$1.9T debt ceiling increase passes Yes that is Trillion!
Congress approved a record $1.9 trillion debt ceiling increase Thursday together with legislation to reinstate “pay-as-you-go” rules credited with helping to rein in deficits during the 1990s.
Final passage came on two interlocking, partisan House votes which followed weeks of negotiations led by Majority Leader Steny Hoyer (D-Md.) alongside the White House and Senate leadership.
On the first vote, Democrats narrowly prevailed 217-212 despite 37 defections. On the second, which was less directly about the debt increase but still decisive to the whole package, the Democratic lines held and a proud Hoyer announced the 233-187 outcome from the speaker’s chair.
With new unemployment numbers due out Friday, Democrats hope now to turn their attention back to the economy without fearing another painful debt vote before the November elections. To this degree, Thursday’s votes were something of a political coup for embattled House and Senate leaders, who had feared Republicans would bleed them all year by forcing repeated votes on incremental debt adjustments.
Reinstating “pay-go” was an important concession to win over Blue Dog fiscal moderates to this strategy, and Speaker Nancy Pelosi (D-Calif.) worked the floor together with Rep. Allen Boyd (D-Fla.), a prominent leader of the Blue Dog coalition.
To appease Senate moderates, President Barack Obama has pledged to create by executive order a new 18-member commission empowered to recommend further deficit reduction steps to be considered after the elections.
But in almost a preview of the fall campaign, Republicans angrily attacked the procedures as “deceitful” and a ploy to hide what they said was the failure of Obama’s costly “anti-employer” economic policies.
“They took out a monster loan that didn’t pay off,” said Rep. Pete Sessions (R-Tex.), a member of the House Rules Committee and the chairman of the National Republican Congressional Committee. Americans “k-n-o-w what is going on,” the Texan spelled out. In his most mocking tone, Sessions portrayed Obama as a frustrated anti-business sourpuss.
“Every time I look up, our great president, Barack Obama, has an ax to grind with somebody, and it’s generally employers.”
Former President Bill Clinton joined Democratic leaders on a conference call supportive of the pay-go rules so often associated with his eight years in office. Clinton’s tenure ended with projected surpluses but he also enjoyed a booming economy and high-tech bubble that yielded rich tax revenues.
The very opposite is the case today, with weak revenues and Democrats torn between deficit reduction and new government investments to spur employment.
“The best deficit reduction plan is full employment,” said Rep. Robert Andrews (D-N.J.). But “pay-go” has become an article of faith for many Democrats after watching the tax cuts and Medicare prescription bills enacted under the Bush Administration, together with two wars overseas.
By contrast, the health care debate in this Congress has been prolonged by self-imposed Democratic pay-go discipline that has made the process that much harder for the majority.
Even so, the pay go legislation now is more of a hybrid recognizing some political realities.
Up to $1.5 trillion in exemptions over the next 10 years are included; chief among these are those Bush-era tax cuts that benefit the middle class and will cost about $1.3 trillion over the 10 years.
Holding aloft the 56-page bill, Sessions said 32 pages of it were devoted to exemptions. And Wisconsin Rep. Paul Ryan, the ranking Republican on the House Budget Committee, denounced the process as “a fiscal charade.”
But with the exception of the middle-class tax cuts — which Republicans want to keep as well — the most costly exemptions will be phased out in two to five years.
Hoyer admitted weaknesses but argued that the legislation is still a step forward in the face of the deficits ahead. “The perfect ought not to be the enemy of the good,” he said.
FINAL VOTE RESULTS FOR ROLL CALL 46 H RES 1065 RECORDED VOTE 4-Feb-2010 1:51 PM QUESTION: On Agreeing to the Resolution BILL TITLE: Providing for consideration of the Senate amendment to the joint resolution (H.J. Res. 45) increasing the statutory limit on the public debt
ALG President Bill Wilson condemned the U.S. House of Representatives for voting to increase the national debt ceiling by nearly $2 trillion, saying "the American people are under absolutely no obligation to borrow yet more money to pay for Congress' unsustainable level of spending that threatens the nation with true default.""The obscenity of this vote is nearly limitless," Wilson said, adding, "This is the equivalent of requesting a credit limit increase on a son or daughter's MasterCard to help pay interest — not even pay down the principal — on the family Visa card that is maxed out."
"No family could sustain itself in such a manner, nor can any nation which robs from future generations to purchase temporary, illusory prosperity," Wilson explained. "It is both immoral and profoundly foolish."
"The House has once again voted to kick the can down the road instead of bringing the nation's finances into proper order," Wilson said, adding, "The House has now voted to permanently shackle the American people to a mountain of debt that cannot be paid back, further pushing the nation along the road to financial Armageddon."
Barack Obama's proposed 10-year budget will add $10.6 trillion to the national debt, totaling in $25.77 trillion in total debt come 2020. That averages $1.06 trillion every year added to the nation's debt.
As a result, the nation's Triple-A debt rating "could come under downward pressure," according to Steven A. Hess, senior credit officer at Moody's.
