Should Congress raise its debt ceiling just to borrow more money to stay afloat? The Democrats want to raise the debt ceiling. Republicans have made their stand clear: They will agree to raise the limit only if it is accompanied by spending cuts or reforms which are the right thing do to in cutting spending. The ceiling limit on our national debt is $14.3 trillion. According to the Treasury Department that limit was reached this past May.The Treasury Department also stated that the ceiling must be raised by $2.4 trillion by August.
The Federal Government has already extended itself overspending having to borrow over our legal borrowing limit to keep the government operating. The Republicans have outline a hardcore plan being hard nose because we are in an record debt crisis and it appears that only the GOP is taking action in preventing Congress from spending more.
Recently the House voted “318-97” against raising the ceiling without cutting. President Barack Obama and a group of House Republicans met to talk about the standoff. Reports are that there is a chance they won’t come to any agreement by August.
One area that is being mention is cuts to Medicare as the Republicans are focusing their efforts trying to get the White House on board which is being called “where the money is.” The Democrats are not in agreement with this program instead they would likely make some cuts in spending if Republicans agree to some tax increases.
If no agreement is reached, the dollar could crash raising interest rates as markets could fall according to warnings from U.S. economists. Nobody knows this outcome because “it’s never happened before.”
Princeton economist Alan Blinder stated that“in these pages that the bills for Social Security, Medicare, Medicaid, defense and interest on the national debt amount to about two-thirds of all federal outlays.”At some point [Treasury Secretary Timothy] Geithner could wind up brooding over horrible questions like these: Do we stop issuing checks for Social Security benefits, or for soldiers’ pay, or for interest payments to the Chinese government?”
If you’re thinking that the economy is starting to recover, guest again. Housing prices are down again, job creation slow and weak, manufacturing growth slowed factory growth down. Even the Dow Jones Industrial Average has started to creep downward.
Raising the ceiling without attempting to control spending will have a negative effect on the economy which is a positive step towards a national crisis. This would demonstrate that Washington’s congressional members, president Obama and his administration are not capable of taking necessary steps to cut the spending mess we are in instead moving on the same current path.
Cutting and reforming the deficit ceiling will avert a crisis. To avoid a crisis will take all involved to reach an agreement. If the debt ceiling the Democrats want to raise the debt ceiling. If the ceiling is raised will this cut spending period? There is no indication from the Democrats for any spending cuts or reform. Republicans are right that the decision to raise the debt ceiling must be accompanied by either cuts, reform or both.
Obama inherited financial collapse, deficits and debt. He inherited a broken political system. These things weren’t his fault. But his decisions appear to making them worse.