New Congress Debates Raising Debt Ceiling
Harry Smith spoke with Rep. Michele Bachmann (R-MN), Rep. Debbie Wasserman Schultz (D-FL), Rep. Anthony Weiner (D-NY), and Rep. elect Mike Kelly (R-PA) on how, with a shift in power, will congress set aside disagreements and work together to solve such issues as deficit reduction, job creation, and turning the economy around.
WASHINGTON – House Republicans dealt defeat to their own proposal for a $2.4 trillion increase in the nation’s debt limit Tuesday, a political gambit designed to reinforce a demand for spending cuts to accompany any increase in government borrowing.
The vote was lopsided, with just 97 in favor of the measure and 318 against.
House Democrats accused the GOP of political demagoguery, while the Obama administration maneuvered to avoid taking sides — or giving offense to majority Republicans.
The debate was brief, occasionally impassioned and set a standard of sorts for public theater, particularly at a time when private negotiations continue among the administration and key lawmakers on the deficit cuts Republicans have demanded.
The bill “will and must fail,” said Rep. Dave Camp, R-Mich., the House Ways and Means Committee chairman who noted he had helped write the very measure he was criticizing.
“I consider defeating an unconditional increase to be a success, because it sends a clear and critical message that the Congress has finally recognized we must immediately begin to rein in America’s affection for deficit spending,” he said.
But Rep. Sander Levin, D-Mich., accused Republicans of a “ploy so egregious that (they) have had to spend the last week pleading with Wall Street not to take it seriously and risk our economic recovery.”
He and other Democrats added that Republicans were attempting to draw attention away from their controversial plan to turn Medicare into a program in which seniors purchase private insurance coverage.
The proceedings occurred roughly two months before the date Treasury Secretary Tim Geithner has said the debt limit must be raised. If no action is taken by Aug. 2, he has warned, the government could default on its obligations and risk turmoil that might plunge the nation into another recession or even an economic depression.
Republicans, who are scheduled to meet with Obama at the White House on Wednesday, signaled in advance that the debt limit vote did not portend a final refusal to grant an increase.
The roll call vote was held late in the day, and there was little, if any discernible impact on Wall Street, where major exchanges showed gains for the day. At the same time, it satisfied what GOP officials said was a desire among the rank and file to vote against unpopular legislation the leadership has said eventually must pass in some form.
Republicans said they were offering legislation Obama and more than 100 Democratic lawmakers had sought.
But Rep. Steny Hoyer of Maryland, the second-ranking Democrat, accused the GOP of staging a “demagogic vote” at a time lawmakers should work together to avoid a financial default.
All 97 votes in favor of the measure were cast by Democrats, totaling less than a majority and far under the two-thirds support needed for passage.
For its part, the administration appeared eager to avoid criticizing Republicans.
“It’s fine, it’s fine,” presidential press secretary Jay Carney said when asked about the Republican decision to tie spending cuts with more borrowing.
“We believe they should not be linked because there is no alternative that’s acceptable to raising the debt ceiling. But we’re committed to reducing the deficit,” Carney said.
The government has already reached the limit of its borrowing authority, $14.3 trillion, and the Treasury is using a series of extraordinary maneuvers to meet financial obligations.
By no longer would making investments in two big pension funds for federal workers and beginning to withdraw current investments, for example, the Treasury created $214 billion in additional borrowing headroom.
At the same time, the Obama administration and congressional leaders are at work trying to produce a deficit-reduction agreement in excess of $1 trillion to meet Republican demands for spending cuts.
Political maneuvering on legislation to raise the debt limit has become common in recent years, as federal deficits have soared and presidents of both political parties have been forced to seek authority to borrow additional trillions of dollars.
Because such legislation is unpopular with voters, presidents generally look to lawmakers from their own political party to provide the votes needed for passage. In the current case, though, Republicans control the House, and without at least some support from them, Obama’s request for a debt-limit increase would fail.
However, House Speaker John Boehner, R-Ohio, announced months ago that he would demand spending cuts as a condition for passage.
“It’s true that allowing America to default would be irresponsible,” he said on May 9 in a speech to the Economic Club of New York. “But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process.”
Below info from ReasonTV:
Some say the world will end in fire and some say in ice.
But in Washington, a lot of people say it will end if we don’t continually raise the debt ceiling.
The statutory debt limit, or debt ceiling, represents the maximum amount of debt the federal government can carry at any given time. The limit was created in 1917 so that Congress wouldn’t have to vote every time the government wanted to increase the amount of debt (which was becoming a more and more frequent occasion). Since then, the Treasury Department has had the authority to issue new debt up to whatever the limit is to fund government needs. Last year, the limit was raised to $14.3 trillion, an amount that is about to reached.
As it approaches, Federal Reserve Chairman Ben Bernanke has said failing to raise the limit would likely mean the U.S. would default on its debt, creating “real chaos” in place of the fake chaos that’s out there now. Treasury Secretary Timothy Geithner has said that failing to raise the limit would be “deeply irresponsible” and and Austan Goolsbee, President Obama’s chief economic adviser, has said that not raising the limit would create “the first default in history caused purely by insanity.”
John Brummett in his article “Dear visa, my debt ceiling is capped,” April 25, 2011, Arkansas News Bureau, he observes:
The first thing I intend to do is join the tea party. Then I’m going to refuse to raise my debt limit. Then I’m going to call the Visa people.
“Y’all have me down here owing $6,000,” I’m going to say. “But I’ve become a fiscal conservative. I’m getting really disciplined fiscally. I’m taking my household back.
“My self-imposed debt ceiling is $4,000. I’ve opted not to raise it. Nary a cent. I only went over it because the oral surgeon demanded immediate payment.
“So $4,000 is the most you rascals will get out of me. You may as well quit compounding the interest on this outstanding balance. I am serious about this. You may consider this baby capped at four grand.
“Oh, by the way: Don’t even think about canceling this card. I have a second round of dental work coming up and the oral surgeon doesn’t give these implants away.
“Thank you, and remember: Vote Palin-Bachmann.”
You are thinking this is absurd. You are right, of course.
But you are not intellectually entitled to call it absurd if you are among the seven in 10 Americans telling pollsters you don’t want the federal government’s debt ceiling raised. You are not intellectually entitled if you are one of these right-wing politicians pandering to this tea-drunken grandstand by threatening to vote not to raise it.
Here is how real fiscal responsibility works: You repay the debt that you have incurred to date. You make spending reductions prospectively by showing sufficient discipline to reduce the future pace at which you incur debt. You dare not let your existing debt go unpaid lest your credit score suffer and you get denied the next time you find yourself in a bit of a pinch and need to finance a refrigerator at Sears.
Michael D. Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution. Here is a portion of this recent article:
Now that Osama bin Laden has been successfully dispatched to the eternal damnation he so richly deserves, Washington is ready to return to the more mundane question of whether the Obama administration will be allowed to spend this country into oblivion.
The next big fiscal fight will be over when and how to increase the debt limit. The administration has been hard at work trying to shape the message and public opinion. Unsurprisingly, much of that message is less than 100 percent accurate. Here are some myths about the debt ceiling and the upcoming debate about raising it:
4. This is not about future spending. The administration insists that raising the debt ceiling is just about paying for spending that’s already occurred. Not quite. Depending on how high it is raised, it may be about paying only for spending that is already authorized — or much more. Authorized and spent are not the same thing. There is nothing wrong with forcing government not to spend money that it had planned on spending. Moreover, Tim Geithner is reportedly calling for an increase in the debt ceiling big enough to last through the 2012 election, which would enable a lot of new spending.