The debt ceiling is expected to be reached officially on Monday, December 31, when the national debt reaches $16.4 trillion. Unofficially, with various “extraordinary measures” employed, the Treasury won’t bump into the real limit until some time in February. Those measures will give the Treasury a little over $200 billion in “headroom,” and since the government is borrowing $100 billion every month, the math is easy. The question then becomes: What happens next?
President Obama has demanded that any discussion about the debt ceiling be deferred until after the fiscal cliff crisis has been resolved. He frankly would prefer that the issue go away entirely, and has offered to take on the responsibility of raising it unilaterally, effectively removing such responsibility from Congress altogether. Using a measure first proposed by Senate Minority Leader Mitch McConnell (R-Ky.), the White House would request a debt ceiling increase from the Congress and the Congress would then just approve it. If the Congress fails to approve it, the president could then veto the disapproval, unless Congress overrides his veto — a highly unlikely outcome. In simple terms, Obama would be given a credit card with limits that can be raised with a phone call.
This, the president asserts, would give great comfort and assurance to the bond market that the government would never default on its debt, thus keeping interest rates low. Such a measure would also remove the debt ceiling discussion as a hammer by members of Congress to force spending cuts from the White House.
All of this is just a charade, according to Peter Schiff, the CEO of Euro Pacific Capital and supporter of limited government. He wrote that “these debates have become nothing more than exercises in feigned outrage. If Congress wants to control the debt, let them do so. If they don’t care, just continue on the current path.”
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