WASHINGTON, DC – The federal government will reach yet another debt crisis no later than October of this year. This news comes from Republican Senator Rob Portman and Treasury Secretary Timothy Geithner.
Senator Rob Portman (R-Ohio), former director of the U.S. Office of Management and Budget and a member of the Senate Budget Committee, announced that his analysis of President Obama’s fiscal year 2013 budget request established the statutory debt ceiling will be passed before Election Day 2012:
“Following the contentious debt ceiling last August, President Obama promised that he would take action to address the country’s fiscal crisis. He has failed to do that. In fact, his new budget increases spending and projects that Washington will be hitting the debt ceiling again in mid-October—burning through a $2.1 trillion debt limit increase in just over 14 months. This is an unfortunate but clear signal to the American people that Washington is spending too much, borrowing too much, and putting our nation’s fiscal stability at risk.”
Portman added; “Despite this, President Obama’s budget increases the debt by $11 trillion over ten years, falling woefully short of addressing this pending fiscal crisis. Chock-full of gimmicks and stimulus spending, this is a political document and far from what you would hope to see from a leader in challenging times and an economic downturn.”
The total debt subject to the statutory debt limit will reach $16.334 trillion by September 30, 2012. This is just $60 billion below the 16,394,000,000,000 debt limit. Because the federal government is accumulating debt at a rate of $132 billion a month, the debt ceiling will be reached by October 15, 2012.
Geithner acknowledged the debt limit will be breached but told the Senate Budget Committed he expected that to be after October 15th. “We do not expect to hit the debt limit until quite late in the year, significantly after the end of the fiscal year [Sept. 30] but before the end of the calendar year,” he said.
There has been persistent concern in financial markets that the U.S. would hit the $16.4 trillion debt limit before the Nov. 6 presidential election, when it would once again become a political hot button issue. The debt ceiling was raised by $1.2 trillion last month after Congress did not pass a resolution opposing it.
The debt-limit is just one of a series of critical fiscal issues that probably will have to be decided by the lame duck Congress. Geithner also told the committee that he would not support extending the payroll tax cut into 2013. Congressional negotiators have reached a deal to extend the tax break for the rest of 2012.
Since Geithner’s boss, President Obama, and Democrat leaders have made the payroll tax an issue, that statement is interesting indeed. The President has masterfully positioned himself and his friends in Congress as champions of tax cuts for the middle class via the payroll tax cut issue. Now Geithner says he will not support its extension into 2013.
The picture should be growing clearer what is happening with both the payroll tax cut issue and a string of short-term debt ceiling extensions. With the debt ceiling set to be breached mid-October, that will give the president fodder to attack any congressman or senator who opposes yet another meaningless extension. “Shut down the government,” is likely to become a campaign slogan once more.