Dual crises: Shutdown, debt limit could merge

A look at what you need to know about the two fiscal matters
Associated Press
Oct 13, 2013

Democrats and Republicans regularly warn about the dire consequences of legislation they don't like. Often it's gloom-and-doom partisan hype.

This time, though, people already are feeling the fallout as twin tempests — the partial government shutdown and a potential default on the country's debts — threaten to form a single economic-policy superstorm.

The shutdown began Oct. 1 because a divided Congress couldn't agree on a budget. Thousands of federal workers are furloughed, national parks are closed and many nonessential governmental services are dialed back or put on hold.

The shutdown doesn't directly threaten Social Security, other mandatory benefits or U.S. interest payments on the national debt.

Breaching the debt limit would.

Unless Congress raises that limit soon, the government will run out of the authority to borrow and pay its bills on Thursday, the Treasury Department says.

A default would challenge the U.S. dollar's status as the world's "reserve" currency. More than 60 percent of all foreign country reserves are in U.S. dollars, the prime currency in international trade.

"Without enough money to pay its bills, any of its payments are at risk — including all government spending, mandatory payments, interest on our debts, and payments to U.S. bondholders," the bipartisan Committee for a Responsible Federal Budget said in a recent report.

A look at what you need to know about the two fiscal matters:

The debt ceiling is the legal limit to all federal borrowing, an absolute ceiling on the national debt that cannot be breached.

It can be raised.

Since Congress first established a limit in 1917, it has been raised roughly 100 times. Raising the statutory limit does not authorize borrowing for new spending. It only allows the government to keep borrowing to pay existing bills.

The government borrows money mostly by selling Treasury bills, notes and other securities, including U.S. savings bonds. Individuals, mutual funds, corporations and governments worldwide buy the bonds.

Paying interest on these bonds is one of the government's largest single expenses.

In the budget year that ended Sept. 30, the government made $396 billion in interest payments, including payments on bonds held in some government accounts such as the Social Security Trust Fund.

The national debt is the accumulation of annual budget deficits. It first crossed the $1 trillion mark early in the administration of President Ronald Reagan.

It stood at $10.6 trillion when President Barack Obama took office in January 2009 and is $16.7 trillion today — bumping up against the debt limit, which is also $16.7 trillion rounded off.

Recently, the Treasury Department has used complicated accounting maneuvers to keep from technically exceeding the limit. But it's running out of such tricks.


There are a couple Hail Mary plays the government could try if the deadlock persists: selling gold from U.S. reserves, selling or leasing government buildings or national parklands and minting special large-denomination coins.

The Obama administration has shown little interest in such steps.

One possibility was suggested in 2011 by former President Bill Clinton and more recently by House Democratic leader Nancy Pelosi of California: have Obama raise the ceiling on his own, citing the part of the 14th Amendment that says "the validity of the public debt of the United States, authorized by law ... shall not be questioned."

Obama was asked at a Twitter town hall forum in July whether he would use that amendment as the basis to raise the debt ceiling. "I don't think we should get to the constitutional issue," he tweeted. "Congress has a responsibility to make sure we pay our bills. We've always paid them in the past."

His spokesman Jay Carney has said the administration doesn't believe the amendment gives the president the authority to ignore the debt ceiling.


While budget deficits are coming down, the government continues to add to the national debt.

The deficit represents the annual difference between the government's spending and the tax revenues it takes in. Each deficit contributes to the national debt. The last time the government ran an annual surplus was in 2001.

The annual deficit declined to roughly $642 billion for the just-ended budget year, the first time in five years it has dropped below $1 trillion. It was $1.4 trillion when Obama took office in 2009.

Still, the government must borrow 19 cents for every dollar it spends, pushing up the nation's overall debt level.

One reason that keeps increasing: the army of retiring baby boomers leaving the workforce and beginning to collect Medicare and Social Security benefits.


Obama and Democratic leaders denounce as a form of blackmail GOP efforts to use the shutdown and debt limit debate to delay or defund Obama's health care law.

Efforts by opposition parties to try to put strings on a president's debt-limit increases have been pretty standard going back at least to President Dwight D. Eisenhower in the 1950s.

"Congress consistently brings the government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans' benefits," Reagan said in a 1987 radio address. He was scolding the Democratic-controlled Congress for seeking to modify or defeat his proposal to raise the debt limit.

