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The Deal with the Debt: Administration Accuses Congress of ‘Playing with Fire’

Boehner: "There’s never been a president in our history that did not negotiate over the debt limit. Never. Not once."

by
Bill Straub

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October 10, 2013 - 12:33 am
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WASHINGTON – It’s fair to say there hasn’t been this much attention paid to a ceiling since Michelangelo completed his work in the Sistine Chapel.

And in this instance the effort is neither as beautiful nor rewarding.

Americans may soon experience firsthand what the hubbub over the nation’s debt ceiling is about. Come Oct. 17, according to Treasury Secretary Jack Lew, the federal government’s authority to borrow the funds necessary to meet its obligations will be reached. Unless Congress responds quickly and raises the debt ceiling above its current $16.7 trillion level, world markets could face an economic meltdown.

Yet, as matters currently stand, lawmakers may not meet that looming deadline. Raising the debt ceiling, which many in Congress consider an odious proposition in the best of times, is embroiled in the protracted debate over a stopgap government spending bill and funding for the Affordable Care Act, also known as Obamacare.

The battle already has led to a partial shutdown of the federal government, leading to service gaps. And now it may force the U.S. to default on at least some of its bills.

Congress, Lew said, is “playing with fire.”

“If the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default,” he said Sunday during an appearance on State of the Union on CNN. “There is no option that prevents us from being in default if we don’t have enough cash to pay our bills.”

Since reaching the debt limit is an unprecedented happenstance, no one can predict with any certainty what might occur. But even the threat of potential default has in the past created tremors in the worldwide economy. After weeks of negotiations in 2011, Congress and the White House reached a deal to raise the debt limit on the default deadline of Aug. 2, 2011. That near disaster led to a downgrading of the nation’s credit rating, increased uncertainty within the business community and led to a drop in consumer confidence. Financial markets fell in response.

From the second to the third quarter of 2011, as an outgrowth of the debt ceiling dispute, household consumption fell $2.4 trillion.

“If Congress were to repeat that brinksmanship in 2013, it could inflict even greater harm on the economy,” Lew said. “And if the government should ultimately become unable to pay all of its bills the results could be catastrophic.”

Last week the Treasury Department released a report, “The Potential Macroeconomic Effect of Debt Ceiling Brinksmanship,” concluding that a default has the potential to freeze credit markets, force a decline in the value of the dollar and hike interest rates.

“The U.S. dollar and Treasury securities are at the center of the international finance system,” it said. “In the catastrophic event that a debt limit impasse were to lead to a default on Treasury securities, financial markets could be shaken to their core as was seen in late 2008, which resulted in a recession worse than any seen since the Great Depression.”

Vanguard, one of the world’s largest investment management companies, warns the economic impact of failing to raise the debt limit would be hard to quantify but would almost surely prove significant.

“Confidence in the U.S. government’s ability to function and fund itself would be shaken with ramifications extending from the confidence of domestic businesses and consumers to the faith of investors both at home and abroad,” said Vanguard economist Andrew J. Patterson.

Publicly, at least, House Speaker John Boehner (R-Ohio), who is leading the charge against the spending package and Obamacare, is warning that it is unlikely the lower chamber will pass a “clean” debt limit increase unless President Obama acquiesces on either defunding or postponing implementation of the Affordable Care Act. Obama has refused to negotiate over the issue, maintaining it’s the job of lawmakers to maintain the financial integrity of the U.S.

Boehner squarely places responsibility for the developing crisis on Obama and Senate Democrats, asserting they are placing “the economy at risk.”

“Listen, there’s never been a president in our history that did not negotiate over the debt limit,” Boehner said. “Never. Not once. As a matter of fact, President Obama negotiated with me over the debt limit in 2011. He also negotiated with the Blue Dog Democrats to raise the debt ceiling in 2010. The way to resolve this is to sit down and have a conversation to resolve our differences.”

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Top Rated Comments   
Most of the so-called shutdown is contrived, a display of petty, mean-spirited harassment of a clueless (I won't say innocent) public.

The left is what they always accuse the right of being, Manichean, either completely with them or absolutely against them. Their will to power ultimately allows no other choice. But here's the tragedy... American society has historically been based on decency and good will, forgive and forget, make tomorrow better than yesterday. It is almost impossible for most Americans to believe that an internal enemy exists who looks like themselves, but who thinks in terms of only control and subjugation. Throughout the past 60 years the left has cynically counted on this to ease themselves into power. What I've just said should be nothing new.

