President Obama earlier today formally asked Congress to lift the debt ceiling by another $1.2 trillion, which should be sufficient to keep the federal government operating through the end of 2012.
If you’re thinking “uh oh, here we go again,” don’t worry. No doubt there will be howls of outrage from Republicans and Tea Party activists about another increase in the national debt. But the move has been carefully choreographed to avoid a showdown. In fact, it’s already a done deal.
Last August’s Budget Control Act included three increases in the debt ceiling, sufficient to take the government through the presidential election. They were automatic. But each time it went up, and this is the third and final time, Congress insisted on having the opportunity to vote on repealing the measure.
The House over the next two weeks will no doubt vote to stop the increase – Republican opposition to raising the debt ceiling remains as fierce as ever. But it’s a virtual certainty that repeal won’t pass the Democratic Senate. And even if it did, the president still has his veto pen.
So why go through the exercise at all? “If they (the Republicans) didn’t think the symbolism was important, they wouldn’t have insisted on scheduling a vote on it,” said Stan Collender, a principal at Qorvis Communications, who not-so-boldly predicted on his Capital Games and Gains blog that the request “will not be disapproved.”
Of course, the applecart isn’t entirely home free. There are always the possibility of a “long-tail” (extremely rare) economic event, which have been occurring with depressing frequency in recent years.
For instance, the economy could go into freefall and tax collections could collapse. Or Europe could implode, dragging down U.S. banks and forcing the Treasury to seek another bailout fund.
Or Quetzalcoatl could return, bringing an end to the 5,126-year Mayan calendar cycle. That will bring either the end of the world or a true balance between masculinity and femininity (depending on whether your favorite prognosticator is Mel Gibson in Apocalypto or faith healer Andrew Smith).
Okay, the collapse of Europe is more likely. But I wouldn’t burn your T-bills just yet if you’re looking for ways to keep warm over the long Martin Luther King Day weekend.