Time to Face the DeficitDecember 10, 2009 - by Donny Shaw
The financial collapse, the Wall Street bailout and the two wars we have been fighting for the past seven years have brought the federal deficit to a record high. In order to keep the country from defaulting and to accommodate a new jobs bill to stem off a growing unemployment problem, Congress is now upping the amount they plan to increase the public debt ceiling by.
In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.
“We’ve incurred this debt. We have to pay our bills,” House Majority Leader Steny Hoyer told POLITICO Wednesday. And the Maryland Democrat confirmed that the anticipated increase could be as high as $1.8 trillion — nearly twice what had been assumed in last spring’s budget resolution for the 2010 fiscal year.
The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes over the coming year. But the enormity of the number could create its own dynamic, much as another debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts nearly 25 years ago. […]
Though Treasury can buy itself time by moving assets around, it is already coming close to the current debt ceiling of $12.1 trillion. Last spring, the Democratic-backed budget proposed to raise this to about $13 trillion, but given the current pace of borrowing, no one now expects that will be sufficient to get through 2010.
In fact, fiscal year 2009 ended Sept. 30 with a $1.4 trillion deficit, which demanded higher-than-expected Treasury borrowing. Most of that was due to the downturn in the economy and spending commitments in place before Barack Obama took office. And as much as Republicans point to the president’s economic recovery bill last February as the culprit, only a small share of that $787 billion package was spent by Sept. 30.
The House approved a bill in April to raise the debt ceiling by about $1 trillion, but it never went through the Senate. You can view that bill here. One thing you’ll notice is that it has no sponsor. It’s the only bill in Congress without the name of at least one member of Congress attached to it. Why? Basically, because the House has a special rule (RULE XXVIII) that allows the Clerk to draft these bills because no member of Congress wants their name on a bill to raise the debt ceiling. The Rule also allows the bill to be automatically considered as passed by the House, allowing the House to raise the debt ceiling without putting their names down on record with an actual vote.
The new bill to raise the debt ceiling by $1.8 trillion probably will have to have a sponsor, though. Rule XXVIII only lets the Clerk draft public debt bills after Congress passes a budget resolution that sets forth a level of debt that is higher than what would be in effect under existing law. In this case, they are going to be raising the limit preemptively.