May 18, 2012
The Debt Ceiling, It’s Back…
Consider ThisIt’s starting to look like déjà vu all over again.
We all remember the high-stakes game over raising the debt ceiling last summer. “Not pretty” is the best way to describe that exercise.
And now, we may be headed toward debt ceiling debate 2.0. The current limit on the debt ceiling is due to expire around the end of the year. And earlier this week at a Washington, DC fiscal summit, House Speaker John Boehner declared, “Yes, allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending.”
In the House, Republicans – who are the majority party - have the tricky task of finding palatable spending cuts while at the same time trying to rescue some of the cuts to defense that are set to occur at the end of this year—all while not raising taxes. At the same time, others are looking at current events in Europe - the “eat your spinach” (pro-austerity) politicians are being thrown overboard in France and Greece and it raises questions about if that is a path that is any better. The age old debate of cutting vs. spending to invigorate the economy and ultimately tackle our debt will surely be as hot as ever. And, as importantly or even more importantly for politicians, how might these debates jeopardize their reelections.
This will play out over the next few months. But in addition to a “taxmaggedon” we should brace ourselves for a potential “debtmaggedon” as we head into the new year.