Morning Bell: Bernanke Helps Defuse “Default”
Conn Carroll /
Our federal government is currently $14.1 trillion in debt. The vast majority of the American people believe this number is far too high and on track to go far higher. Fortunately, Congress created a mechanism to force itself to reexamine its spending habits when budget deficits got out of control: the debt ceiling. Once total outstanding federal debt reaches the limit, the Treasury Department is no longer authorized to issue new debt. Like the states and family budgets, the federal government would then be forced to make do with tax receipts. The current debt limit is $14.294 trillion. The Treasury Department predicts that we will reach that limit sometime this spring. Somewhere between 62 percent and 71 percent of the American people oppose raising it. Will Washington listen to the American people? Or will they heed the Obama Administration and just continue their reckless spending ways?
In defense of never-ending reckless spending, Treasury Secretary Timothy Geithner has been trying to bamboozle Congress into raising the debt ceiling so that the Obama Administration can continue their free-spending ways unchecked. Geithner claims that unless the debt ceiling is raised by “the end of the first quarter of 2011,” the “full faith and credit of the United States” would be “called into question” and there would be “catastrophic damage to the economy.” As we have detailed before, this is simply false. In the fall of 1995, the federal government reached its $4.9 trillion debt ceiling. Congress refused to raise it. The world did not end. Instead, Treasury took several measures during the period to raise funds to meet federal obligations without exceeding the debt ceiling. Was, as Geithner warns, the “full faith and credit of the United States … called into question”? No. Was there “catastrophic damage to the economy”? No. (more…)