Guest Blogger Antoine Marshall breaks down the Debt Ceiling and puts forward his original proposal (in a 7 part blog series)-- let's hope Congress takes notice. Antoine Marshall is a rising 3rd year law student at Wake Forest University. http://www.linkedin.com/pub/antoine-marshall/1a/267/148
What’s the hold up in raising the debt Ceiling?
With the Republicans in control of the House of Representatives any debt ceiling vote is going to have to come with House Republican’s approval. Backed by a core of first term Tea Party candidates Republicans have trumpeted the cause of reducing federal spending.
In all fairness to their cause, economist caution that when a country’s debt reaches 100% of their Gross Domestic Product (GDP) they struggle to generate jobs and support a healthy economy (Greece before their economic meltdown had a 133.3% GDP to debt ratio, Italy which is juggling its economic meltdown has a debt to GDP ratio of 116%), and at a GDP at $15 trillion, there is major concern that our debt is going to lead us to a major economic depression.
Obama is calling for a $2.4 trillion dollar increase in the debt limits, because projections show that that is what’s needed to get us through the 2012 elections.
The President has stated outright that he will veto any short term deal, under the belief that with all the trouble we’re going through now to pass a deal it’s going to be impossible to do so during an election cycle. He also states that by passing a 3, 6 or 9 month plan will increase market uncertainty which will continue to slow the economic recovery.
Republicans have called Obama’s request for a long term deal a political ploy, that his request isn’t because he doesn’t think a deal can get done during an election season, but because he’s trying to avoid the issue come election time because it hurts his re-election.
They in turn have tied the debt ceiling to the debt and demand that any increase in the debt ceiling has to have a dollar for dollar reduction of the debt in the federal budget over the next 10 years. Included within that demand is a zero tolerance policy for any new taxes.
Essentially they are calling for $2.4 trillion dollars in cuts in federal spending, which can only be obtained through cuts to Democratic Darlings like Medicare and Social Security.
A deal that appeases Obama’s demand for a long term deal and a Republican demand for dollar for dollar cuts with no new taxes is virtually impossible and thus the impasse.
Stay Tuned for Part III
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