Democrats Propose $1.9T Increase in Debt Limit
ABC News (Link) - AP - Andrew Taylor (January 20, 2010)
Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.
The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.
It�s hardly the debate Democrats want or need in the wake of Sen.-elect Scott Brown�s victory in Massachusetts. Arguing over the debt limit provides a forum for Republicans to blame Democrats for rising deficits and spiraling debt, even though responsibility for the government�s financial straits can be shared by both political parties.
The measure came to the floor under rules requiring 60 votes to pass. That�s an unprecedented step that could mean that every Democrat, no matter how politically endangered, may have to vote for it next week before Brown takes office and Democrats lose their 60-vote majority.
Democratic leaders are also worried that Sen. Evan Bayh, D-Ind., who opposed the debt limit increase approved last month, will vote against the measure.
The record increase in the so-called debt limit is required because the budget deficit has spiraled out of control in the wake of a recession that cut tax revenues, the Wall Street bailout, and increased spending by the Democratic-controlled Congress. Last year�s deficit hit a phenomenal $1.4 trillion, and the current year�s deficit promises to be as high or higher.
Congress has never failed to increase the borrowing limit.
�We have gone to the restaurant. We have eaten the meal. Now the only question is whether we will pay the check,� said Finance Committee Chairman Max Baucus, D-Mont. �We simply must do so.�
A White House policy statement said the increase �is critically important to make sure that financing of federal government operations can continue without interruption and that the creditworthiness of the United States is not called into question.�
Less than a decade ago, $1.9 trillion would have been enough to finance the operations and programs of the federal government for an entire year. Now, it�s only enough to make sure Democrats can avoid another vote before Election Day.
Republican Sen. John Thune of South Dakota immediately offered an amendment to end the bank and Wall Street bailout, officially known as the Troubled Asset Relief Program, or TARP. Thune would prohibit further expenditure of TARP funds and would require that all funds paid back be used to retire debt.
The latest increase comes on top of a stopgap $290 billion measure that cleared the Senate on Christmas Eve. Given the country�s finances, that measure would last only about six weeks, lawmakers said, requiring the far larger measure that�s pending.