WASHINGTON – Treasury Secretary Timothy F. Geithner now is saying that, contrary to his recent dire warnings of “catastrophic economic consequences” should Congress fail to increase the nation’ debt limit, there has been an apparent unexpected increase in projected tax revenue, and the deadline for possible default has been benched until mid-spring.
The debt limit (the legal limit which the Congress allows the U.S. government to borrow to pay its bills) currently stands at $14.29 trillion.
In his Jan. 6, 2011, letter to Congress stating the urgency for the increase, Geithner advised that there was $335 billion of “headroom” beneath the current limit and further estimated that “the debt limit will be reached as early as March 31, 2011, and most likely sometime between that date and May 16, 2011.”
The Treasury Secretary cushioned his estimate by explaining to the Congress that “because of the inherent uncertainty associated with tax receipts and refunds during the spring tax filing season, as well as other factors, it is not possible at this point to predict with precision the date by which the debt limit will be reached.”
Not four short weeks later and nearly two months prior to the April 15 tax filing deadline, the Treasury Secretary has, due to apparent goods news from the bean counters at Treasury, temporarily delayed the political showdown with congressional Republicans opposing an increase in the debt limit.
Despite the inordinate amount of information provided to the Congress in the Jan. 6 “catastrophic” missive, the Treasury Secretary was not so generous in his latest debt limit delay communication.
According to the recent Treasury release, the earliest possible day of reckoning for reaching the debt limit has only been moved back five days, from Treasury’s original date of March 31, 2011 to April 5, 2011. This reprieve was based on “an upward revision to projected receipts (tax) and a projected downward revision to debt to be issued to government trust funds.”
The changing guesses come at a time when there is concerted plan to encourage Congress to refuse to raise the debt ceiling at all and, for the first time in decades, make the government’s spending match its income.
The campaign at this time is shipping the first 125,000 “red ink” letters to House Republicans urging them to oppose raising the debt limit when it comes to a vote in the coming weeks.
“Unfortunately, if the House Republicans do not hear from the American people in strength, they will vote for business-as-usual deficit spending for the next two years and surrender the power they have to force fiscal responsibility on Barack Obama and the Democrats in the Senate,” says WND founder and CEO Joseph Farah, the organizer of the campaign. “House Speaker John Boehner says he wants to use the debt limit to wrangle concessions out of the Democrats, but when he signals, as he did last weekend, that Congress must raise the debt limit to keep the government solvent, he has already waved the white flag of surrender on the most important vote to be cast in Congress over the next two years.”
There are those voices who already have spoken out in opposition to raising the limit, including former GOP presidential candidate and Reagan administration official Alan Keyes, Sens. Jim DeMint, R-S.C., and Pat Toomey, R-Pa., and Reps. Michele Bachmann, R-Minn., Ron Paul, R-Texas, and Anthony Weiner, D-N.Y.
“We should demand of our representatives in Congress that they refuse to raise the debt ceiling,” said Keyes. “But we must also demand of ourselves that we refuse any longer to choose our political leaders from candidates produced by political parties intrinsically dependent on political vehicles fueled by unbridled government spending. Where politics is concerned, restoring the ceiling must be just the first expression of our determination to rebuild, as a home for responsible freedom, the house of constitutional liberty our forsworn elites are determined to destroy.”
Keyes made his comments in support of Farah’s plan to persuade House Republicans to defy their own leadership and refuse to raise the debt limit – an act that will force government to live within its means.
The commitment to a balanced fiscal plan is, however, wavering. Farah says the only hope is a major outpouring of protest from tea party activists and true conservatives who recognize that government is way too big and is in desperate need of major cuts just to bring it in line with the Constitution.
For his part, Farah has made it easy for the public to make their voices heard in Washington in a powerful way.
The “No More Red Ink” campaign has two facets:
- Sign a petition directed exclusively to all 242 House Republicans calling on them not to bargain away their “nuclear option” that can stop any further deficit spending for the next two years.
- Flood their offices with “red ink” letters that remind them they are holding all the cards in getting government spending under control and that all they have to do is vote “no” on raising the debt limit.
“This is a plan to separate the real economic conservatives from the pretenders,” said Farah. “If you want to reduce the debt that is destroying this country’s economy we have a chance right now to slam on the brakes. Once the debt limit is raised, it’s back to business as usual.”
