Debt limit chaos awaits Paul Ryan as he seeks Home speakership

American businesses have created 13.2 million jobs since early 2010, jobless claims are at 40-year lows, consumer confidence remains healthy and small businesses are planning further increases in their payrolls. Aides say members of Congress are closing in on a budget deal which would include a debt limit increase.

Those in Congress pushing the limit trying to gain concessions on spending are banking on the projections that the nation wouldn’t truly default on its obligations until about seven days later. Indeed, House Minority Leader Nancy Pelosi (D-Calif.) told reporters last week, “Let me be clear, the full faith and credit of the United States of America is not negotiable”.

-Addresses a shortfall in Social Security payments to the disabled by preventing a 20 percent across-the-board benefit cut to recipients. One former Republican governor likened refusing to raise the debt limit to eating a meal and leaving a restaurant without paying. For years, the party in control of Congress had to deliver numerous votes to pass debt increases, whether or not it controlled the White House.

According to the non-partisan Government Accountability Office, the 2013 debt limit impasse cost the American taxpayers between $38 billion and $70 billion in additional borrowing costs alone.

Since we reached the debt limit in March, Treasury has been using extraordinary measures to borrow money and pay our bills. We should never allow uncertainty surrounding the debt limit to imperil the USA and global economy, but that’s especially true at a time when our nation is seen as the source of strength in the global economy. Because Congress authorizes more spending than it mandates in taxes, the Treasury has to borrow the difference.

The exact date when the Treasury will have to start bouncing checks is hard to predict. With a few 80 million payments moving through the system each month, the government’s revenues and expenses ebb and flow with irregular, sometimes unpredictable, peaks and troughs on the income and payment sides of the ledger. The government is a thing unto itself – a kind of pass-through point that determines the flow and direction of resources and activity throughout the economy – and it is in fact possible for the government to run, and to need to run, big deficits for very long time periods.

Second, the specific limit set by the law – initially around $12 billion and now at its current level after having been raised 78 times since 1960 – is completely arbitrary and not linked in any meaningful way to the scale of the economy.

But he now estimates that the Treasury’s ability to pay the bills will end on November 3, when the United States will only have about $30 billion on hand – and Uncle Sam’s daily expenditures often hit $60 billion. Our creditworthiness is a critical part of our strength as a nation, and protecting that strength is a solemn responsibility. Increasing the government’s $18.1 trillion borrowing cap so that it can continue to pay its bills in full and on time would prevent a potential meltdown in the financial markets and save the Republican Party from presiding over a default on US obligations.

“Some in Congress are endangering this progress by once again manufacturing a crisis for our country”.

HORSLEY: Treasury Secretary Lew hopes this is not the year we find out.