U.S. to hit debt limit before election day

U.S. to hit debt limit before election day. This will no doubt be a big issue in the campaign. We are "spending too much, borrowing too much, and putting our nation's fiscal stability at risk."

'via Blog this'

DOW falls below 12,000. Why?

The debt ceiling bill passed today and the DOW plunged 265 points and closed below 12,000. What does this mean?

This can only mean one of two things (or both): either 1) there never was any economic calamity to be feared if the debt limit was not raised, or 2) essentially zero investors thought there was any chance the ceiling would not be increased. On any interpretation, key aspects of the media narrative of the last month or more were wrong.

Or maybe they just don't believe the deal went far enough. 

Do we have a deal?

Jennifer Rubin: A deal on the debt may be coming together.

"The president gets a deal through 2012; the House gets its cuts; and Sen. Mitch McConnell (R-Ky.) gets his commission. And the GOP extremists don’t get their balanced budget amendment passed and sent to the states or the satisfaction of blowing up the deal. As for the country, if it passes, the agreement will take us from the days of automatic debt-ceiling raises to the first, tentative steps toward fiscal sanity."

More here. And here.

Over to you, Harry

The House has passed the Boehner debt bill 218-210. No Dem voted for it.

What if we don't raise the debt ceiling?

Megan McArdle: What will happen if we really don't raise the debt ceiling? Very good summary of possibilities and probabilities.

Playing with fire

Jennifer Rubin:

A Republican aide e-mails me: “The Speaker, Sen. Reid and Sen. McConnell all agreed on the general framework of a two-part plan. A short-term increase (with cuts greater than the increase), combined with a committee to find long-term savings before the rest of the increase would be considered. Sen. Reid took the bipartisan plan to the White House and the President said no.”
If this is accurate the president is playing with fire. By halting a bipartisan deal he imperils the country’s finances and can rightly be accused of putting partisanship above all else. The ONLY reason to reject a short-term, two-step deal embraced by both the House and Senate is to avoid another approval-killing face-off for President Obama before the election. Next to pulling troops out of Afghanistan to fit the election calendar, this is the most irresponsible and shameful move of his presidency.
As for the House, why not pass the deal that Sen. Harry Reid agreed to, send it to the Senate and leave town? Enough already.

This incident should be remembered when we are assessing blame at election time.

Debt ceiling analysis

Michael Barone on the debt talks: "What I think I saw early Friday evening was a President who saw his project of expanding America’s welfare state to European proportions meeting serious reverses. And a Speaker has determinedly sought to fulfill the mandate that voters gave his party and his chamber in November 2010 and who has taken command of the negotiations."

SS checks not at risk

This statement from the Stanford's Hoover Institution argues that your Social Security check is not at risk even if Congress does not raise the debt limit, and explains what is going to happen, or at least what is supposed to happen. So Obama's recent statement (“I cannot guarantee that those [Social Security] checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.") is merely a scare tactic.

What's at stake in debt ceiling debate? (again)

Michael Walsh answers the question, What is the debt ceiling debate really about?

Forget all the numbers being tossed around in Washington -- the millions and billions and trillions of dollars being taxed, borrowed, printed and spent as the country approaches the Aug. 2 debt-ceiling deadline.
Forget the political jockeying for position between a president desperately seeking re-election in 16 months and a Congress equally desperately seeking not to be blamed for spending even more money that we don't have.
Forget the fact that such "entitlements" as Social Security and Medicare -- social-insurance programs that the public long thought to be actuarially sound -- have been exposed as little more than legal Ponzi schemes, paying today's benefits out of tomorrow's borrowed receipts.

Getty

Welfare mentality: When did it become the federal government's primary job to send millions of Americans checks?

Instead, just ask yourself this simple question: When did it become the primary function of the federal government to send millions of Americans checks?
For this, in essence, is what the debt-ceiling fight is all about -- the inexorable and ultimately fatal growth of the welfare state. If you don't believe it, just look at President Obama's veiled threat to withhold Grandma's Social Security benefits if Congress doesn't let him borrow another $2 trillion or so to get himself safely past the 2012 election.
The feds now borrow 43 cents of every dollar they spend. Under Obama, outlays have soared to nearly a quarter of GDP (the historical average is just under 20 percent) -- and once ObamaCare starts to fully kick in around 2014, it will only rise.

What's at stake in debt ceiling debate?

Michael Barone on the debt ceiling debate:

The bedrock issue is whether we should have a larger and more expensive federal government. Over many years federal spending has averaged about 20 percent of gross domestic product.

The Obama Democrats have raised that to 24 or 25 percent. And the president's budget projects that that percentage will stay the same or increase far into the future.

In the process the national debt as a percentage of gross domestic product has increased from a manageable 40 percent in 2008 to 62 percent this year and an estimated 72 percent in 2012. And it's headed to the 90 percent level that economists Kenneth Rogoff and Carmen Reinhart have identified as the danger point, when governments face fiscal collapse.

This is a level of spending as a share of the economy Americans haven't seen since World War II. It seems more like Europe than like the America we have known.

Surprising 2006 debt limit vote

Drudge: Every Democrat Senator, including Obama, voted against raising the debt limit in 2006.

Who is paying attention to the debt ceiling?

Contrary to President Obama, Americans are paying attention to the debt ceiling and they are opposed to lifting it.

President Obama has run into a brick wall. It’s called the will of the people. The reason he can’t force Republicans to raise the debt ceiling is that he will not countenance a deal that cuts spending but doesn’t raise taxes. He seems unable to grasp that 236 Republicans in the House of Representatives and 41 Senators have signed the Taxpayer Protection Pledge, promising that they will “oppose any and all efforts to increase the marginal income tax rates for individuals and /or businesses…and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”
The newly elected Republicans in the House believe they were sent to Congress to harness runaway government by reducing spending. They are, shockingly, committed to the principles on which they campaigned. This is such a foreign concept in Washington that it seems President Obama can’t wrap his mind around it. 

Dithering on the verge of default

A mini debt-ceiling deal may be in the works.

Dear Congress: No

Dear Congress: Your credit application has been turned down. 

“Our records indicate that your annual income for the 2011 taxable year was $2,170,000,000,000. You have requested a credit limit of $17,000,000,000,000. These figures exceed the American Public’s debt-to-income guidelines for credit issuance.”

Ed Morrissey: 71 percent of Americans oppose raising the debt ceiling.

Both parties are willing to play chicken with it, but it's got to stop somewhere!