He raised the debt ceiling 18 times.

As a senator representing Illinois, Obama voted against President George W. Bush's 2006 increase in the debt limit, calling it a "leadership failure" and "sign that the U.S. government can't pay its own bills."

Bush won that battle.



Dr. Information

The only thing you need to know is this: Our debt is out of control and continues to rise.
Congress and Washington need to make severe cuts or there will be nothing left at all to give out.


Wrong, Doc. The only information you need to know is the CORRECT information: Refusing to raise the debt limit does NOT cut the deficit. It also doesn't allow the gov't to get out of its obligations. Refusing to raise the debt limit simply makes it impossible to borrow the money the gov't needs to pay its bills.

This has been the normal operating procedure for nearly the past 100 years. Congress has acted 78 times since 1960 to raise the debt limit (49 times under Republican presidents and 29 times under Democratic presidents).

I'm wondering when Republicans will notice all the cuts that have already been made. In 2010, Obama signed the Statutory Pay-As-You-Go Act, which mandates that new spending be offset with spending cuts or new revenue. Spending increased an average of 7.7% per year under Bush, and only 1.4% per year during Obama's first term, the lowest gov't spending growth over the past 60 years.

Since then, we've had the sequester, the previous budget ceiling debacle, which further cut spending and the deficit. Bill Maher gave a list Friday night of 4-5 cuts (of more than a few hundred billion dollars each)that have occurred during Obama's time in office. The REAL question is: why don't conservative media outlets report this information? These are actual cuts that occurred, yet they turn a blind eye.

End result: Obama has cut the deficit in HALF, which beats the heck out of what the "fiscal hawk" GOP did during 2000-2008 (took a budget surplus and turned it into a trillion dollar deficit and recession that grew exponentially each day).

Republicans should stick to lecturing us on things they actually are good at: sticking it to the poor/middle class, insuring tax breaks for the rich, God and guns. Cuz let's face it: fixing a weak economy is NOT their strong suit... They're good at causing a weak economy, and insuring that it won't improve, though, I'll give them that.


"Wrong, Doc. The only information you need to know is the CORRECT information: Refusing to raise the debt limit does NOT cut the deficit. It also doesn't allow the gov't to get out of its obligations. Refusing to raise the debt limit simply makes it impossible to borrow the money the gov't needs to pay its bills."

Yes, lets get out the ACTUAL correct information. If you limit the amount you can borrow to what you already have borrowed, you are currently spending more than you take in and can't borrow, your budget is to spend more than you have, the deficit can't go up... unless you are allowed to raised the debt limit, then the deficit WILL go up. So if the debt limit goes up... so will the deficit.

Currently the US gets around $250 billion from taxes, licenses, and fees from leases and such per month. the payment on interest is around $20-25 billion per month.


As far as Obama cutting the deficit in half... deficit spending in 2008, the last year of bush was 458 billion. 2009, the first year of obama the deficit was 1.431 TRILLION, 2010 was 1.294 TRILLION, 2011 1.3 TRILLION, 2012, 1.087 trillion, projected 2013 973 billion, projected 2014 744 billion... the last year of bush 458 billion obama tripled the deficit, before he cut it in half and it still is 50% more than what he inherited from bush.



The final spending bills for the budget were not signed into law until March 11, 2009 by President Barack Obama, nearly five and a half months after the fiscal year began.

Obama singed the 09 budget bill, his budget, his deficit.

Obama tripled the deficit before he halved it, it is now only 50% more than the last deficit bush did before he left. But that is only if you wish to use the CORRECT information and facts.


coasterfanned, where do you get your info? You really need to stop reading Pelosi/Reid manuals.

Consider the following regarding our debt under the Obama administration (info from factcheck.org):

1. As of Oct. 4, the amount the Treasury owed to the public was just under $11.94 trillion, an increase of 89.3 percent since the day Obama first became president.

2. Critics of federal debt levels often cite another, larger figure for total federal debt, which includes money the federal government owes to itself through such devices as the Social Security and Medicare trust funds. That total debt figure stood at just under $16.75 trillion on Oct. 4. That’s an increase of 57.6 percent since Obama was first sworn in.

3. However, the Obama administration recently projected an annual deficit of $750 billion in the fiscal year that began Oct. 1, and $626 billion the year after. At that rate, the debt owed to the public will more than double during the Obama presidency.

