What kind of political dilemma the debt ceiling is fabricating?

By Jason Holmes

After a stressful week full of debates on the debt ceiling and only with a few weeks remaining ahead of the deadline, still no conclusion has been reached. There has been ample theatrics in the meetings with the name callings, the raised voices and even the president walking out of the meeting. And still nothing important and considerable has been reached. The Americans are thus still at a dilemma as to what is going to happen to them. The debt problems increased with the recession and the households have still not been able to get out of debt with even the help and advice on debt consolidation.

The unfolding political drama

As per the estimates of the Treasury Department made in the first quarter of this year (2011), we were supposed to officially hit the debt limit within May 16th. However, the debt ceiling deadline has been extended till 2nd August and so now the political parties and the government are frequently holding meetings so as to reach a conclusion. Obama has mentioned that he wants at least the outlines of the deal in place by 22nd of July 2011, so as to allow some time for the Congress to bring out the agreement into law and pass it within the stipulated time. But mostly, the meetings are resulting into nothing other than blaming each other for the situation and each other for their inability to reach a proper conclusion.

Not only this, as this week ends, Washington itself too had no plan or final decision to offer to the parties – a proposal that might be able to keep up to the expectations in regards to the borrowing limit. The only thing which was decided was that the country and the people, the political parties would be saved from the default.

The president is already getting excessively berated with the suggestions on the huge budget cuts and the entitlement program cuts. The House Speaker of the Republican Party John Boehner, who is said to have privately met with the president in order to lay the groundwork for a proper deal on the debt ceiling, seems to be facing the almost indomitable task of selling the tax loophole eliminations which some of the people in his chamber view as uniform to the increases in the tax.

A new poll shows that there is majority of public opposition against the possible reductions in the benefits which are provided through Social Security, and Medicare and Medicaid. Though Tim Geithner, the Secretary of the Treasury Department had said that the cuts are not going to affect common people much.

The main issue that is being questioned is that whenever the nation needs an increase in the debt ceiling, if it should be increased.  In fact, the debt ceiling has been increased at least 80 times in the last 50 years. This is a serious matter of concern for one and all. According to a Democrat strategist, Peter Fenn, the president’s stratagem of proposing a cut on the deficit by $4 trillion within the next decade is like plummeting the Republicans politically. He is of the opinion that Obama has forced the Republicans to deal with the revenue and the budget cuts. He also added that the president’s efforts are going to help him a lot in his re-election efforts a great deal next year.

However, the idea that debt creates money cannot be undermined too. Actually one of the most important ways in which the government can go on borrowing money without putting much pressure on the debt ceiling is actually by rolling out more money. This can be done if only there is more debt. In order to do that, the Fed will have to act as the lender while the government will have to go on as the spender.

2 comments to What kind of political dilemma the debt ceiling is fabricating?

  • Mariposa de Oro

    Could this actually be a case of?: Never let a good crisis go to waste, even if you have to create it yourself.

    I’m just wondering if this isn’t the usual political theater but really an excuse for the regime to grab more power for itself.

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