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In this age of instant information and sensationalism it seems there are constantly new neatly packaged buzzwords being introduced that contain the latest threat to our well being as citizenry. These terms range from threats to our mental safety like NST and tech-life balance, to safety measures at our schools with a SRO (School Resource Officer). But lately we've been hearing a lot about sovereign debt, fiscal cliffs and debt ceilings, both carrying ominous imagery with them; one of a steep drop off into an endless financial abyss, and the other a fast approaching claustrophobic credit barrier.
Since we've managed to narrowly avoid the fiscal cliff for the time being we'll focus more on this debt ceiling deadline (DCD) that is said to be approaching anywhere from the middle of February to the beginning or middle of March depending on how maneuverable the department of the treasury can be.
According to a treasury department official, the U.S. officially reached the debt ceiling on December 31st, 2012.
In a letter written directly to the squabbling congress by Tim Geithner, the treasury secretary urged lawmakers to increase the debt limit or face certain negative consequences.
Even a very short-term or limited default would have catastrophic economic consequences that would last for decades. Failure to increase the limit would be deeply irresponsible. For these reasons, I am requesting that Congress act to increase the limit early this year, well before the threat of default becomes imminent... - Tim Geithner
There's something to be said about this debate just now coming to public light, seeing as how the U.S. has been voting to alter the debt limit since the 1940's with little or no recognition from everyday Americans. Just how many times has the debt limit been changed in that time? Since 1944 it has been changed 104 times, 94 increases and 10 decreases. The last time this debate raged we were brought to the brink of financial collapse in a game of political chicken that wound up costing the U.S. it's AAA credit rating, and the U.S. taxpayers $1.3 billion in wasted money.
In order to avoid this political circus the president has thrown his weight into the ring.
They [congress] will not collect a ransom in exchange for not crashing the American economy...The full faith and credit of the United States of America is not a bargaining chip. - President Obama
So why is this now such a hot topic if it has been happening for years? Why are lawmakers just now beginning to take notice of the federal governments wild spending habits? One reason may be the recent surge in debt taken on by the fed during the 2008 financial crisis that saw the U.S. balance sheet balloon from $11.31 trillion when the Democrat was sworn in, to $14.291 trillion.
But if the Government basically has the power to print money at will, why have a debt ceiling at all? Why not spend as we need in order to pay our bills? According to Ben Bernanke, the man with his finger on the printing press trigger, that's not a bad idea.
I think it would be a good thing if we didn’t have [the debt ceiling]... If the Congress is approving spending and it’s approving taxing, and those two things are not equal... the way to address it is by having a sensible plan for spending and a sensible plan for revenue and make decisions about how big the government should be or how small it should be.
But there is a clear divide in congress and strong opposition against raising the DC that does not see things the way Bernanke or Obama do, and have already shown they are prepared to dig in come hell or high water. Speaker of the House John Boehner stated in response to Obama's earlier statement,
The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved - John Boehner
So how will it end this time? As the two sides posture themselves for what is looking like another ugly brawl, regardless of where you stand politically it appears that rather than a clear winner emerging from the dust we'll have the same result as last time; the innocent tax paying bystander becoming the battered loser.
By Carter Smith exclusive to ResourceSpots.com