling and that members should “spare the country the drama.”
Both parties are trying to put on a good show for the American public. Dividing the American people seems to be an art form for Obama and his administration.
The Debt Limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.
Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary. Recently, however, a number of myths about this issue have begun to surface.
- Secretary Lew Sends Debt Limit Letter to Congress (1/22/2014)
- Secretary Lew Sends Debt Limit Letter to Congress (12/19/2013)
- Report to Congress on the Operation and Status of the G Fund (11/15/2013)
- Lew In The News: Secretary on Meet The Press and in the International New York Times (10/21/2013)
- Secretary Lew Op-Ed: Lessons From a Crisis (10/20/2013)
- Sales of State and Local Government Series (SLGS) Securities Resume (10/17/2013)
- Statement of Secretary Lew (10/16/2013)
- Secretary Lew Testifies before the Senate Finance Committee on the Debt Limit (10/10/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (10/4/2013)
- Secretary Lew Op-Ed: U.S. Failure to Pay Bills Hurts Everyone (10/3/2013)
- Potential Macroeconomic Impact of Debt Ceiling Brinksmanship
- Secretary Lew Sends Debt Limit Letter to Congress (10/01/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (9/25/2013)
- Secretary Lew Warns Of Dangers Of Debt Limit Delay In Speech To The Economic Club (9/18/2013)
- Secretary Lew Remarks to the Economic Club of Washington, D.C. (9/17/2013)
- In Case You Missed It: Secretary Lew Talks Debt Limit on CNBC (8/28/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (8/26/2013)
- Secretary Lew Remarks to the Commonwealth Club of California (8/22/13)
- Secretary Lew Sends Debt Limit Letter to Congress (8/2/2013)
- Report to Congress on Fund Operations and Status of the CSRDF/PSRHBF under the DISP ending February 4, 2013 (7/26/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (5/31/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (5/20/2013)
- Secretary Lew Sends Debt Limit Letter to Congress (5/17/2013)
- Press Release: Treasury Suspends Sales of State and Local Government Series Securities (5/15/2013)
Debt Limit: Myth v. Fact (5/2011)
- Report to Congress on the Operation and Status of the G Fund (8/24/2011)
- Geithner Op-Ed: ‘Compromise Achieved, Reform’s the Next Chapter’ (8/2/2011)
- Secretary Geithner Sends Debt Limit Letter to Senator Johnson (6/29/2011)
- Debt Limit in Focus: A Question to the President and Two Treasury Letters to the Hill (6/29/2011)
- Secretary Geithner Sends Debt Limit Letter to Senator DeMint (6/28/2011)
- Treasury: U.S. Still Projected to Exhaust Borrowing Authority on August 2nd (6/1/2011)
- As US Reaches Debt Limit, Geithner Implements Additional Extraordinary Measures to Allow Continued Funding of Government Obligations (5/16/2011)
- Secretary Geithner Sends Debt Limit Letter to Senator Bennet (5/13/2011)
- Federal Asset Sales Cannot Avoid Need for Increase in Debt Limit by Mary J. Miller (5/6/2011)
- Secretary Geithner Sends Debt Limit Letter to Congress (5/2/2011)
As you can see from the links above, their divide and conquer strategy has been used since the invention of the debt ceiling. They try and scare the American people into selling their childrens future, in return for less economic pain today. This game cannot go on forever.
Is the FED the Key Factor Behind the Debt Limit? Treasury Secretary Jacob J. Lew is calling on Congress to raise the debt limit in February. The Treasury Department now expects the debt limit “endgame” to arrive in late February, rather than in March.
To some observers, this is rather surprising, since just last week, Senate Majority Leader Harry Reid indicated the nation wasn’t likely to hit the debt ceiling until May.
Lew wrote in a letter to Congressional leaders that “the large obligations of the government that occur in the month of February” will soon put a strain on the government.
Lew also wrote: “Protecting the full faith and credit of the United States is the responsibility of Congress, because only Congress can extend the nation’s borrowing authority. No Congress in our history has failed to meet that responsibility. I respectfully urge Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit before Feb. 7, 2014, and certainly before late February.”
The response on Capitol Hill was swift and predictable. Democrats are pushing for a straightforward increase in borrowing authority. And Republicans want to include other provisions related to the debt and deficit.
Senate Budget Chairwoman Patty Murray, a Washington Democrat, was among those who called for an increase with no strings attached.
As quoted by Roll Call, Murray stated: “With the bipartisan agreements on the budget and on funding the government for this year, we have an opportunity to move past the manufactured crises and work together on real challenges. I hope Republicans will listen to Secretary Lew and join Democrats to ensure the U.S. pays its bills on time…”
But Michael Steel, a spokesman for Republican House Speaker John Boehner, dismissed that suggestion: “The Speaker has said that we should not default on our debt, or even get close to it, but a ‘clean’ debt-limit increase simply won’t pass in the House. We hope and expect the White House will work with us on a timely, fiscally-responsible solution.”
What’s always lost in the shuffle during debt-ceiling discussions is that the government has a debt ceiling because it’s a borrower, not a creator of money. The money is borrowed at interest—lots of interest. Yet, the Constitution empowers Congress “to coin money and regulate the value thereof.” That may be the escape hatch from the debt trap the American people need.
Applying that constitutional change seems like a steep uphill challenge. But the fact that Congress 100 years ago handed over its money-creation power to the private Federal Reserve System is the real issue lurking behind fleeting headlines about Washington’s debt-limit. Fed critics find it unfortunate that the current Congress cannot muster the courage that past Congress members found decades ago to shine a bright light on the Federal Reserve.
It’s time to take America back, May 16th 2014 has been set as the 10 million man march on Washington DC. If you can’t make it to Washington DC, go to your state capitals, or even your county court house, get out and be seen. This nonsense has to stop.
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