The significance of the new debt ceiling date

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Forums > All Posts > The significance of the new debt ceiling date

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2011-05-15 08:09 AM

Schmidt
Colorado Springs, CO
Posts: 1058

Those that have been following the discussions in the media about raising the debt ceiling will have noted that the magic date keeps getting pushed forward. I first wrote about the date as late March or early April. Then it slipped to May and then June and now August 2nd. There are several reasons being cited for pushing the date forward. One is that Geitner is using some of the tactics available to him as Treasury Secretary to manage the debt...or rearrange it. He does have a lot of latitude in this respect. Another is that the government had an infusion of revenue at the April 18th tax deadline as businesses have prospered in the improving economy.

Much of the debate is centered around the Tea Party Republicans who want to extract draconion spending cuts in return for raising the debt ceiling. But what few people notice is that the new date of August 2nd has significance. It's the date that Congress leaves for summer recess. Will they shutdown the government and then go home to tell their constituents they just can't agree...so they shutdown the government to go fishing? Or golfing in Boehner's case?

Or will they raise it just a little...enough to extend the date to the end of September when the 2011-2012 budget bill must be approved?

One thing they won't do is forgo their summer recess.

Geitner is playing hardball, and I think the Republicans will cave. Any other predictions?

2011-05-16 07:30 AM

Schmidt
Colorado Springs, CO
Posts: 1058

Reference: Washington Post, May 15, 2011: Treasury to tap pensions to help fund the government by Zachary A. Goldfarb

This is how it's done...borrowing from the pension funds of federal workers. I admit to not fully comprehending the mechanics of how this creative accounting works.

But I do understand the political strategy in pushing this date forward to the start of the summer recess for Congress. Nothing like a real deadline to get some action.

However, will the Republicans call it a bluff and go on vacation without reaching a deal on the debt ceiling?

2011-05-27 06:19 AM

John Mario
Not Selected
Posts: 20

Not raising the debt ceiling will have disastrous consequences. It will result in defaulting on our nation debt interest payments. And that would be disastrous for our economy and our international credit rating.

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