Editore"s Note
Tilting at Windmills

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May 3, 2011

WITH GOP INVITING A DEBT CRISIS, GEITHNER STARTS JUGGLING.... At first blush, yesterday's news on the debt ceiling appeared encouraging. After all, when a countdown to a catastrophe is pushed off, and a deadline is delayed, everyone gets a little breathing room. A temporary reprieve is still a reprieve.

That said, word from the Treasury Department offered more clouds than silver linings.

A greater-than-expected increase in tax revenue has extended by about a month, until early August, the federal government's ability to pay its bills without an increase in the debt ceiling, the Treasury Department said Monday.

The new estimate creates a significant grace period for Congress to consider an increase in the maximum amount that the government can borrow, a step that House Republicans say they will not take without an agreement to curb spending.

Federal borrowing is still likely to hit the legal limit on May 16, the Treasury said, so this week it will begin to take emergency steps to buy additional time under the cap. Those steps, plus the increase in tax receipts, which have reduced the need for borrowing, will delay a crisis by about a month -- to August from July.

What we're looking at is basically two separate-but-related deadlines. The first is hitting the debt limit itself, and that deadline hasn't changed. We've known for a while that this was projected to happen in about two weeks, and the clock will, in fact, run out on May 16.

The second deadline is the more important one. It's been assumed that we'd reach the debt limit on time without congressional action, at which point the Treasury Department starts juggling the books, taking "extraordinary measures" to avoid a catastrophe. We thought this deadline was coming in July, but Geithner projected yesterday that policymakers now have an extra month to do the right thing.

And what do the new emergency steps include? The Treasury will first suspend a program "under which it borrows money from state and local governments to help those governments meet legal obligations to invest in tax-exempt bonds." (Treasury has done this before, whenever debt-ceiling problems have popped up.) In two weeks, additional measures will kick in.

Geithner added yesterday that members of Congress should not use the debt limit increase as a "bargaining chip to advance partisan policy agendas," which echoes Fed Chairman Ben Bernanke's advice, but which Republicans will ignore.

Indeed, despite the potential for devastation, GOP leaders continue to explore new ways to play reckless and dangerous games. Avoiding a catastrophe couldn't be easier, but congressional Republicans, at least for now, don't seem to care.

The new drop-dead deadline? August 2.

Steve Benen 8:30 AM Permalink | Trackbacks | Comments (14)

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Comments

The worse off the country is, the better the Republicans like their chances in 2012.

Party uber country.

PARTY UBER ALLES!!!

Posted by: c u n d gulag on May 3, 2011 at 8:36 AM | PERMALINK

Geithner can start by saying that he'll need to halt the federal disaster relief in Texas and Alabama because the Republicans won't raise the debt limit.

Then he can start looking at other ways to cut back on federal money flowing to red states, saying that since their governors complain so much about the "oppressive hand of Washington", they won't mind proving how self-sufficinet they are.

Posted by: SteveT on May 3, 2011 at 8:38 AM | PERMALINK

Decent words are scarce when measuring the Republican irrational irresponsibility on this issue! Just their gibberish chatter alone on economic matters is enough to cause uncertainty in world markets.

Ornery souls can make a mess of most things, including common sense (not to mention our whole damn economy)! -Kevo

Posted by: kevo on May 3, 2011 at 8:58 AM | PERMALINK

Ever since Reagan, the Republicans have put their ideology ahead of the interests of the nation. And they willfully perpetuate his words about the gov't being the problem -- the way they govern, it certainly is.

That statement works across the board -- domestic issues, foreign policy, whatever. It's sad and what angers me the most is the way they play the Patriot card whilst doing their worst damage.

Posted by: zhak on May 3, 2011 at 9:00 AM | PERMALINK

The full measure of the degree to which they're willing to put their partisan interests over the nation's is this: they've got another perfectly good hostage moment coming up just two months after Geithner's latest drop-dead date on the debt limit.

Since there is no budget yet for FY 2012, the Federal government will shut down at midnight on September 30 unless the two parties can agree on a budget by then. That gives the GOP an excellent opportunity to hold the government hostage for whatever they want that they didn't get in the recent series of near-shutdown moments over the FY 2011 budget.

If they cared about their country even a little, they could wait and use that as their hostage moment. Nobody likes a government shutdown, and it would cause its share of problems, but it's hardly the economic Armageddon that a failure to raise the debt limit has the potential to be.

But their prioritizing of party over country is so great that they want both hostage moments, no matter how irresponsible it might be to risk running into the debt ceiling, and how dire the consequences might be.

The 2012 budget hostage moment just will not do, all by itself.

