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Economy
US House rejects higher debt ceiling
2011-06-02
[Iran Press TV] The Republican-controlled US House of Representatives has turned down a bill intended to raise the country's $14.3 trillion borrowing limit.

All Republicans flatly rejected the measure that would raise the US debt ceiling by $2.4 trillion, a move that Democrats described as political posturing, according to a UPI report.

US politicians voted 318-97 to defeat the measure, in yet another sign of growing division between Republicans and Democrats. All Republicans were opposed to the increase, as were most Democrats.

Following the voting, House Speaker John It is not pronounced 'Boner!' Boehner
... the occasionally weepy leader of House Republicans...
 said that hiking the debt limit without implementing major spending cuts would prove detrimental to the US economy. "Today the House stood with the American people and said very clearly that this course of action is unacceptable," he said.

However,
The mauve However...
 last week, the Democratic-controlled Senate rejected the Republican budget proposal, which considered serious spending cuts and a major change in the country's healthcare program for the elderly.

The recent rejections of legislative proposals comes two months ahead of the crucial August 2 deadline for raising the debt ceiling, despite efforts by US Vice President Joe Foreign Policy Whiz Kid Biden
The former Senator-for-Life from Delaware, an example of the kind of top-notch Washington intellect to be found in the World's Greatest Deliberative Body...
 to fill the gap by holding a series of meetings since early May.

Republicans have said they are ready to make concessions on their plans to cut healthcare costs to help reduce trillions of dollars from the US budget deficit. They previously offered cuts in benefits for the elderly as well as the Medicare and Medicaid healthcare funds. Medicare and Medicaid represent nearly a quarter of all US federal spending.

Democrats, however, have opposed Republican plans despite claiming that they too want to curb the budget deficit. They suggest that deficit reduction should be accomplished by raising taxes on the wealthy.

Experts say that failure to increase the debt limit could be devastating for the US and other economies around the world.
Posted by:Fred

#7  Yep. It can last longer than you might expect - longer than a household could - because the US and its currency occupy a unique position in the world. Also, the government has an option besides borrowing that households don't: printing money, which is what the Fed's "quantitative easing" amounts to. Legal counterfeiting. Flooding the markets with funny munny is what's keeping stocks afloat, while every other economic indicator is screaming STALL. Like pumping a dying man full of cocaine. Absent a radical change in his fundamental underlying condition, he's still gonna die.

So no, this won't end well.
Posted by: RandomJD   2011-06-02 23:35  

#6  So then we are living beyond our means. How long can that last?

The thing that's disturbing here is that the people who got us into this mess are still running things and they don't show any signs of changing their ways. I don't see this ending well.
Posted by: Ebbang Uluque6305   2011-06-02 17:59  

#5  How is it "devastating"? It doesn't mean we're not gonna repay the debt we already have, does it? All it means is we're not gonna incur any more debt, right?

Ebbang: correct. However, this would be devastating because the current gap between revenues and expenses is about $1.5 trillion/year. So if the US government can't borrow any more, the FY 2012 budget would have to be cut by almost half. Politically impossible. The fight that almost shut down the government in April resulted in a compromise of $35 billion in cuts - about a week's worth of spending. A drop in the bucket.

There is no flaw in your common sense. Problem is, this household has come to rely on credit for almost half its expenses. Try snatching the credit card away from someone used to throwing money around like that (and those who feel entitled to their handouts): that's where "devastating" comes in.
Posted by: RandomJD   2011-06-02 17:47  

#4  Is the interest growing faster than we can pay it down?

It is if you can't imagine cutting the size of a bloated, cumbersome, bureaucratical power pyramid.
Posted by: gorb   2011-06-02 17:01  

#3  Some in our government seem to be more fixated on Weinergate at this moment instead of trying to get the damned fiscal mess they created straightened out. Time to clean house again if things don't get straightened out.
Posted by: JohnQC   2011-06-02 16:37  

#2  How is it "devastating"? It doesn't mean we're not gonna repay the debt we already have, does it? All it means is we're not gonna incur any more debt, right?

It sounds like common sense to me. If your credit card is maxed out you don't get another one and keep spending. You stop spending and pay down the balance on the card you have. Is that too much to ask from our elected representatives?

Or is there something here I don't understand?

Is the interest growing faster than we can pay it down?

Does it mean we're not gonna borrow from Peter to pay Paul?
Posted by: Ebbang Uluque6305   2011-06-02 13:36  

#1  failure to increase the debt limit could be devastating for the US and other economies

This is a true statement. It is also true to say that increasing the debt limit would be devastating. The essential question is which would be more devastating.
Posted by: Glenmore   2011-06-02 11:08  

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