GOP Had To Cave On Debt Limit So Now Crisis Draws Near

Why did the Republicans in the House and Senate feel a need to agree to raise the debt ceiling? Because they were the ones who agreed to the expenses that required greater debt. The debt deal and the farm bill both made it inevitable. There was no way to claim the moral high ground.

So now we have, of course, a record level of Federal debt.

The debt of the U.S. government has increased by $2.678 trillion in the 2.5 years since House Speaker John Boehner (R.-Ohio) completed his first deal to put legislation increasing the debt limit through a Republican-controlled House of Representatives.

On Aug. 2, 2011, President Barack Obama signed legislation, approved by the Boehner-led House, permitting the Treasury to increase the debt by $900 billion. Since then, the debt limit has been repeatedly suspended by legislation that needed to pass through the Republican-controlled House.

Yesterday, the House once again passed legislation to suspend the debt limit—this time through March 15, 2015, which is after November’s mid-term congressional elections.

This time, the House voted 221 to 201 (with 10 members not voting) to suspend the debt limit.  The majority consisted of House Democrats plus 28 House Republicans–including Speaker John Boehner (R.-Ohio) and House Majority Leader Eric Cantor (R.-Va.).

As a result of this extra debt load, the director of the Congressional Budget Office, Doug Elmendorf, has gone on record to note that we are risking a financial crisis.

“The large budget deficits recorded in recent years have substantially increased federal debt, and the amount of debt relative to the size of the economy is now very high by historical standards,” Elmendorf told the Senate Budget Committee.

“CBO estimates that federal debt held by the public will equal 74 percent of GDP at the end of this year and 79 percent in 2024 (the end of the current 10-year projection period). Such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).

Elmendorf also estimated that the economy will grow at a “solid pace” in 2014 and for the next few years. But he said the unemployment rate will probably remain above 6 percent until late 2016.

So, at one time everyone was blaming the Republicans for risking a crisis by trying to get political leverage with the debt ceiling vote. But now, by raising the debt ceiling, the GOP has done its part to move us closer to a financial crisis.

Despite Tea Party influence, the majority of Republicans in Congress seem to think the government is omnipotent and that its credit is unlimited. By the time they realize they are suffering under a delusion it may be too late.