This legislation, H.J. Res. 45, will increase the national debt ceiling by $1.9 trillion to $14.294 trillion when signed by Barack Obama. House Democrats have said that a failure to pass the debt increase would result in "default."
Wilson earlier today said that was "inaccurate."
"If this bill had failed, the U.S. would not have failed to pay interest on its debt obligations nor to make debt payments," Wilson explained. "Therefore, the nation was not going to default, unless House Democrats are stipulating that the U.S. actually needs to borrow more money simply to make national debt payments.
"What would have happened if the vote failed is the U.S. would not have been able to borrow any more money for so-called 'mandatory' spending," Wilson added.
Wilson said that the U.S. was at "considerable risk of default," not from any failure to increase the debt ceiling, but from Congressional "refusal to restrain current exorbitant spending."
"Default will only result because we have increased borrowing to unsustainable levels, which is what increasing the debt ceiling by nearly $2 trillion represents," Wilson said, noting that in Barack Obama's proposed 2011 budget, interest paid on the national debt is $251 billion, or 9.7 percent of total projected revenue.
"By 2020," Wilson said, "interest owed on the national debt will more than triple to an unprecedented, unsustainable $840 billion annual cost, or 17.8 percent of total revenue."
"After that, it gets even worse," Wilson warned, predicting that eventually, "simply paying interest on the debt owed will overtake the national budget, to say nothing of ever being able to pay down the principal owed."
The previous national debt limit was currently $12.394 trillion, and that limit was set to be reached by the end of February.
Wilson noted that the debt increase was tied to so-called "Pay-Go" rules, requiring either tax increases or spending cuts to pay for any increases in spending. "Since approximately 56.4 percent, or $2.165 trillion, of the 2011 proposed budget is so-called 'mandatory spending,' and 'mandatory spending' will increase by $1.219 trillion to $3.384 trillion in 2020 under Obama's plan, House Democrats have precluded the possibility of ever cutting entitlement spending."
Wilson explained, "Meaning, the House has just voted to increase taxes by at least $1.219 trillion over the next ten years to pay for the unsustainable increases in entitlement spending that will occur every year."
Wilson earlier said there was an alternative: "The only solution to the nation's financial Apocalypse, where Moody's is preparing to downgrade our Triple-A debt rating, is to reduce spending, not to borrow more money."
"Instead," Wilson concluded, "the House chose to bankrupt the nation."
This is nothing short of a catastrophe. The Blue Dogs and other so-called "moderate" Democrats have once again failed to rein in their reckless party, and save the nation from the increasing likelihood of national financial ruin.
By Howard Rich "We're not going to save our way out of this recession. We've got to spend our way out of this recession." – U.S. Majority Whip Jim Clyburn
Just days before Congressman Jim Clyburn had the "audacity" to admit what D.C. politicians were actually doing with our tax dollars, U.S. President Barack Obama had the cowardice to continue concealing government's unprecedented generational larceny.
"It is critical that we rein in the budget deficits that we've been accumulating for far too long," Obama said in unveiling his latest effort to distract American citizens from a looming fiscal Armageddon.
Of course, after proposing a so-called "budget freeze" in his State of the Union speech, Obama rolled out the "Mother of all Boondoggles" (for now, at least), a $3.8 trillion spending plan for the coming fiscal year that includes a record $1.6 trillion deficit (on top of the $1.4 trillion deficit government will run in the current fiscal year). By the end of this month, the Treasury now projects that the U.S. will hit its $12.4 trillion debt ceiling, coming on the heels of a vote last week in the Senate to raise the debt ceiling from $12.4 trillion to $14.294 trillion. And just this week, Moody's warned that the nation's Triple-A rating could be in jeopardy "if the current upward trend in government debt were to continue and become irreversible."
"It would be a terrible mistake to borrow against our children's future to pay our way today," Obama said – but then he did just that, endorsing a spending plan that grows government by hundreds of billions of dollars when the nation can least afford it, and when the country's first major entitlement bubble is about to burst.
According to a new CBO report, Social Security outlays will exceed revenues for the first time in 25 years in 2010 – and a wave of red ink is rapidly building up behind this immediate tipping point as the program will run permanent deficits beginning in 2016. Meanwhile a similar Medicaid implosion is on the horizon, and on top of these brewing disasters we have the hundreds of billions of dollars America must devote to interest payments on its mushrooming debt.
Yet amazingly, with the same sleight of hand that his so-called stimulus "created or saved" imaginary jobs (in non-existent Congressional districts), Obama now claims that federal deficits will begin to magically decline by 2012 – although even his rosiest numbers don't envision annual deficits falling below $1 trillion until after 2020.
Where will our national debt be at that point? $24 trillion?
That's classic Washington calculus though, isn't it? Nothing ever gets cut from government, as we just have politicians who promise to borrow less of your money at some point in the increasingly distant future. But that point in the future never actually arrives, because there is invariably some emergency or perceived social obligation which crops up to justify yet another massive expansion of government.
In addition to excluding such politically-correct contingencies from his spending plans, Obama also erroneously claims that future deficits could be reduced if only the U.S. Congress were to pass his socialized medicine proposal – with its estimated $2.5 trillion price tag.
