Barack Obama reportedly is seeking a short-term increase to the nation′s debt ceiling, taking it to $16.7 Trillion dollars. Just $2.4 Trillion more than the current level which was surpassed weeks ago. With a deadline of August 2 rapidly approaching, the White House, along with Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, are getting nervous as House Republicans insist on substantial spending cuts to be tied to any debt limit increase. Many even want long-term reforms of major entitlement programs, such as Social Security and Medicare, or face default. At the current rate of spending by the Obama administration, the $2.4 Trillion dollar increase would barely cover the next 12 months of government operations.

obama debt limit

Meanwhile, some are asking how is it that the Treasury is funding spending now, even though the debt ceiling was maxed out weeks ago? According to reports, Geithner has been borrowing money from federal employee pension plans. Already some $100 Billion has been borrowed and spent. By August 2, that number could be between $250-300 Billion. The U.S. Treasury is allegedly using 3-month T-bonds to cover the borrowing, which pay practically no interest.

The massive borrowing to cover the massive spending by the Obama administration is seen as a key reason for the lack of economic growth and job creation the past two years. So much capital is being diverted to cover federal spending, especially monies which are part of the Federal Reserve′s quantitative easing programs, which expire at the end of this month. Some suspect that Ben Bernanke will implement a QE3, third round of loaning money to large banks and institutions for the expressed purpose of purchasing U.S. debt.

Will Barack Obama get a short-term increase in the debt ceiling to $16.7 Trillion before August 2? The White House, along with Timothy Geithner of the Treasury Department and Ben Bernanke of the Federal Reserve are doing their best to scare House Republicans into submission. Even with a $2.4 Trillion dollar increase to the nation′s debt limit, that would barely cover one year of Obama′s spending spree. Many say Democrat claims of default are exaggerated, and most polling data shows that the American people would prefer no increase be approved.