The federal government is about to max out its borrowing limit again and Treasury officials said Tuesday that the White House plans to request another $1.2 trillion in borrowing authority Friday. The increase is necessary, they say, because the government will be within $100 billion of its current limit by then.
The increase should come minus the intense debate that was a part of this summer’s debt ceiling battle, as it is part of the deal made in August. This is no more than a scheduled increase that has already been agreed upon.
The U.S. Congress passed the Budget Control Act of 2011, increasing the debt ceiling in what was the fourth increase of the mandatory borrowing cap in President Obama’s first term. That deal, signed into law in August, authorized a phased increase of the debt ceiling by up to $2.4 trillion, with $400 billion of that kicking in immediately and another $500 billion coming in September. This final request would increase the debt limit from its current level of roughly $15.2 trillion to $16.4 trillion.
Officials say the $1.2 trillion should be enough to allow the government to keep borrowing until the end of 2012, or just after the presidential election.
What is the Debt Ceiling?
President Obama will present the request to Congress for approval, but it can only be blocked if both the House and the Senate pass a resolution against it, which, with the Democrats in control of the Senate, is unlikely. In the event Congress did reject the request, the president can veto their objection. If Congress doesn’t act by Jan. 14, the increase will take place automatically.
With Congress out of session until January 17, lawmakers will not introduce resolutions against the increase before the date the increase becomes effective.
While the increase in the debt ceiling is going to occur, Republican candidates will not miss the opportunity to use what will be the fifth increase in Obama’s first term as a talking point on the campaign trail.
The divide between the parties over how to reduce the deficit continues to grow. In November, the bipartisan Congressional committee tasked with cutting the deficit $1.2 trillion over the next 10 years failed to reach an agreement. That means automatic cuts of that amount will begin in January 2013 – a condition included in last summer’s deal.
Debt Ceiling History
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