Money Cashers (.com) explains that “the debt ceiling restricts the Government from paying the bills or costs for programs which have been legally authorized by Congress.”
Before 2011, Congress understood the negative consequences if they did not routinely pass legislation that would pay for goods and services they already approved. But in 2011 the Republicans, lead by the newly elected Tea Partiers—including our Representative Tom Reed, delayed the passing of the Debt Ceiling, and came alarmingly close (two days) to defaulting on our debt payments.
In 2013 we had two Debt Ceiling Crises. The January Crisis featured Paul Ryan’s short term debt ceiling increase and the infamous Sequester that cut $1.2 trillion spending in the next decade to military, social programs, and education budgets.
The October Crisis had us defaulting on our bills and shutting down our government for 16 days. The GOP demands included an one year delay implementing Obamacare and fast-tracking the Keystone XL Pipeline. The Crisis ended when Congress passed, the President signed, the Continuing Appropriations Act of 2014, which funded the government through January 15, 2014.
In 2014 the House passed a bill suspending the debt ceiling until March, 2015. They did not act when the suspension ended so Secretary Treasurer Jack Lew took extraordinary measures to borrow as much money he legally was allowed to pay America’s bills.
The present pending crisis–Lew reports that the debt ceiling needs to be raised by November 3. President Obama has announced that he will not negotiate on the debt limit.
Speaker of the House Boehner wanted to get this crisis over before he leaves Congress, probably on Friday, October 30. The problem is that he does not think that his party will support the Republican Study Committee’s proposal which includes $1.5 trillion increase to the debt ceiling, cutting spending below the Sequester budget levels, and a 21 month freeze on regulatory agencies writing new rules. Does he try to avert another crisis before a new Speaker is chosen by working with the
enemy Democrats to approve the plan?
According to the Washington Post, our congressman Tom Reed questions the process used to get to this proposal, saying: “It’s just being sprung on us at the last minute. I have some serious concerns about the path they want to bring us down.”
You may remember that Rep. Reed voted to not pay our debts in 2013 and to shut down the government. He explained those votes by writing in his October 18, 2013 newsletter, “I voted against the measure because I believe Americans have been put through enough shutdowns, fiscal cliffs, and risks of default.” (Translation: I voted to continue the shutdown and to default on our debts because we have been through enough shutdowns and risks of defaulting. No, it doesn’t make sense).
After his votes the Buffalo News wrote: “(Reed) was content to set off another recession. He also voted to begin and then, on the brink of fiscal disaster, to continue the shutdown.”
According to the Huffington Post: “If the U.S. reaches the debt cap and Congress does not approve further borrowing, then:
- The government will not be able to fulfill all of their obligations as agreed to in the most recent budget,”
- “Some law will be broken — either the debt ceiling will be breached or the budget will not be honored.”
- It could also affect our ability to pay future obligations
- Congress and the president would find their hands tied if they want to make any new financial commitments
- Our Credit Rating would go down, which would raise interest rates
Standards & Poor’s calculated the cost of the 16 day government shutdown was $24 billion.
If the Debt Ceiling proposal is approved in the House, it will probably not be passed in the Senate. The President wants a “clean bill”; one that deals with the Debt Ceiling without the requirements. What does Speaker-in-waiting Paul Ryan want? What does the Freedom Caucus/Tea Party be willing to settle for?
More importantly, what’s best for our economy?