Everything You Need to Know About the Debt Ceiling
The parade is over, the balls are finished, and President Obama is back in the big white house for another four years. It’s officially back to business in Washington and at the top of the list is tackling the nation’s debt problem.
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Not Your Average Credit Card
The White House won’t roadblock a House Republican bill to suspend the debt ceiling through May 19. It’s looking like the bill could pass when it is put to a vote on Wednesday, although House Dems aren’t exactly for it.
WTF is the Debt Ceiling?
It is the total amount of money the U.S. government is authorized to borrow to pay its bills. Not to go on a shopping spree, but to cover little (and big) things we have already bought.
Who Thought This Was a Good Idea?
Congress. During World War I, Congress put a limit on how much national debt we could have. How simple! Except for the fact that every year Congress creates a budget that says how much money we should spend and also determines how much must be borrowed in case we come up short in revenue (we almost always do). So Congress gets pretty used to raising that pesky little debt ceiling roof. Often. You’d think it would be a no-brainer by now.
Piece of Cake!
No such thing as a piece of political cake on the Hill. Technically, we already hit the debt limit on December 31 but everyone was in holiday mode so the Treasury helped us out by using some maneuvers to keep us from going over the limit. These measures have an expiration date so we’ve got to figure it out or face a hot catastrophic mess that could end in the U.S. defaulting. Last time we prolonged this debate, our credit was downgraded.
Why the Drama?
Some Republicans think the only way to cure our spending problem is to take away our back up plan: borrowing. No one likes to be labeled a big spender in DC, but eventually enough people come around. Even young Senator Obama voted against a debt ceiling increase once upon a time.
Bring it on Home
The House will vote on a bill to temporarily suspend the debt limit until May 19. After that, the nation’s borrowing authority will increase to accommodate what we borrowed over those three months, just like magic. But there’s a catch: Congress has to pass a budget for next year by mid-April. If they don’t, the dysfunctional chamber holding things up will have its pay suspended. Really puts a dent on those summer plans. Oh, and the Senate hasn’t passed a budget in four years, so the pressure is on for Senate Dems to get along with their Republican brethren.
The Why (Do I Need to Skimm?)
It’s the first big test for the new Obama. We’ve got to find a way to get along and work out our money problems, or we’ll really mess up our finances—again. We’re also really tired of talking about Congress fighting.
Photo courtesy of DonkeyHotey.
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