Posted on Monday, 14th December 2009 by admin
Congress will likely increase the debt ceiling by $1.8 trillion to roughly $14 trillion, before the year-end holiday recess. The House will act first, followed by the Senate.
Congress has to raise the ceiling or the U.S. government will grind to a halt in a few weeks. There’s little chance the majority, led by the Democrats, will face any substantive opposition from the minority, the Republicans. The reason? In 1995-96, the Republican-led Congress picked a fight with President Bill Clinton, D-Arkansas, and temporarily shut down the federal government. The result was a public backlash against the Republican Party.
Voters in 1996 were not only upset at essential services not operating — they were really steamed that the the party responsible for Congress’ agenda at the time, the Republicans, did not have the maturity to reach a compromise with President Clinton. Most Americans want both parties to work together — to compromise and find solutions to the nation’s problems. The high-profile government shutdown led by then-House Speaker Newt Gingrich, R-Georgia, was seen as a sign of disrespect for the American people and their public service needs: you won’t see the Republicans try that tactic again.
Economic/Fiscal Analysis: One caveat: The debt ceiling issue could get trickier, politically, if Democrats attempt to attach a large jobs bill to the debt ceiling. More than likely, the jobs program will take the form of separate legislation.
The U.S. government last balanced its budget in fiscal 2001, the last budget of President Clinton’s administration, with a $128.2 billion budget surplus. Clinton also produced budget surpluses in fiscal 2000, $236.2 billion; fiscal 1999, $125.6 billion; and fiscal 1998, $69.3 billion.
President George W. Bush took office in January 2001, proposed a 2001 income tax cut, Congress passed it, and instantaneously turned the federal government’s $128.2 billion budget surplus in to a $157.8 billion budget deficit in fiscal 2002. The U.S. government’s budget has been in a deficit ever since.
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Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Tags: Debt Ceiling, Holiday
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