Saturday, September 12, 2009

Treasury Girds for Debt-Ceiling Fight

Today the WSJ is reporting that as the Treasury Girds for Debt-Ceiling Fight, Obama administration officials are exploring ways to fund the government if Congress balks.
The Obama administration, concerned about the possibility of a big political fight over the national debt, is looking at how it can continue funding the government in the event that Congress hinders its ability to borrow money.

Treasury Department officials are examining tools employed by previous administrations, including disinvesting government retirement funds and suspending interest payments to federal accounts, according to people familiar with the matter. They are also looking at what to do in the unlikely event of a government shutdown. At issue is the debt ceiling, a dollar limit controlled by Congress that dictates how much the U.S. can borrow. Treasury Secretary Timothy Geithner told the Senate in a letter last month that the $12.1 trillion ceiling could be hit as early as mid-October, and said it needs to be increased so the U.S. can continue funding operations and making debt payments. Mr. Geithner didn't indicate the increase he was seeking.

With the U.S. borrowing about $30 billion a week, some economists say the Treasury will need an increase of as much as $1.5 trillion if it wants to avoid another request before the 2010 midterm elections. The U.S. could default on its debt if Congress doesn't raise the debt ceiling, but it is a remote scenario.

Well we say that the Obama administration need not worry. The U.S. Congress has long ago abdicated its duty for watching out for the American public. So after a much televised public brawl where they will pretend to berate Geithner and Obama, Congress will of course raise the debt ceiling.
In any event the U.S. Congress no longer controls the government purse. It signed away that responsibility in 1913 over to the Federal Reserve. While Congress quibbles over raising the debt ceiling by another $1.5-2 trillion, Bernanke & Co. who require no Congressional approval (since the Fed is independent and has emergency powers) have already raided the taxpayer purse by $23.7 trillion.
And as for Neil Barofsky of SIGTARP who revealed the $23.7 trillion raid, is his independence safe? Hell no! OMB Watch reports, Bernanke and his partner-in-destruction, the U.S. Treasury tried to lasso in SIGTARP, but luckily failed in their attempt. But who’s to say they won’t try again?

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