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Washington Hits the $16.7 Trillion Debt Ceiling with $300 Billion in New Debt
Quote:[Image: BL-debt-ceiling-2013-v3.jpg]

On May 19, the United States hit its debt ceiling after adding $300 billion in more debt since lawmakers suspended the ceiling in February.

But the cash won’t run dry until at least Labor Day, according to Treasury Secretary Jack Lew, whose department can employ a variety of cash management tools to continue spending beyond the official debt deadline.

Congress last hit the debt ceiling in January.

The President and Congress then decided to “suspend” the debt limit through May 18. This is the first time that lawmakers adopted a debt ceiling date instead of a dollar amount. The Congressional Budget Office explains:

On May 19, the debt limit will be raised to its previous value—$16.394 trillion—plus the amount of borrowing that occurred while the limit was suspended (that is, from early February to May 18).

In other words, the President and Congress decided in February that they would continue borrowing through May 18, with the new debt limit becoming the then-current limit of $16.394 trillion plus whatever was added on since then.

Washington racked up $300 billion in more debt in less than four months, making the current limit $16.7 trillion.

This is the pattern of recurrent budget negotiation crises:


Spend some more;

Run up against the debt ceiling;

Resort to “extraordinary measures” to ward off a possible default for a while; and finally,

Settle for inadequate measures that fail to curb soaring debt in the future.

We’ve entered stage 4, and hitting the debt ceiling should prod lawmakers to accelerate discussions over substantial spending reductions to improve the U.S. fiscal outlook.

Despite lower deficits in the short term, the U.S. budget trajectory continues on a fiscal collision course as spending on Social Security, Medicare, Medicaid, and Obamacare is a ticking debt bomb.

Stage 5 needs to become: Adopt substantial bipartisan policy reforms that significantly slow spending and put the budget on a path to balance in 10 years or less.

Quote:Lew asks Congress for debt increase, says it’s 'not open to debate'

Treasury Secretary Jack Lew on Friday urged congressional leaders to raise the debt limit and insisted that the White House is not going to negotiate over the increase because lawmakers have "no choice."

"We will not negotiate over the debt limit," Lew wrote. "

The creditworthiness of the United States is non-negotiable.

The question of whether the country must pay obligations it has already incurred is not open to debate."

Lew said that while President Obama is willing to discuss plans to reduce the nation's deficit with Congress, those talks must be kept separate from any effort to raise the nation's debt cap.

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