Chris Stirewalt makes a great point here....if Armagedden is just days away, why is Obama traveling across the nation trying to drum up money for his reelection???? Why wouldn't Obama be back in Washington working on trying to get this settled? The reason is that there is no Armagedden if the debt limit isn't increased ....and that's what should happen!
If We’re Eight Days Away From the Start of a Global Depression, Why is Obama Kicking it in Cali?
By Chris Stirewalt Published April 21, 2011
Terms of Debt Limit Debate Still in Flux
-- Approximate amount of borrowing power the federal government has remaining under the current debt ceiling.
Congress is in recess and President Obama is campaigning and fundraising in California, but the government is less than 10 days away from what administration officials have deemed an economic Armageddon.
Is the federal debt ceiling not as big a deal as we’ve been told? Can Treasury Secretary Tim Geithner begin to slow down borrowing to extend the deadline? Or is there just a serious lack of urgency here?
The federal government borrowed $3.8 billion on Tuesday. That’s the last day’s data available and fairly typical for a government that borrows about $125 billion a month – approximately 40 cents of every dollar it spends.
The current cap on federal borrowing is $14.29 trillion dollars, last increased by $1.9 trillion in February of 2010. The government’s debt is now something like $14.26 trillion. If borrowing remained at a steady clip, the government would exhaust its remaining $33 billion in credit sometime on April 29.
The first scheduled meeting of Vice President Biden’s bipartisan negotiating group isn’t set until May 5. Seems like they should have checked the calendar, yes?
House Republicans are itching to get the fight going. House Majority leader Eric Cantor, tapped by Speaker John Boehner to represent the House GOP in the Biden negotiations, said Wednesday that “…if the president and our Democratic colleagues refuse to accept serious reforms that immediately reduce federal spending and end the culture of debt in Washington, we will not grant their request for a debt limit increase.”
This is the strongest suggestion yet from Cantor that he is willing to actually say no to the Obama request.
But we don’t know exactly what the request is. Geithner has declined to give an exact date for the “calamity” he has foretold, rather saying that it will be sometime between the end of April and the middle of May. He has also declined to tell members of Congress how much more money he wants the authority to borrow, suggesting that they should decide that themselves.
The president is raising money from Silicon Valley and Hollywood, Congress is on Easter break until May 2 and Geithner, the guy who does the borrowing, won’t even say how much he wants. What the heck is going on here? Is this an Armageddon-calamity-disaster-worldwide depression thing or not?
First, the administration has considerable latitude when it comes to borrowing. How much it borrows and which dollars it spends first have a lot to do with how fast the president wants to gnaw through his credit limit.
Second, it helps Democratic negotiators for the discussion to take place as close to the cliff as possible. The less time for dickering and the closer the crisis, the easier it will be to paint Republicans as risking the destruction of Western civilization as we know it.
But reaching the debt ceiling initially means that the government can’t keep borrowing that $3.8 billion a day. It doesn’t mean defaulting on federal loans and creating the credit Armageddon of which the White House has warned. It just means that government has to operate on about $8 billion a day instead of $12 billion.
But since the $8 billion would have to include paying interest on money already borrowed, which varies by day depending on bond maturations, etc., the available pool of cash to operate the government might be as little as $5 billion or $6 billion per day.
The administration is negotiating over the debt-ceiling bump on the assumption that as soon as the government can’t operate at full bore borrowing it will blow up its credit rating and default on its obligations.
Republicans, instead, are negotiating from the perspective that not raising the debt ceiling means the federal government will have to shut down half of its operations to continue to meet its obligations. By Republican estimations, that half government could go on operating while negotiations continued over the full package.
Whichever side wins this framing round of the debate – immediate crisis threatened by Obama or the partial shutdown offered by the Republicans – will have the upper hand in the debt deal. Here, the administration has the initial advantage because Geither has so much latitude in arranging spending and debt obligations.
To minimize his advantage, House Republicans will be trying to pin down the administration on the specifics – when the ax will fall and how much the president wants – in a bid to get the negotiations jumpstarted.
Perhaps the president hasn’t noticed the impending doom of which he has warned. More likely, the administration understands that calamities of which it has warned are not so imminent as suggested.
The magic moment in all of this will be Monday, May 2 when Congress gets back to work and the bipartisan Gang of Six in the Senate unveils its plan. If that sucker doesn’t get off the ground quickly, May will be an ugly month in Washington.