Debt Ceiling Debate- can government shutdown 2011and raising debt limit be the ultimate answer?
Over the decades, the issue was within the sphere of conspiracy theory and contrarian news but now the downgrade of US debt is becoming more conspicuous as budgetary and gravest financial crisis come to a head. American economy has reached an irreversible state where the invariable question raised by everyone is; will the government lift the debt ceiling up and dent its credit rating? Or the lawmakers will still be in a state of confusion over how to close the $5 billion gap between what spending cuts that republicans want badly and democrats oppose? It is being found the majority of Republicans and independents would actively vote against raising the debt ceiling whereas 42 percent of the Democrats were in favor of it. Debt management is out of question at this point of time. To find a possible solution to this grave issue, we have to wait and watch.
It is anticipated, the Congress will have to pass an increase to the Federal Debt Limit which currently stays at $14.294 trillion – or there will be a high risk of defaulting on interest payments on the nation’s debt. The power struggle of congress over a vote which would expand the Federal government’s borrowing authority by an additional trillion dollars is the nine most recent increases since 1997 have averaged $977 billion in new borrowing authority. The Treasury set the limit till May 16, by which Congress must act to insure the sustained functioning of the ruling government with some of its financial high-wire acts, which could be pushed further into June.
According to administration officials and private sector economists without this above mentioned strategy the U.S. government and private sector economy would confront a catastrophic end. The reason is simple even the world’s biggest debtor, Uncle Sam misses his credit card payments on time no one would like to lend money to him with a reasonable rate in future. Initially people had discarded the debt ceiling debate in Congress as nothing but sheer eyewash, and believed as US dollar being the reserve currency of the world and United States has the privilege of printing the US dollar, such downgrade will never take place.
However, the current financial scenario points towards a different picture. Tim Geithner, Treasury Secretary made it clear in his letter to Congress regarding the debt ceiling in January of 2011 that we Americans are Literally On the Brink of Catastrophic Collapse. In another letter on April 4 to Congress he mentioned clearly “If Congress failed to increase the debt limit, a broad range of government payments would have to be stopped, limited or delayed, including military salaries and retirement benefits, Social Security and Medicare payments, interest on the debt, unemployment benefits and tax refunds,”
He further believes “this would surely cause severe hardship to American families and raise questions about the American’ ability to defend our national security interests. In addition, defaulting on legal obligations of the United States would lead to sharply higher interest rates and borrowing costs, declining home values and reduced retirement savings for Americans. Default would cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.”
Private sector economists wanted everyone to enjoy the opening act as the current shutdown would shave 0.2% of GDP a week, which will be quickly restored once the deal is settled. However, every American’s worst fear is the alarming issue of Debt Ceiling mega group which can force the country back into recession any time if they want to and can fundamentally obstruct the government to fund its programs in future.
US Presidential Candidate Ron Paul questions the Bankster fraud
Recently a poll conduced by Fox News threw some surprising results. When the voters are asked whether they would favor increasing the debt ceiling if they were in position of lawmakers, a huge 62% voted against raising it, even at the cost of doing away with the government and only one out of four voters were found to be in favor of raising the limit. So, the bottom line is, with no conclusion reached yet the entire world waits eagerly to see what lies ahead.
Author Bio : This is a Guest Post by Marc Brown, a Digital Journalist associated with digitaljournal.com.