President Barack Obama was able to slip one through. Friday, he signed into law a bill that allows the United States to borrow another $1.9 trillion, raising the U.S. debt ceiling to $14.3 trillion. The move was considered an emergency, because the debt ceiling threatened to exceed its previous $12,374 trillion level this month.
How did the bill through without public histrionics at a time of rising public anxiety over increasing U.S. government debts and deficits? Republicans had no reason to cause a stir since the bill inculdes a measure that makes it more palatable to political opponents.
Democrats included what’s called the “PAYGO” measure (aka pay as you go) to quell bipartisan fears. What is PAYGO? The measure allows the government to reign in future spending by ensuring a direct offset by a decrease in spending elsewhere or a tax increase.
House of Representatives speaker Nancy Pelosi said that the PAYGO measure was a vital step towards ending the kind of fiscal irresponsibility that has buckled U.S. government finances. “It has a proven track record of success,” Pelosi said. “When instituted in the 1990s, it produced record surpluses. When abandoned by the Bush administration and the Republican-led Congress in the last decade, we were left with record deficits. … Today, these irresponsible practices will end.”
So, what looks like it will put the U.S. in further financial peril will, if history serves correctly, lead us toward more stable ground, possibly even to surpluses at some distant point, much like a person receiving a credit line increase to avoid foreseen over-the-limit spending, while vowing to not spend more than what’s available in cash going forward.
The potential negative impact: any new spending or programs implemented by the government will guarantee a tax increase on some group or cuts to other programs and possibly cause more hardship for the less fortunate. –gerald radford