However, now the gloves come off. The left is this close to absolute control. There is no longer any need to sidle craftily towards the target when it is so close in sight. The left will now double down on whatever heinous acts it feels necessary to achieve a final solution. Should the Republicans find a backbone and the current situation continue, then today's bullying blockades of National Parks are only a subdued precursor to a vicious response.

The rest of us who have eyes to see and ears to hear should be scared $h*^less. I really don't understand why Americans don't understand.
1 year ago
1 year ago Link To Comment
All Comments   (13)
All Comments   (13)
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1 year ago
1 year ago Link To Comment
as Debbie said I'm impressed that someone able to get paid $4020 in four weeks on the internet.. .......:>WWW.JOBS60.ℂOM
1 year ago
1 year ago Link To Comment
my friend's mother makes $79 hourly on the computer. She has been out of a job for nine months but last month her check was $15237 just working on the computer for a few hours. try this out.......WWW.Rush64.COM
1 year ago
1 year ago Link To Comment
Obama's view on the give and take of normal politics is that either we give him what he wants or he will take it.
1 year ago
1 year ago Link To Comment
10/17 isn't the day we exceed the current Debt Limit, that's the day that Lew figures he no longer will be able to paper-over just how far we have already exceeded that limitation.
Now, the question is, will this be a "Black Thursday"?
1 year ago
1 year ago Link To Comment
All this hullabaloo over the CR and Obozocare pales in significance to the debt ceiling fight. Government broke through the "debt ceiling" a long time ago.

In the case of the government they avoid going bankrupt by stealing from everyone in the country. And let's not forget that the stealing has already happened -- Treasury actually hit the debt ceiling several months ago and their "extraordinary measures" have included stealing the money in federal employee retirement accounts, known as "TSP" accounts, rather than admit they had to deal with this problem months ago. If you work for the government you have already had that very government directly steal from you. Oh yes, they put an IOU in there, but that presumed the debt ceiling would be raised which they could not guarantee at the time. In other words Obama and Treasury directly lied to you." - Karl Denninger

Failure to increase the debt ceiling immediately forces our masters in Washington to balance the budget.

Which is why it will never happen.

But it should.

And this, even more than the fight over the ACA, is what will ultimately cause me to ditch the Republican Party once and for all.

1 year ago
1 year ago Link To Comment
I'm betting Soros' Cabal is going way short on the market and it is their lackey Obama's job to crash that market so they wind up owning half the Country.
1 year ago
1 year ago Link To Comment
I will be happy to give Soros & Co. one-half of my ammo holdings!
1 year ago
1 year ago Link To Comment
“Extending borrowing authority does not increase government spending...", Lew said.

Yes, but HALTING borrowing authority LOGICALLY would decrease government spending...making the BIG assumption that our government can actually act logically...
1 year ago
1 year ago Link To Comment
Look, this debt ceiling fight is as important as the Obamacare fight. It is completely foolish to raise the debt ceiling without a significant and real reduction in spend.

As it happens we are raising the debt ceiling to cover deficit spend, Too little time to figure out what to cut? Fine, every check written by the government for its employees and to any company, or for any grant, gets cut 10%.

If the government wants to have the full confidence of people who have dealings with the government they will have to earn it.

Not to mention that the salaries and the contracts are padded anyway. And believe me there will be no fallout if we cut all grants by 10%. No one will care.
1 year ago
1 year ago Link To Comment
I'm on a fixed income. Usually this is enough to pay my bills and buy a few goodies for myself with a little left over. Near the end of last month the transmission went out on my truck. I didn't have enough to get it fixed so I waited until my next check came in. It took most of that check and part of the next but it got paid and fixed. I had enough to keep me in food and a roof over my head but the goodies didn't make the cut. My "debt ceiling" is the amount of money I get each month. There is no way I am able to raise it just because I want a new toy.

If the government doesn't have the money to pay for all the goodies it wants then why should they be any different than I am? Pay the bills that are due then if there is anything left over get yourself some goodies but don't spend all your money on goodies then come crying because you don't have enough to pay for the essentials. If the Senate had submitted a serious budget sometime in the past few years we wouldn't be arguing over a CR now and they want to blame the Republicans for that?
1 year ago
1 year ago Link To Comment
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