The Barack Obama White House sent another warning to House Republicans concerning increasing the nation’s Debt Ceiling. Two Sundays ago, Austan Goolsbee warned about the consequences of America defaulting. This week, Timothy Geithner echoed this, saying “Failure to raise the limit would precipitate a default by the United States.” Now the White House adds to the gloom, telling the GOP lawmakers that there will be no deals. They want a straight vote without any conditions, like a plan for significant spending cuts. A recent poll by Reuters/Ipsos shows that 71% of Americans want the Federal government to default as they oppose increasing the Debt Ceiling. Only 18% support President Obama on this issue.

CBO Outlays Revenues 2010
This CBO chart from Summer 2010 is optimistic on Federal revenues. Image Source: CBO.gov

At present, the U.S. Debt Ceiling stands at about $14.3 Trillion dollars. Today, our National Debt is about $14.04 Trillion dollars, adding about $6-7 Trillion per day. As Lord Ha-Ha once said concerning Allied bomber casualties, “At that rate, it won’t take very long, will it?” It certainly won’t! The ‘experts’ figure Uncle Sugar will be broke sometime around April-May. I would say we’re looking at late February, early-March at the latest.

So we only have about 5-6 weeks to resolve this issue. As expected, the 111th Do-Nothing Congress kicked the can down the road, afraid that voting on increasing the Debt Ceiling, or even passing an actual fiscal budget, might cost them Democrat seats. Well, they lost anyway despite sticking their heads in the sand.

President Obama has few options here. The ‘Young Guns’ of the Republican Party, led by Paul Ryan (R-WI), are adamant about tying a modest increase with spending cuts. The ultimate goal is to reduce current discretionary spending levels back to 2008 levels, along with means testing for some entitlement programs. There is also around $78 Billion in defense spending cuts on the table, too. An immediate reduction of $100 Billion with more to follow later.

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