Last week, while we were all consumed with the devastating impact of Hurricane Sandy and the final days of the 2012 campaign, the U.S. Department of Treasury issued a quiet warning that the U.S. was about to hit the debt ceiling. Don’t feel bad about missing this news—it was buried at the bottom of a Treasury news release.
Treasury continues to expect the debt limit to be reached near the end of 2012. However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America. We continue to expect that these extraordinary measures would provide sufficient “headroom” under the debt limit to allow the government to continue to meet its obligations until early in 2013.
You recall that in August 2011, Democrats and Republicans in Washington finally overcame a bitter stalemate on the debt ceiling, raising the legal limit to $16.394 trillion. According to Treasury, we’re now in line to top that limit by the end of this year—meaning it will take only about 16 months of spending for our government to reach the limit.
Democratic Senate Majority Leader Harry Reid is unequivocal that the debt ceiling will be raised again, and he indicates it should be done without debate. CNS News reports:
“I think the debt ceiling will come after the first of the year,” Reid said. “But please everyone accept this: They tried it before—they, the Republicans.”
“They tried it before – ‘We’re going to shut down the government, and we’re not going to raise the debt ceiling,’” he said. “If they want to go through that again, fine.”
“But we’re not going to be held subject to something that was done as a matter of fact in all previous administrations,” Reid said.
CNSNews.com then asked, “But will you support raising it by another $2.4 trillion?”
“If it has to be raised, we’ll raise it,” he said.
Keep in mind that with the planned automatic spending cuts slated for January under “sequestration,” $500 billion of which will come from the defense budget, we still won’t reduce the debt. We’ll only slow the rate of growth in the deficit for a few years. So, not only will we get a complete lack of smart, targeted spending reform that we need—we’ll increase our debt levels while we diminish our defense capabilities with these “meat ax” cuts.
It’s a monumental failure of governance, but amazingly this was barely an issue in the 2012 campaign. Where’s the leadership?