2013 Debt Ceiling is Creating a Perfect Storm
The perfect storm, when all things come together and create a disaster. The last debt ceiling deal, sequester, Obamacare, NSA, partisanship, 2014, Syria ... Is this the perfect storm as we head into the debt ceiling debate?
Members of Congress return from their summer break on September 9. Until the other day, the first items on the agenda would have been the 2014 fiscal year budget and an increase to the amount of money the federal government is allowed to borrow. Giving President Obama the authority to attack Syria will now take center stage. In reality, that debate will become part of the budget and debt battle.
Treasury Secretary Jack Lew has signaled the approaching perfect storm. According to Lew, the president will not negotiate on the debt ceiling. America must pay its incurred debt. In his statement, Lew also stated that the country will run out of money to pay its bills by mid-October. With the 2014 election campaign season ready to start, Congressional approval still at all-time lows, and a majority of Americans opposed to intervention in Syria, this position may be taking the brinksmanship too far.
During the 2011 debt ceiling debate, Standard and Poors downgraded the nation’s credit rating. At the start of this year, Congress suspended the debt ceiling to avoid default. Congress also agreed to end the payroll tax reductions and put in place a version of No Budget No Pay as part of increasing the debt ceiling. What was left undone were the spending cuts being demanded by Republicans.
Speaker of the House John Boehner (R-Ohio) has stated there will be no debt increase without corresponding spending cuts. Republicans acquiesced last time. It’s now time for the president to cede some ground. Boehner is willing to accept a plan discussed during sessions led by Vice President Joe Biden. No cuts is not an option. Further tax increases without spending cuts are also off the table.
Related to the debt ceiling is the need for Congress to pass a continuing resolution funding the government should all appropriation bills for the upcoming fiscal year not be approved by September 30. Eighty GOP members of the House are insisting any resolution include defunding Obamacare. The 80 say they are willing to shut the government down if this is not included. While this is not enough GOP votes to prevent a continuing resolution from passing; Boehner supports a clean spending resolution, it does signal that a debt ceiling increase without spending cuts will not pass.
If Obama attacks Syria, with or without Congressional approval, his projected savings from ending our involvement in Iraq and Afghanistan become obsolete. The sequester cuts to the Department of Defense would have to be restored for the offensive to be successful in the long run. The impacts to the economy of another war would have to be seriously considered.
The president’s red line combined with red line drawn by Jack Lew could be taking us directly into the eye of the perfect storm.