Republicans in the House hold all the cards, Farah points out. They don’t need a single Democratic vote to side with them. If 218 out of 242 Republicans in the House vote no on raising the debt limit, the debate is over – “and so is the growing U.S. debt.”
“At that point, Barack Obama can’t implement Obamacare,” he said. “From that moment onward, there will be no more spending initiatives by Obama for the next two years. There will be no more bailouts, no more ‘stimulus’ spending. It’s all over. In fact, the most significant budget cuts in modern American history will have to be made – and the Republican House will still have to approve them.”
Farah says he can’t understand why so few conservatives and Republicans are pushing the idea.
“I have to believe that most Americans are simply unaware of what is about to transpire,” he said. “Everyone is talking about the debt crisis – even Obama. But no one is talking about the opportunity we have to start reversing it right now. It’s always tomorrow, next year, next decade. That is a recipe for an even bigger disaster. Borrowing more is never a solution to a debt problem.”
The “No More Red Ink” campaign allows Americans to send a “red ink” letter to every member of the House majority urging them to vote “no” on raising the debt limit. The letters are individually addressed to each member, with guaranteed delivery by Fed Ex for a cost of just $29.99. It would cost an individual more than $100 in postage alone to send the 242 letters with no guaranty of delivery and certainly nowhere near the impact.
“I’m here to tell you that the Republicans in the House will be held accountable for this surrender to the Washington establishment and the Democrats in the Senate and White House if they capitulate on more debt spending,” says Farah. “Republicans in the House hold all the cards they need to stop this fiscal insanity this year. If they give in, they will be no better than the Democrats who have wrecked this economy.”
A similar campaign organized by WND last year delivered more than 9 million “pink slips” to members of the House and Senate. Farah is hoping a similar response by Americans in the next few weeks will persuade House Republicans to oppose raising the debt limit.
Given that there is no detail provided with the latest Treasury release, such as; what exactly are the data provided to the secretary, that wasn’t available a month ago, prompting him to believe there is wiggle room on the estimated date of financial doom, the prospect always arises of political influence on a projection.
“I don’t think so,” says Brian Riedl, a Research Fellow for Budget Policy at the Heritage Foundation.
“The Treasury,” says Riedl, “has economic models that continually project how much tax revenue that will come in over time and these are based on basic economic factors. They tweak their models and it only takes a small tweak in their economic growth forecast or in their withholding numbers to buy them an extra month or so.”
“Either way,” Riedl tells WND, “I think we’re going to hit the debt limit in late spring. It doesn’t matter what they project, it only matters what actually comes into the Treasury. In reality we’re running a deficit of $100 billion a month and as long as that continues we should hit the debt ceiling in about two or three months.”
With what appears to be five extra days of breathing room, the Treasury effectively has removed the issue from page one of the daily newspapers, but in the bigger scheme of things it remains inevitable that Congress must visit the issue sometime soon.
But the result of that debate is far from money in the bank.
Reidl sees the debt limit debate as an opportunity for Republicans to push for real reform.
“I don’t see the Republican House voting to raise the debt limit without real budget reforms. It isn’t that they don’t want to raise the debt limit, they do want real budget reforms to make sure we’re not in the same position again a year from now. It’s an opportunity to force Congress to rein in spending and deficits.”
Just days ago, the Heritage Foundation also responded to Geithner’s warnings that if he doesn’t get his way with the debt ceiling, “our soldiers and veterans wouldn’t be paid, Social Security checks wouldn’t go out.”
The analysis by J.D. Foster, the Norman B. Ture senior fellow in the economics of fiscal policy at the Heritage Foundation, calls that warning alarmism.
“If the federal government runs up against the debt limit, then the Treasury has tools to manage cash flow for a time before severe measures will be necessary to align the federal spending set in law with the receipts available to the Treasury,” Foster wrote in his report.
“Treasury almost certainly will not default on its publicly issued debt. Nor will Congress imperil the standing of U.S. government debt in the credit markets, risking America’s ‘full faith and credit,’ as the president’s chief economic adviser has said,” he said.
At issue is the skyrocketing budget deficit under Barack Obama’s leadership, which is expected to be $1.5 trillion this year. Meanwhile, the national debt is expected to reach its legally allowed maximum of about $14 trillion over the next few months.