News / USA

Obama Seeks New Authority on US Borrowing Limit

U.S. President Barack Obama (File)U.S. President Barack Obama (File)
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U.S. President Barack Obama (File)
U.S. President Barack Obama (File)
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U.S. President Barack Obama is seeking new authority to set the country's borrowing limit, adding a contentious new element to the end-of-the-year debate over the government's spending and tax policies.

The U.S. is again nearing its legal borrowing limit, now set at nearly $16.4 trillion. It is likely to reach that limit in early 2013, and without further congressional authorization, the U.S. would not be able to sell more government bonds to finance its operations. As the country's debt mounts, increasing the ceiling on its borrowing limit is now controversial in the U.S., even though it has been done more than a hundred times in the last century, often with almost no debate.

Obama and Congress engaged in a weeks-long standoff in mid-2011 before increasing it to the current level. As part of negotiations with congressional leaders to stave off $600 billion in mandated spending cuts and tax increases set to take effect January 1, Obama says he wants the power to set the debt ceiling, and the right to veto any congressional disapproval of the debt level he sets.

Newly re-elected, the Democratic president is seeking the debt ceiling authority as part of his call to raises taxes by $1.6 trillion over the next decade to eventually trim the country's debt. But his Republican opponents in Congress are balking at giving him new power over setting the country's debt limit and his tax proposals. They are calling for government spending cuts equal to any increase in the debt limit and retaining control over setting the limit.

Today, Obama told toy factory workers in Pennsylvania that he thinks he and congressional lawmakers can reach a compromise to avoid $600 billion in spending cuts and tax increases set to take effect January 1. But the Democratic president said reaching a deal with Congress will not be easy, with both sides needing to make compromises.
 
"All of us are going to have to get out of our comfort zones to make that happen," said Obama.  "I'm willing to do that and hopeful enough members of Congress in both parties are willing to do that as well."

The House Republican leader, Speaker John Boehner, said negotiations are at a stalemate and said the president's proposals are not a "serious" offer to settle the dispute.
 
"There's a stalemate," said Boehner.  "Let's not kid ourselves. Now I'm not trying to make this more difficult... And then the White House spent three weeks trying to develop a proposal and they send one up here that called for $1.6 trillion in new taxes, calls for not even $400 billion in cuts and they want to have this extra spending that's actually greater than the amount they're willing to cut. It was not a serious proposal."

The dean of the business school at Hofstra University in New York, Patrick Socci, said that increasing the debt ceiling has become controversial because the U.S. has been accumulating annual trillion-dollar deficits during Obama's tenure. The government has been spending substantially more than it is collecting in taxes as it moved to boost its economy in the aftermath of the deep recession in 2008 and 2009.

"The reason why it's contentious now is there are a significant number of Americans who feel we're on an unsustainable course," said Socci.  "We're spending far too much money and we need to cut back."

But not raising the U.S. debt ceiling could be economically catastrophic. One financial services company cut the country's top credit rating in 2011 after Congress wavered on raising the debt ceiling.

As it stands now, several foreign governments, topped by China and Japan, are the biggest investors in U.S. securities, each holding more than $1 trillion in American bonds. Economic analyst Steve Bell of the Bipartisan Policy Center in Washington said there would be widespread uncertainty throughout the world about the safety and reliability of U.S. financial obligations if the debt ceiling is not increased again.

"If that were to happen, which would be unprecedented in American history, that means that the Treasury would essentially have to pay the bills as they came due, and I mean that literally," Bell noted.  "It's 9 o'clock in the morning, and a bill came due, and enough money had happened to come into the Treasury that day to meet that bill, they'd pay that bill. But the next bill would come in, and there wouldn't have been enough money, that bill would not be paid. The question is for everybody in the world who depends upon the safety of American debt, would this mean the debt would be paid on time? And the answer is, nobody knows."

Bell said he thinks the debt ceiling will not be raised until the last couple weeks in February. But Socci suggested Obama and Congress would agree to increase it as part of a compromise on the year-end tax and spending issues.

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Comments
     
by: Darren M from: Toronto, Canada
December 01, 2012 7:38 PM
The constant, chronic whining of the liberal left and the pandering to them of the government will be the undoing of America.

Whaaaa...we don't like factories because they pollute. Poof, manufacturing jobs go overseas where their wanted.

Whaaaa...we don't like consumerism so stop selling us stuff. Poof, 2 million jobs and 100 billion a year in commerce and trade vanish as the democrats implement the national DNC list.

Bad behavior by a few rogue bankers and the whole sector gets tied up and impaired from being able to do business. (there will always be bad actors so punish them, not the industry itself. Crooks will always find ways to break the law irrespective of the stifling rules governments impose.

I could go on. When democrats stop seeking votes by trying to please every loud mouth complainer then America will get with it. Stop assaulting your own economy, it can only take so much.

I am a proud Canadian, blessed to be your neighbor. But I must say, we miss the old America.

Change for the sake of change is not necessarily better. Socialism has never worked and never will. It is nothing but organized jealousy. Screw socialism and the donkey it rode into town on.

Bring back America's positive attitude, love of success and pro business bent. The world needs it, America needs it.

God bless the United States of America.

Your friend, ally, and close cousin,

Canada


by: diane from: TX
November 30, 2012 8:28 AM
Avoiding the two party system is not leading. No deal without spending cuts.

by: Allen Bunch
November 30, 2012 8:04 AM
"Listen, this is not a game. Jobs are on the line, the American economy is on the line, and this is a moment for adult leadership," said Boehner."

That is exactly right. It is time for both parties to quit playing games. Taxes did not break America. Spending did not break America. Giving our industrial base to other countries did break America.

It is time to abolish irrational trade and put Americans back to work instead of workers in other countries. We spend a billion dollars a day more on imported goods than they spend on our exports. No country can survive that.

At least for a little while longer, America still has the biggest consumer market in the world. Why not use it to support American families instead of supporting people in other countries. It is time to return to charging all suppliers of goods and services to the American market for the use of that market. If you want to use the American market to generate profits for your business you should have to pay for that PRIVILEGE.

That is how it was in the 50's and 60's and that is how it should be today.
In Response

by: almoro from: cameroon
November 30, 2012 5:50 PM
That`s utterly true, Mr. Allen Bunch! It`s better to point directly to the fire instead of its smoke!

by: JStevens from: Florida
November 30, 2012 7:03 AM
Great campaigner; unfortunately, incredibly inept leader.

by: michael from: florida
November 30, 2012 6:27 AM
After 4 years the POTUS game is clear to see.. He wants to raise the taxes now and discuss reforms and spending cuts later. Is he really going to be serious about spending cuts/tax reform etc, when he already has the tax increases.
Please.... let,s be adult about this. Why is he not negotiating in Washington ?
Is it becuase he has no appetite or skills at leadership, but prefers to be on his soapbox all the time, speaking to a captive audience, and he is the only one with a teleprompter and microphone ?

America needs and deserves better than this.

by: Brad Arnold from: Mpls, MN
November 30, 2012 6:22 AM
Ironic that House Speaker Boehner says "one-sided leaks to the press is not the way to get things done here in Washington," because it was Republican House aides that are credited with leaking the White House proposal to the press. Frankly, so far in these "negotiations," it is the House Republicans that haven't taken them seriously yet (for example trying to hold extension of the US debt ceiling hostage).
In Response

by: Maggie from: Lexington,K.y
December 01, 2012 12:07 AM
you are from MN and probably voted for Obama. Do you really want to give him permanent to raise the debt ceiling himself, without Congress even having the power to veto! Isn't that rather despotic?

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