Only according to Obama's asinine arithmetic do spending explosions and entitlement expansions equate to future savings.
This fiscal lunacy is clearly not what the American people want. Yet even though they held up unmistakable "STOP" signs in elections in Virginia, New Jersey and Massachusetts, Obama and his Congressional allies are ignoring the message and pushing the pedal to the floor as they drive this nation off of a fiscal cliff.
Obama's rampant spending isn't even the gravest danger, either, as his budget threatens to exacerbate the damage by putting future economic growth in a stranglehold.
While Obama claims to have placed "jobs" at the top of his priority list, his budget raises taxes on capital gains and hikes upper income tax brackets as part of an effort to pump more than $460 billion into government's coffers – mirroring the faulty "payment plan" behind his socialized medicine proposal.
And while soaking the rich makes for great populist rhetoric, it doesn't create jobs – in fact, it ensures that job creators keep what little money Washington leaves them with buried in their back yards, not making payroll.
With his presidency on the ropes, Barack Obama is portraying himself to the masses as a deficit hawk focused on improving our economy.
Nothing could be further from the truth.
His unprecedented spending binge would stab at the very heart of job creation in this country, while plunging this nation deeper into a deficit spiral from which it might never ever be able to escape.
Howard Rich, Chairman of Americans for Limited Government, is a Liberty Features Syndicated writer.
The Senate must move legislation to raise the federal debt limit beyond $12.1 trillion by mid-October, a move viewed as necessary despite protests about the record levels of red ink.
The move will highlight the nation’s record debt, which has been central to Republican attacks against Democratic congressional leaders and President Barack Obama. The year’s deficit is expected to hit a record $1.6 trillion.
Democrats in control of Congress, including then-Sen. Obama (Ill.), blasted President George W. Bush for failing to contain spending when he oversaw increased deficits and raised the debt ceiling.
“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren,” Obama said in a 2006 floor speech that preceded a Senate vote to extend the debt limit. “America has a debt problem and a failure of leadership.”
Obama later joined his Democratic colleagues in voting en bloc against raising the debt increase.
Now Obama is asking Congress to raise the debt ceiling, something lawmakers are almost certain to do despite misgivings about the federal debt. The ceiling already has been hiked three times in the past two years, and the House took action earlier this year to raise the ceiling to $13 trillion.
Congress has little choice. Failing to raise the cap could lead the nation to default in mid-October, when the debt is expected to exceed its limit, Treasury Secretary Timothy Geithner has said. In August, Geithner asked Senate Majority Leader Harry Reid (D-Nev.) to increase the debt limit as soon as possible.
Changing the debt cap “does provide an opportunity to look at fiscal policy and what its failings are, and ideally it could give both sides an opportunity to think about what we need to do so we don't keep raising the debt limit,” said Robert Bixby, the executive director of the Concord Coalition, a fiscal watchdog group.
“But probably as a practical matter, it will get more attention as a partisan back-and-forth,” Bixby said.
When the House raised the debt limit to $13 trillion as part of a budget resolution approved in April, Democratic leaders used a maneuver known as the “Gephardt rule,” named after former House Democratic Leader Dick Gephardt (Mo.), to avoid taking a roll call vote on the debt limit increase.
The Senate isn’t so lucky. It lacks a similar mechanism, meaning each senator must cast a politically perilous vote on raising the debt ceiling.
The Senate Finance Committee will “carefully review Treasury's request on behalf of the American taxpayers,” according to an aide to the committee's chairman, Sen. Max Baucus (D-Mont.).
“Sen. Baucus understands the critical importance of signaling to the world that the U.S. maintains the confidence and security to continue to lead the global economy out of recession,” the Baucus aide said. “The request to raise the debt limit is serious and must be addressed thoroughly and in a nonpartisan manner.”
The aide noted that Baucus is pressing the Treasury Department to be more transparent about its efforts to pull the economy out of recession.
“He will continue to demand the necessary communication and cooperation going forward,” the aide said.
Both the White House and the independent Congressional Budget Office last month said that they expect the debt to increase by another $9 trillion over the next decade. Should the Senate follow the House's lead and set the new debt limit at $13 trillion, lawmakers would probably have to raise the limit again next year, when the Obama administration expects to run a $1.5 trillion deficit.
The business community has supported Geithner's push for a higher debt ceiling. Bruce Josten, the top lobbyist for the U.S. Chamber of Commerce, said it's essential to the U.S. economy.
“If we fail to address this in a timely fashion, then you run the risk of having to curtail government operations,” Josten said. “The last thing our economy and the world economy needs is greater uncertainty throughout global credit markets.”
Josten said that the high level of debt is a reality during the recession, but it's unsustainable and needs to be reduced by reforming Medicare and Social Security.
“While we can freely and openly acknowledge completely and lobby to raise the debt ceiling and incur some more debt, the longer trends ultimately need to be reversed,” he said.
Congress raised the debt limit just a few months ago when it passed the $787 billion stimulus package.