Congress may be in recess but that doesn’t stop the White House from talking shop this week. Yesterday it was announced that President Barack Obama has plans to ask Congress for an increase on the debt ceiling later on in this week.
The increase will serve as a buffer giving the United States the opportunity to pay its bills on time. Although there have been issues in the past, the agreement is expected to go through without a hitch — a welcome change from the recent bi-partisan back-and-forth scene.
As a quick refresher, the debt limit is the amount of money the government can borrow in order to pay for all the things that need funding. The $1.2 trillion extension, to be voted on later this week, will prolong borrowing through 2012 and past the upcoming election. This is good news for programs that need funding, but an obstacle for the future president considering all the difficulties presented to reach the initial extension agreement.
The road to agreement was not always this easy, months and months of disagreements, impassioned speeches, and shutdown threats finally led to an extension in August. The summer deal agreed on increases to take place in three steps, effectively creating a $2.1 trillion borrowing limit. This decision was reached just 2 hours shy of the mandatory default deadline and was contingent on the fact that both parties agreed to find a way to cut $2 trillion from our deficit within the next few years.
As we’ve established, this increase will be an easy move for Congress considering it falls under the $100 billion December 30 cap from the previous agreement. After all is said and done, with Social Security payments added to debt, the United States is expected to have approximately $82 billion in interest.
Currently, our debt limit is at $15.194 trillion and will be increased to $16.394 trillion. Unless Congress vetoes this increase, the cap will automatically raise. Even if Congress does choose to veto, it is highly unlikely they substantial resistance due to the president’s legislative power and the U.S. House of Representative’s current recess.
What it means to you?
Although it may be hard to follow exactly how this will impact individuals, it’s crucial the government can reach these types of resolutions quickly. Aside from the fact our government needs to get out of its massive debt, they must reach solutions quickly to avoid a government shutdown. When government workers are not able to do their jobs it trickles down to individuals who rely on these employees to make their day-to-day life go smoothly.
As long as the government is able to get a handle on repaying the huge debt, it can then focus on funding programs to help get individual Americans back on track.