Why You Should Ignore the Coming Debt Ceiling Debate
Politics / US Debt Jan 16, 2012 - 07:20 AM GMTDavid Zeiler writes: Under the guise of yet another debt ceiling debate, Republicans and Democrats will spend much of the week demonizing each other on the Washington stage.
But don't be fooled. This so-called debate will be nothing more than a planned-in-advance sideshow to supply each side with 2012 election campaign fodder.
The deal put in place on Aug. 2 essentially guaranteed that the limit on the U.S. national debt would be raised to $16.4 trillion in January. That means any sound and fury that emanates from Washington this week over raising the debt limit will signify nothing.
"It's pro-forma. They already made a deal to raise the debt ceiling last time around," said Shah Gilani, Money Morning Capital Waves Strategist and author of the Wall Street Insights & Indictments newsletter. "The President has to ask for the increase -- which makes it look like he caused it -- and the Republicans get to display anger that "here we are again.' But it's a game they agreed to earlier."
The deal in August intentionally split the debt ceiling increase into three separate requests to set up these faux debates for public consumption.
U.S. President Barack Obama did his part on Thursday by making a formal request for the $1.2 trillion increase in the debt limit.
That was the cue for Republicans in the House of Representatives to draft a "resolution of disapproval" which they will debate and vote on this week. And given that the GOP has a majority in the House, the resolution is guaranteed to pass.
In this play's next scene, the Democratic-controlled Senate rejects the resolution, which allows President Obama's requested debt ceiling increase to take effect by default - just as all sides envisioned back in August.
And even if a few rebellious Democratic Senators vote with their Republican colleagues, President Obama can veto the resolution. With the odds of Congress overriding a veto near zero, the debt ceiling increase is pretty much a lock.
But the show must go on.
Expect both parties will recycle liberally from the script written during last summer's bitter debt ceiling debate as they play out the charade. The Republicans will again decry the Democrats' fiscal irresponsibility while the Democrats tag the Republicans as extremists unwilling to compromise - talking points that will come in handy on the campaign trail.
The hypocrisy of it all is so blatant even some lawmakers are pointing it out.
"Anyone who supported this deal back in August but then votes to oppose the debt limit increase this upcoming week should take no credit for standing against reckless spending," Rep. Tim Huelskamp, R-KS, grumbled to Fox News.com. "The real opportunity to stand for fiscal responsibility was in August."
Source http://moneymorning.com/2012/01/16/why-you-should-ignore-coming-debt-ceiling-debate/
Money Morning/The Money Map Report
©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com
Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.
Money Morning Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.