Did you notice the word "increase" in the first 2 and double in the 3rd?

Not one of the 3 examples bode well for your heroes. Not only is our gov't spending more this year it is coming off of projections for record breaking dollar amounts of taxes being paid/collected.

The problem (dem + gop) is that for 55 of the last 60 years our gov't has spent more than it has collected! There is NO person or business that could survive with that statistic.

Hopefully Boehner and the gop will stick to their guns and lets draw a line and stick to it.


Re: "Bill Maher,"

Good to see that you continue to receive and swallow your Progressive nonsense from a socialist *ssclown.

Independent analytical critical thinking is obviously not your strong suit.

BTW: The last balanced fed budget was during the Eisenhower Admin.


Dr. Information

wrong again coasterfan. keep living in that imaginary world.


So few leaders. Dr. Expert/Clowntango 2016.


It's not that complicated, people. Consider your OWN budget. When you spend too much, there are only a couple of options for you:

1. Stop spending so much.

2. Declare bankruptcy, and the heck with your creditors (while the rest of us hope you've at least learned from your experience).

Unfortunately, this president (as well as too many before him) seem to think that the answer to spending too much is spending more. Here are some words of wisdom for everyone from the individual to the City to the State to the federal governments: If you find yourself in a hole, STOP DIGGING!


Equally stupid was the Bush economic policy that gave us unfunded mandates like Leave No Child Behind, and two unfunded wars, while CUTTING taxes (incoming revenue), which would have helped pay for the above stupidity.

This is the same as:

1. Telling your boss to cut your salary in half.

2. Going out the next day and buying a swimming pool, Hawaii vacation and new car...using your credit card.

I just LOVE when conservatives try to 'school' us on basic economics, considering how silent they were during Bush's extreme spending spree.

The GOP plan didn't merely stop digging. Since they cut off revenue, while increasing spending, they (in effect) discarded their shovel for a steamshovel...


Yep bush sucked on economics... about half as bad as obama is doing now. Let's concentrate on bush now that he is out of office and doesn't matter in the present, lets not look at the one who is president now... you know the one whose policies tripled the deficit when he first came into office and now cut it in half, while still being 50% more than bush's highest deficit. You know the guy now in office, the one with the lowest percentage and number of people in the workforce, more people working part time than ever before, higher rate of Welfare, and food stamps since before Clinton. Yes lets look at anyone else but the guy currently in office doing such a bang up job economically.

The Big Dog's back

The economy was in free fall when Obama took office. You don't stop a free fall just like that.


Reagan did, a little over a year and unemployment was under, 7%, US growth over 7%, interest rates cut in half. That was done with a congress which was opposed to what he wanted to do, and he changed their minds and they voted for his way, at least a majority and got passed the 60 vote requirement in the dimocrap controlled Senate. and in the dim controlled house. Obama had a supermajority in the Senate and a clear majority in the house. Sorry to bring facts and history into your stupidity. You have been told several times before. He could pass what he wanted with that kind of dim control.

The Big Dog's back

When you bring facts in pooh let me know. Like the fact the military and Gov employees were added to the employment rate to make it look better under Raygun.


After 5 years of Reagan we had 4 years of 7% growth, interest rates cut over 1/2 unemployment went from 10%+ to 6%, Pain index was put away as not being needed to see how pi$$ poor carter was doing. I could go on, would you like to cite Obamas stats and show how well he is doing in comparison to Raygun? All the while Raygun had dims in control of the House and his first two years the Senate also in dims control. Obama had a supermajority in the Senate and a majority in the house... till he lost the supermajority in the Senate, and outright got blasted out of the House. Now tell us all how good Obama is doing in comparison to Raygun. Raygun may have sucked in some respects... but Obama swallows... and squats when compared. Course Obama did win the Nobel Prize... for getting elected,and making promises... he hasn't kept.

Darwin's choice

5 Years enough?

Erie County Resident

Your right piddles, you can't stop a free fall just like that. To bad Obama and the Demoncraps are making it pick up speed all by themselves.


I cannot, and will not, excuse Bush. As much as it hurts to say it, Clinton wasn't too bad where budgets were considered; Reagan wasn't too good. But you'll notice in my comment that I criticize this president AND TOO MANY OTHERS BEFORE HIM. This isn't about Obama alone. It's about putting an end to a vicious cycle. Obama said he'd do it, but he's doing just the opposite (and in amounts that make your much maligned unfunded war look like chump change).

