America hits its debt ceiling: A 'crisis on the horizon'?
The U.S. has exceeded the $14.3 trillion borrowing limit imposed by Congress, and though it's taking emergency measures to pay its bills, time is running out
On Monday, the U.S. government reached the $14.3 trillion debt limit imposed by Congress. The Treasury is now enacting emergency measures to avoid default and buy time — until early August — for the White House and GOP leaders to strike a deal allowing more government borrowing. But many in Congress say they won't vote to increase the debt limit without a parallel agreement to slash spending. That means "the pathway to a deal remains unclear, even to those doing the negotiating," say Damian Paletta and Carol E. Lee in The Wall Street Journal. Is a debt disaster inevitable this summer?
Yes, there's a "crisis on the horizon": The government has 11 weeks to avoid a catastrophe, says Steve Benen at Washington Monthly. The good news is that, technically, it's "extraordinarily easy" to raise the debt ceiling and avoid default. The bad news is that "radicalized Republicans have decided to start playing by new, wildly irresponsible rules, and Democrats aren’t drawing lines in the sand, demanding an end to GOP recklessness." Don't expect a deal anytime soon.
"It's May 16; do you know where your debt ceiling is?"
Spending cuts are the only solution: Yes, we've reached the debt limit, but "we're all still alive," says The Lonely Conservative. The real way to straighten out our financial mess is to cut spending. "If they don’t get that under control, we’ll be in a permanent financial crisis." "Don't look now but we've hit the debt ceiling"
Maybe the government should start selling assets: The U.S. has 147 million ounces of gold sitting in Fort Knox that can be sold for hundreds of billions of dollars, says Ron Utt, a senior fellow at the Heritage Foundation, as quoted by The Washington Post. Given record gold prices (roughly $1,500 an ounce), the feds should sell now. The government also has billions more in other assets that could be privatized in order to raise funds and reduce our debt. "U.S. should sell assets like gold to get out of debt, conservative economists say"
Ummm... that wouldn't accomplish anything: There may not be "any good reason for the federal government to retain massive amounts of gold these days," says Kevin Drum at Mother Jones, but selling it now won't do any good. Dumping all the gold in Fort Knox would only buy a few months before we're in the same position again. And gold won't stay at its peak prices for very long once the government starts unloading its stash under fire-sale conditions. The debt ceiling is a major problem, but this isn't the way to solve it."What's the opposite of gold buggery?"