Senate discussing a raise in national debt ceiling to above $14 trillion
By Lori Montgomery
The Senate opened debate Wednesday on a plan to raise the nation's debt limit by $1.9 trillion, a move that Democrats hope will see the Treasury through this fall's congressional elections.
The record increase would raise the Treasury's legal ceiling for borrowing to $14.3 trillion -- about the size of the nation's overall economy.
Treasury expects to exceed the current debt limit of $12.4 trillion as soon as next month. Much of that borrowing is between government agencies; borrowing from foreign governments and other private investors stands at about $7.8 trillion, or around 54 percent of the nation's gross domestic product, a level that has been rising rapidly in the aftermath of the deepest recession in a generation.
Republicans are poised to draw debate over the debt limit into a days-long indictment of President Obama's fiscal policies. Mindful of that, the White House and congressional Democrats have reached a tentative agreement to create a bipartisan budget commission to chart a parth to fiscal solvency. Senate moderates, who had threatened to block a significant increase in the debt limit without such a commission, were meeting Wednesday afternoon to decide whether the deal would pass muster.
Democrats Push to Raise Federal Debt Ceiling to Cover Government Spending
Senate Plan Increases Treasury Borrowing Limit to $14.3 Trillion
January 21, 2010 By Kim Linton http://www.associatedcontent.com/article/2616697/democrats_push_to_raise_federal_debt.html
In light of rising dissatisfaction with current policies and increased government spending, the White House hopes to quickly raise Treasury borrowing limits before the congressional 2010 elections. Only a few hours after Senator Scott Brown's victory in Massachusetts, the Senate opened debate on a plan to increase the nation's debt ceiling by $1.9 trillion.
The current national debt limit, $12.4 trillion, is expected to be exceeded within the next month. Of the $12.4 trillion, over $7.5 trillion (54 percent of the nation's GDP) is borrowed from foreign governments and private investors. The Senate plan will increase the Treasury's legal borrowing limit to $14.3 trillion - which is about the size of our entire economy.
In August of 2009, Treasury Secretary Timothy Geithner sent a letter to top lawmakers asking Congress to move as soon as possible to increase the nation's debt ceiling. Geithner wrote, "It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations."
Because of legislation passed in 1917, Congress is required to set a limit for the national debt and must vote to raise it before that limit is exceeded. Raising the debt limit is always a tough vote for the majority party, and not surprisingly, some Republicans are voicing their opposition to the proposed plan. Rep. Tom Price (R-GA), leader of the Republican Study Committee in the House said, "It's a clear sign that we've got a federal government that is out of control from the fiscal standpoint. I don't see how anyone can vote in favor of an increase in the debt ceiling and say they're doing it in a responsible way."
Coinciding with the Senate vote to raise the national debt limit, President Obama's official budget plans will be released after his State of the Union Address next week. Apparently the President plans to announce "historic reductions" in some parts of the federal budget. But unfortunately, those reductions may seem minuscule compared to his current and future plans to increase government spending.
Sources:
Washington Post: Senate Discussing a Raise in National Debt Ceiling to Above $14 Trillion
Washington Post: Senate Discussing a Raise in National Debt Ceiling to Above $14 Trillion
The Heritage Foundation: Obama Hopes to Change the Subject
Wall Street Journal: Lawmakers Urged to Raise Nation's Debt Limit
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