Yes, they hate America. No moral person should ever - ever - vote Republican.

Posted by: low-tech cyclist on May 3, 2011 at 9:16 AM | PERMALINK

SteveT makes an intriguing suggestion, BUT ... Dems can't play the same games as Republicans. Just can't.

Posted by: zandru on May 3, 2011 at 9:17 AM | PERMALINK

Well, thank goodness Democrats are going to oppose this.

What? They'll cave, as several of them already have? Well, the only way to change this dynamic is obviously to keep voting for Democrats.

Posted by: Tom Allen on May 3, 2011 at 9:26 AM | PERMALINK

Following up on zandru's comment, there are good reasons why the Dems can't do that. Mainly, we don't want ordinary citizens to be the ones to suffer for the GOP's sins.

Now if Geithner wants to issue IOUs rather than checks to major government contractors for their work after mid-May, that would be perfectly fitting, and would have the right feedback loops:

Major Defense Contractor: Hey Geithner, what's this IOU crap?
Geithner: it's the debt ceiling. And you know who's standing in the way of raising it. Lean on them, you read me?
MDC: Loud and clear.

MDC: Hey Boehner, I'm being paid in IOUs instead of checks. Raise the freakin' debt ceiling already, OK?
Boehner: Not unless we get all sorts of other goodies from the Dems.
MDC: Screw that, just raise the freakin' debt ceiling! Aren't you listening?
Boehner: La la la la, I can't hear you!
MDC: Then your PAC won't be seeing those big checks it's gotten in past years!

Posted by: low-tech cyclist on May 3, 2011 at 9:27 AM | PERMALINK

It's time for Dems to start detailing EXACTLY what will happen if the debt limit is not raised, in visceral terms that the average voter can grasp.

Obama needs to borrow a page from Jerry Brown's playbook. In California, the tax extension issue will eventually make the ballot, and all polls show MASSIVE support for keeping or increasing current tax rates.

Posted by: bdop4 on May 3, 2011 at 9:33 AM | PERMALINK

Kevo , you ask , "Decent words are scarce when measuring the Republican irrational irresponsibility on this issue!"

Just to be argumentative , how about these - terror tactics , Osama wanna bees , Taliban acolytes , as well as the time honored , hostage takers .

Hints from Armageddon , from your friendly no prisoners , no quarter , unconditional surrender Republican sociopath .

The Jews had the Maccabees and their determination has inspired generations of conservative ideologues . A success is only measurable when you have lost everything .
A contract with the most reliable liars and sneaks not presently incarcerated , is a sure thing . Americans need to know what they are surely sowing and stand to reap . It is a very pretty picture for about one tenth of one percent of the public . Pretty if you can stand what blasted emotional desert sociopaths have in their hearts , for you , and then of course for everyone . They kiss and suck up , while kicking and spitting down . The top one then has a busy trying day , the powerful kicking needed for everybody but the Tippy Top !

Posted by: FRP on May 3, 2011 at 9:34 AM | PERMALINK

SteveT hits the start of the right symphony! In addition to ceasing federal disaster aid to red states, federal aid of all kinds that are discretionary should stop flowing to red states. This includes states like Missouri which have DLC/DINO/repuke-like senators like Claire McCaskell who aid and abet the repukes in the efforts to destroy our economy for political gains.

Posted by: AngryOldVet on May 3, 2011 at 9:38 AM | PERMALINK

To be blunt, Obama would be a fool not to push hard for a resolution of this issue immediately while his popularity is boosted.

What can possibly be gained by waiting?

Posted by: Jimo on May 3, 2011 at 11:56 AM | PERMALINK

I don't understand, revenues increased and the US has longer before hitting the debt limit?

I've been watching TV and the only way to reduce deficits/national debt is by cutting spending.

What gives?

Posted by: matt on May 3, 2011 at 1:04 PM | PERMALINK

I don't know why people think that stopping federal disaster aid to the red states would be displeasing to the governors and legislatures of same. It would only give them *extra* reasons to screw the poor and the minorities. Nor would their accountability moment come immediately, if ever.

Who, do you think, is most adversely affected by natural disasters? The super rich? Their house gets blown to smithereens, they just buy or build another, in a safer place. Provided they survive the onslaught, their entire lives don't get wiped out the same way that lives of the poorer survivors do. Remember Katrina? Now look at New Orleans and at how the demographics there have changed. It's as if it had been bleached. The poor can't afford to keep moving hither and yon; once they left, they stayed gone. And weren't there to vote for changes which would help them.

Posted by: exlibra on May 3, 2011 at 3:27 PM | PERMALINK
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