The mid-October deadline to raise the debt limit is coming down to the gun barrel and Congress is at the end of it. But in this metaphor, they are also the ones with the finger on the trigger.
At this point, it is clear that neither a national default nor a full-speed-ahead spending policy would have harsh economic consequences. Therefore, Congress must be able to find some bipartisan solution to America's spending problem.
“We have never defaulted, and we must never default,” White House press secretary Jay Carney said.
Congress literally cannot afford to miss this opportunity to have a serious discussion about addressing some of the long-term drivers of the debt, namely entitlement programs.
“The debt limit remains a reminder that, under President Obama, Washington has failed to deal seriously with America’s debt and deficit,” House Speaker John Boehner’s spokesman said. For both parties, the debt ceiling is the the elephant in the room, the black sheep of economic policy, and the frog in the throat of bipartisan political discourse.
Since May, the Treasury has been delaying payments and jerry rigging the accounting techniques to prevent an embarrassing government default. According to CNSNews.com, the Treasury Department’s recorded debt has been exactly $16,699,396,000,000 for 100 straight days, which is only $25 million below the current debt limit.
Treasury Secretary Jack Lew sent a letter to Boehner detailing the “extraordinary measures” used to allow the government to continue borrowing money. The Treasury has created $263 billion in headroom by halting investments on the Civil Service Retirement and Disability Fund and the Federal Employees’ Retirement System Thrift Savings plan, the money used to pay federal retirees. They have also refrained from investing in the exchange stabilization fund, the emergency reserve fund for the Treasury Department often used to influence foreign exchange rates.
This means there are two sets of accounting books—one set that is stalled $25 million below the debt ceiling and one that is conceivably $263 billion over the current debt limit. What we need is some financial disclosure on the actual state of our nation’s finances. We need some full fiscal nudity.
At first, Lew dictated that the use of these “extraordinary measures” would end on August 2, but he extended that to October 11 in a subsequent letter. Yesterday he extended it again to “the last day Congress is expected to be in session before the Columbus Day recess.”
There you have it: Both the federal government and the Treasury are dependent on pushing back the date they have to be held accountable for their spending addictions. This is procrastination as policy, and it is perilous.