Debt ceiling debate passed into law – What are the repercussions

by Alex Brown

The major economic and financial upheaval in the United States in recent times has been the heated debate over the debt ceiling and the steps that the Government has to take to bring the debt situation under control. Government mortgage, unlike personal debts cannot be done away with debt settlement. After weeks of intense and heated deliberation the debt ceiling bill had quite a smooth sail through the Senate gathering a bipartisan support by a vote of 74-26. It was passed by the House by a vote of 269-161. After the culmination of both these events, this bill was quickly signed into law by President Obama and soon after making his comments from the Rose Garden. Amongst the 26 negative votes that had come, 19 of it were from Senate Republicans who wanted more amount of spending cuts and a commitment towards a balanced budget. This measure of the debt ceiling being signed into law has given the US Treasury immediate authority to include an additional amount of $400 billion to the national debt. This plan will cut a government spending of value which is just under $1 trillion over the next 10 years. It will also allow raising this amount of money which the US is legally allowed to borrow in two phases.

This also included the creation of a special 12 member joint House-Senate congressional committee also being referred to as “super committee” which had been endowed with the task of devising ways to come up with a cut of $1.2 to $1.5 trillion before Thanksgiving in front of the authorities. It is granted that this would add another $500 billion in debt. It is expected that the second increase in debt will take the nation past the 2012 election before there is any need to raise the debt ceiling again. Shortly before the vote was taken, Mitch McConnell, the Leader of Minority in Senate had said that the whole affair may have been messy and looked like something on which the government wasn’t working. However, in reality the opposite was true. The tug of war which Americans saw taking place in Washington for some weeks was not a standstill, it was what can be called the will of the people who were working themselves out in a political process which is not meant to be pretty. This debate was something that was required by Washington.
Speaker John Boehner in June had said in an interview that there had been no votes in the Congress in order to raise taxes on any income group and hence the deliberation about taxes is not being contemplated. The prediction made by Boehner was accurate. However, he had to be contended with Conservative Republican conclave demanding deeper cuts than what were included in the final version. While addressing the nation from the White House Rose Garden soon after the vote, President Obama again made his subject matter to be tax breaks for millionaires, corporate jet owners and oil and gas companies. This he did in an attempt to deflect liberal objections that the deal did not have any new revenues resulting from tax hikes. Although Obama had proposed to include a tax hike in the deal, it was soundly defeated in Congress. However, he asserted in a signing statement that since the deficit can’t be closed with just spending cuts, it is required to take a balanced approach. This would include measures to protect healthcare programs such as Medicare, reforming out tax codes in order to ensure that the wealthy Americans pay their share of tax, doing away with taxpayer subsidies to oil and gas companies and also solving any tax loopholes that allow billionaires to pay taxes at a rate lower than what school teachers and doctors pay.
Mainly the Tea Party members of the Republicans lamented that they did not get what they wanted which included more amounts of spending cuts. Senator Lamar Alexander, the third ranking Republican in the Senate addressed the disposition of the country by giving a reference of traveling to one city from another one. According to Alexander, since the problem wasn’t created overnight, there is no chance that it would be solved overnight. However, going as much as possible near the target is always a good option. The nearer to the target you approach, the easier it becomes to achieve it. thus the current way in which the bill has been passed and the subsequent steps being taken in order raise capital through majorly spending cuts will bringing the nation closer to its ultimate target of managing its enormous debts.

**Article contributed and submitted by:

Alex Brown
Strategic Internet Marketing Consultant

***The opinions expressed are those of the author or contributor, supports outside contributions but does not necessarily express or support the opinions or information of our contributed articles***

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