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The Bipartisan Policy Center today added its warning to the gathering cloud of predictions that an economic doomsday – the need to raise the federal debt ceiling again – could collide with the 2012 election.
“When the Budget Control Act of 2011 increased the debt ceiling last August, Congress, the administration and outside analysts believed that this increase would allow federal borrowing under the limit well into 2013,” the center wrote. “Due to unexpected circumstances – that belief appears increasingly likely to have been misguided.”
Nearly everyone has a clear memory of last year’s debt ceiling war between Congress and the White House. There were accusations of profligate spending against those of endangering the sovereign credit of the United States.
Then a compromise was reached that was supposed to take that issue out of the headlines until after the 2012 election.
Now it looks like not.
WND reported earlier when Damian Paletta at the Wall Street Journal reported Barack Obama’s 2013 budget proposal forecast the “U.S. government debt subject to the statutory borrowing limit on Sept. 30, 2012, will be $16.3339 trillion.”
Besides the fact that means every man, woman and child in the nation owes some unconscionable figure like $50,000, why else is it significant?
The debt ceiling is set at $16.394 trillion, so Congress and the president in all likelihood will have to be discussing a debt ceiling increase in the very weeks leading up to the November election.
“The political fight last summer over raising the ceiling became so acrimonious that financial markets started going haywire and Standard & Poor’s downgraded long-term U.S. debt,” the WSJ weblog noted.
“There are many variables to take into account before thinking ‘here we go again.’ First, the Treasury Department proved last year that it has emergency measures it can use to buy a few months of headroom, so that means it could be early 2013 before things might get messy,” the blog posting said. “And if tax revenue surpasses expectations this year, that could also buy the government a little more time.”
Reuters also reported that estimates are that the U.S. could reach the debt ceiling again “before the November 6 vote.”
Now the Bipartisan Policy Center added its voice, actually echoing a warning from Treasury Secretary Timothy Geithner, who last week told the Senate Budget Committee that the borrowing power would run out between the end of the fiscal year on Sept. 30, and the end the calendar year.
“Those estimates will change, it’s a long way away and you know those estimates change a lot,” Geithner told senators, according to a report in Politico. “But what we do try and do is update those estimates regularly, transparently and we’ll keep doing that as we have in the past.”
Said Politico, “If the United States maxes out its credit limit before the end of this year, that could set up another messy and acrimonious battle during the lame-duck session. Lawmakers already face a dilemma over expiring Bush-era tax rates and a potential fight over preventing the $1.2 trillion in automatic budget cuts that were borne out of the supercommittee’s failure last November.
“Congress has to sign off on any increases to the debt ceiling, but the Treasury Department can employ a variety of accounting maneuvers to stall the absolute deadline before the country defaults on its debt. It did so last year, when the debt limit was actually hit in May but Treasury was able to delay the deadline until early August,” the analysis said.
Geither gave a hint of what he’d like to see, according to the Weekly Standard, saying, “If you don’t try to generate more revenues through tax reform, if you don’t ask, you know, the most fortunate Americans to bear a slightly larger burden of the privilege of being an American, then you have to – the only way to achieve fiscal sustainability is through unacceptably deep cuts in benefits for middle class seniors, or unacceptably deep cuts in national security.”
Another alternative to a raging battle over the debt ceiling would be the “No More Red Ink” campaign.
That updated and expanded campaign created by WND founder Joseph Farah simply would have majority Republicans in the U.S. House of Representatives decline to authorize any further borrowing.
The move would be expected to force immediate and sudden budget cuts that would result in the federal government living within its income.
According to the results of a recent Wenzel Strategies poll for WND, two out of three voters across the political spectrum say they are more likely to support a presidential or congressional candidate who promises to freeze the debt limit and stop borrowing more money; that is, simply stop the nation’s red ink.
The stunning results come as all major GOP candidates have at some point addressed the profligate spending by Obama, under whose direction the U.S. national debt has surged by some $5 trillion – so far.
The poll was conducted by telephone for WND Feb. 1-3. It has a margin of error of plus or minus 3.44 percentage points.
More than 48 percent of respondents, including 29 percent of the Democrats and nearly 65 percent of the Republicans, said they were much more likely to support a candidate who wants to freeze the debt and stop borrowing. Another 19 percent said they were somewhat more likely.
The dramatic impact of a freeze, because of the demands Obama’s programs have put on the budget, likely could create the need to close down entire federal bureaucracies.
On the other side of the fence, only 20 percent of the respondents said they were less likely to support such a candidate.
Fritz Wenzel, whose organization does the polling for WND, said, “Overwhelming majorities of Americans believe there should be firm restrictions placed on the federal government’s ability to borrow to force Washington to spend less money, even if that means massive cutbacks in federal agencies. They also will vote overwhelmingly for candidates for president and congressional offices who promised to impose such cuts on the national government.”
He continued, “Whether it is the continuing weak economy, their own pressing personal debt problems, or reports of the social unrest that out-of-control government spending in Europe has caused over there, Americans appear to have finally realized that we as a nation can no longer afford a federal government that spends trillions more than it takes in. The idea that we would never have to really face consequences for deficit spending has finally been dispelled, and people are now expressing concern that their very way of life – and especially the future prosperity of their children – will be adversely affected by what politicians in Washington are doing today.”
He said the issue had been brought up nominally during the 2010 midterm elections, “but financial issues have faded somewhat recently as some Republican candidates for president savage each other over personal, not policy, grievances.”
Wenzel said the new poll “shows that the voters are ahead of most politicians on the question of mounting public debt, and those candidates who make it their hallmark stand to gain substantially.”
More than half the respondents “strongly agree” that the federal government’s borrowing authority should be frozen, forcing Washington to spend less. Another 17 percent “somewhat agree.”
“What’s more, 64 percent said they favor more than $1 trillion in budget cuts, knowing such cuts could include the elimination of entire federal bureaucracies. Even among Democrats, 46 percent support at least $1 trillion in cuts, compared to 36 percent who oppose cuts, a clear indication that this issue could be the powerhouse issue of the 2012 election,” Wenzel said.
See detailed results of survey questions:
Would you favor such a freeze in the government’s ability to borrow more money, knowing it would result in spending cuts totaling more than $1 trillion and would likely result in the elimination of entire bureaucracies in Washington?