Government Borrowing Limits

Done with the $38 billion budget cut, next on the government’s agenda will be increasing the federal borrowing limit. Money owed to Social Security comprises the majority of the federal debt, which ended September 2010 at $13.5 trillion. As the government is on track to exceed the current limit of $14.25 trillion by mid-May, debt will either have to be restructured or the federal debt limit increased.

Increasing the federal debt limit would call for another round of budget cuts which is not going to be easy as hurdles to the debt-limit increase are likely to be the same as in the $38 billion budget cut and include the Democrats demand for Planned Parenthood funding and John Boehner and the Republicans stance on health care, the environment, and abortion rights.

Gene Sperling has been the lead administrator for the government’s strategy on the debt-limit debate. A debate which will be battling through Congress this month and has the potential to be a “recovery-ending event,” as quoted by Ben Bernanke in Calme’s New York Times article.

New York Times, April 10, 2011
Next on Agenda for Washington: Fight Over Debt