Professor of fiscal irresponsibility, Obama, enlightened us in his press conference:
- “So let me explain this. If Congress refuses to raise what’s called the debt ceiling, America would not be able to meet all of our financial obligations for the first time in 225 years.
- And because it's called raising the debt ceiling, I think a lot of Americans think it's raising our debt. It is not raising our debt. This does not add a dime to our debt.
- It simply says you pay for what Congress has already authorized America to purchase, whether that’s the greatest military in the world or veterans’ benefits or Social Security. Whatever it is that Congress has already authorized, what this does is make sure that we can pay those bills.
- Now the last time that the tea party Republicans flirted with the idea of default, two years ago, markets plunged, business and consumer confidence plunged, America’s credit rating was downgraded for the first time, and a decision to actually go through with it, to actually permit default, according to many CEOs and economists, would be — and I’m quoting here — “insane, catastrophic, chaos” — these are some of the more polite words.
- Warren Buffett likened default to a nuclear bomb, a weapon too horrible to use. It would disrupt markets, it would undermine the world’s confidence in America as the bedrock of the global economy, and it might permanently increase our borrowing costs which, of course, ironically would mean that it would be more expensive for us to service what debt we do have and it would add to our deficits and our debt, not decrease them.
- There’s nothing fiscally responsible about that. Preventing this should be simple. As I said, raising the debt ceiling is a lousy name, which is why members of Congress in both parties don’t like to vote on it, because it makes you vulnerable in political campaigns. But it does not increase our debt. It does not grow our deficit, it does not allow for a single dime of increased spending. All it does is allow the Treasury Department to pay for what Congress has already spent.”
More Washington Post
So let’s review. Raising the debt ceiling does not add a dime to the debt, but not raising it adds to the deficit and debt. Got it? He can see how increased borrowing costs add to our debt; but raising the debt ceiling — because we are right up against it — does not add anything to debt. Nope.
| Gross Federal Debt |
Debt Held by Public |
Debt Held by Federal Reserve |
|
| FY 2014* | $18.2 trillion | $11.6 trillion | $1.6 trillion |
| FY 2013* | $17.2 trillion | $10.7 trillion | $1.6 trillion |
| FY 2012 | $16.1 trillion | $9.6 trillion | $1.6 trillion |
| FY 2011 | $14.8 trillion | $8.5 trillion | $1.7 trillion |
| FY 2010 | $13.5 trillion | $8.2 trillion | $0.8 trillion |
| FY 2009 | $11.9 trillion | $6.8 trillion | $0.8 trillion |
How many times have we increased the debt ceiling under Obama? A few now. Why? I suggest the debt ceiling has been raised many times, over time, which allowed the debt to rise. How else could the debt have risen above the ceiling ? So why, then, do they always link hitting the debt ceiling with default — if they are not going to add to the debt?
Government debt in the United States has steadily increased from $2 trillion in the mid 1980s to over $17 trillion today. But as a percent of GDP it has grown from 55 percent to over 100 percent of GDP today.
In the Crash of 2008 government debt increased sharply to bail out the banks and to provide “stimulus” to the economy. Debt reached 104 percent of GDP in 2009. But debt is expected to plateau at about 122 percent of GDP in the next few years.
But maybe in Obama’s world the GDP could be just shrinking that much.
Then he closed his box of tricks with this:
Now, the good news is… Our housing market is healing; we’ve cut the deficit in half. Since I took office, the deficit is coming down faster than any time in the last 50 years.
He has some real sophistry working there. Note he is talking about the “deficit” now. So if the budget deficit beginning in his first term was running all time highs, then he has decreased it from that level. Gee, see isn’t that great?
If its so great then why do we have to keep raising the debt ceiling again and again?(and probably again in the near future.) Could it be that we were so far beyond budget limits that anything short of that looks like a big improvement?
Right Ring 