Obama and the Debt, Debt Limit and Default.. This is about all the news and spin coming out the White House and Washington D.C., pundits these days. If you can get by all of the hue and cry over Executive Orders regarding gun control and the Second Amendment, we do find Obama, the flip-flopper.
Currently it stands at $16,436,306,261,920.62 and growing. To put it in an amount you can understand, of the 314,243,667 citizens of the U.S., that amounts to $52.304.34 for each and every one of us.
The Debt Limit.
Let’s put the Debt Limit or what some call the Debt Ceiling in some historical perspective. The federal government can only pay for expenditures if Congress has approved the expenditure in an appropriation bill. The year 1917 is a crucial year in this story. Prior to 1917 Congress was involved in the daily authorization of each and every federal expenditure. With the onset of World War I, the process was changed, and a debt ceiling was created. Since that time, the U.S. Treasury may borrow as it sees fit, as long as it keeps the total amount below the debt ceiling.
Moving forward to 2013, the U.S. Treasury hit the debt ceiling on December 31, 2012. There are points and counter points as to how best to address this issue. The U.S. has already gong through one credit downgrade in 2011 with Standard and Poor’s moving the the U.S. government debt rating from AAA to AA+. This is the first time in the history of of credit ratings that the U.S. rating has been lowered. Standard and Poors’s statement of the downgrade read in part,
– The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
Even Standard and Poor’s was aware in 2011 that the U.S. and the Obama Administration had a spending problem. And of course let’s not forget Senator Obama’s take on raising the debt limit.
Ok, so let’s get this out of the way. Yes a U.S. Federal default would be bad. That being said, and with that elephant in the room identified, lets move on. Currently the only way that the federal government would default on it’s obligations is if it willingly choose to do so. Since the debt ceiling was reached at the end of December 2012, the treasury has been using various accounting schemes and smoke and mirrors to continue to move forward. Once all of those schemes have run their course, the government is on a pay as you go diet. They are limited in their spending by the revenue taken in by taxes and other revenue generating means.
One would hope that cooler heads would and will prevail in this ongoing political fight. To think that the Obama administration would knowingly and willingly default on the obligations of the federal government is a fearful premise. President Obama’s statement earlier this week, that “Social Security checks and veterans benefits will be delayed” if Congress doesn’t raise the debt limit is dishonest, disingenuous, and more importantly, dishonors the office he holds.
Funny, irreverent, cynical, optimistic, dreamer and Taurus with a stubborn streak, and a fondness for Jerry Garcia Ties, Paul thrives on working hard with smart people. Attending Taylor University, and then gaining education in Public Affairs, Visual Information and Broadcasting, Paul graduated from DINFOS at Fort Benjamin Harrison, Indiana. Paul spent nine years as a Navy Journalist, covering the first Gulf War as the Public Affairs Officer for the Atlantic Fleet Seabees. A former, Radio DJ, and Program Director, Television Program Director, Public Affairs Officer, Speech Writer, and Award Winning Radio Spot writer, Paul resides now at altitude in Denver with his wife and three cats.