It doesn't mean Obama is any less or more of a hypocrite or a Big Government Booster than Bush when it comes to government spending. But we're in so deep now that if Obama DOESN'T stop it, and if Obama KEEPS spending like a drunken sailor (with my apologies to drunken sailors who, at least, spend their OWN money), it will quite literally prove insurmountable.

As for your example, you're not terribly far off, except you forgot the government corrollary: DOUBLING your salary, and promptly spending FOUR times as much as you used to. That'd be government.


Sam as far as spending goes no President stands alone in being able to spend. Clinton had dem control his first two years, and that ended after 2 years, he then had to compromise. Which he fought and finally did after a year or so after the mid term election. That is when he almost had a balanced budget, excppt for those things he had paid for outside of the budget. For Reagan to get anything passed through Congress to get the economic policies he wanted to break the freefall we were in. He did so and that is where some of his problem was. But he also overspent on defense and on things the Congress that was dem controlled wanted for voting for his reforms.

It so rarely is all the President or all one party, except when there is one party rule in the House, Senate and Presidency. To put it all on the President, or all on one party is rather silly, excepet when one party rules. One party rule sucks big time.

The President may be the biggest, most important player, but is restricted by Congress, at least when they are of different parties.

It would be much better for the states to control more and the feds less. The people are much closer to state politicians than they are to those in DC. That and term limits would help quite a bit for keeping the politicians answerable to the people instead of the "parties". I would much rather have politicians answerable to the people, rather than the "party".

The Hero Zone's picture
The Hero Zone

I keep trying to push a cookie through my monitor to give you but it crumbles on my keyboard. So en lieu of a baked good, accept my +1 to this.

Stop It

You're supposed to put the cookies in the A drive. The monitor doesn't have a slot unless you are on a Mac...


No argument with your final paragraph. In fact, I'd second your motion! The more localized any control is, the more subject to correction it is. And the gods know correction is SORELY needed!

The Big Dog's back

sam, have you even looked at what little additional spending Obama has done? With your rant above, I will safely assume no.


"sam, have you even looked at what little additional spending Obama has done"

The United States federal budget for fiscal year 2009 began as a spending request submitted by President George W. Bush to the 110th Congress. The final resolution was approved by the House on June 5, 2008.[2] The final spending bills for the budget were not signed into law until March 11, 2009 by President Barack Obama, nearly five and a half months after the fiscal year began

The 09 budget was passed by the dim controlled supermajority of the senate and dim majority in the house and signed by Obama. Obama signed the budget, it is his budget. his deficit


I will let you see the deficts from 2005 to the projected 2015 here.


Poor, poor Obama wasn't able to spend ANY money. He had a supermajority in the Senate, a clear majority in the Hose and piddle puppy says he couldn't spend ANY money. Stimulus, GM, Chrysler,Solindra, and such comes to mind... but that doesn't count. He didn't want to spend that money. The repubes forced him to spend it.


Yes. But I only need one example to make a valid point because it's such a BIG and BAD example: Obamacare. Read the estimated costs on THAT one, Big Dog? Or maybe you don't care that the government's own accounting agency suggests the boondoggle will bankrupt the country in short order? Yeah, I'd say that's "additional spending!"


coasterfan writes: "CUTTING taxes,"

Pres. Obama locked in 98% of the "Bush tax cuts" in '13.

How was Pres. Bush wrong to cut taxes during an economic recession and Pres. Obama correct to make 98% of them permanent during his "McJobs" recovery?

The Big Dog's back

It was a compromise pooh. See, all compromises aren't good.


Re: "all compromises aren't good."

Yea, Pres. Obama should taxed the h*ll outa of 'em huh?

The Big Dog's back

Yep. BTW, who should pay for the bills the Repubs added up? The poor? The middle class? How about those that benefited most?

The New World Czar

You're correct- the Republicans did the math on the deficit run up their Democratic counterparts and after determining it was unattainable, challenged Congress to cut spending.

Since you've benefitted the most from government programs, it is imperative that people like you start paying back in the spirit of atonement.

Glad to see you're seeing the light Big Dog. The admission of your self-inflicted situation in the first place is a great first step.


Re: "How about those that benefited most?"

So Pres. Obama should have rolled back 100% of the Bush tax cuts that benefited the poor and middle class? Got it.