On November 17, Treasury Secretary Tim Geithner told Bloomberg TV’s Al Hunt that “we ought to just eliminate the debt ceiling.”
John Hayward at Human Events summed up Geithner’s attitude perfectly: “Basically, Geithner thinks the debt ceiling is a bluff by those interested in fiscal restraint, and Big Government will always be willing to call it.” If he’s right, we are in deep, deep trouble.
The debt ceiling is the only thing even resembling a control on the runaway government of Geithner’s boss, President Barack Obama. The Treasury secretary is quite perturbed that last year, in his words, “people” threatened “default on the American credit for the first time in history as a tool for political advantage.” The objective historical record shows that if a default had occurred in August 2011, it would not have been the result of the “people” in the Republican-controlled House of Representatives to whom Geithner was clearly referring failing to do their job. It would have occurred because Harry Reid’s Democrat-dominated Senate would have refused to agree to what the House passed, or because the Obama would have vetoed it. Despite this constitutionally designed tactical advantage, House Republicans caved and increased the ceiling to $16.394 trillion, just enough to last past the 2012 elections. This allowed Obama and Democrats to minimize the urgency of the country’s looming fiscal calamity as a dominant campaign issue and to pretend, with the help of its press lapdogs, that it’s only a “medium-term” or “long-term” problem.
Obama’s mental definition of “medium-term” may be “after my second term.” If so, at least on our current path, he’s probably wrong. Let’s look at the scoreboard and see how close the U.S. is to what most economists believe is the fiscal tipping point.
At the close of business on November 17, the date of Geithner’s interview, the national debt was $16.28 trillion, a mere $113 billion short of the national credit limit. Of that amount, $11.45 trillion was “Debt Held by the Public,” a formerly accurate but currently misleading term, given that almost half of that balance is held by foreign entities. Economic “experts” believe that we’re not supposed to worry about the $4.83 trillion remainder called “Intergovernmental Holdings.” I personally don’t buy that, but let’s set that matter aside for now.
The $11.45 trillion in “public debt” is almost 73% of the nation’s third-quarter annualized 2012 gross domestic product (GDP) of $15.78 trillion. When Obama was inaugurated, that percentage was only 45%.