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Debt Ceiling Deadline: October 18 to November 5

Written by Gary North on September 11, 2013

So messed up are the government’s books that experts don’t know when the cooked books, which have been cooked since May 17, will finally overflow onto the fiscal stove. It could be October 18. It might be as late as November 5.

Officially, the federal debt has not risen by one penny since May 17. But the deficit rose by $146 billion in August alone.

This is the finest public experiment in cooked books that we have seen. The Secretary of the Treasury calls this “extraordinary measures,” not “cooked books.” Call it what they will, the body politic is getting a lesson in the games that federal statisticians play.

Obama says he will not consent to spending cuts. Boehner says he will not consent to raise taxes without spending cuts. One of them will back down. Otherwise, the federal government will have to stop sending out money.

The Congressional Budget Office in May predicted that the federal deficit in fiscal 2013 would be precisely $642 billion, down from $1.1 trillion last year. In July, the CBO revised this to $759 billion. Such precision! Not $640 billion. No: $642 billion. Not $760 billion. No: $759 billion. The CBO fakes it with such verve. But faked it is.

We will now get anywhere from five weeks of posturing by Obama and Boehner to seven weeks. The Bipartisan Policy Center reports the following. The government must pay $12 billion in Social Security benefits on Oct. 23, $6 billion in interest payments on Oct. 31, and $55 billion in Medicare, Social Security, military and veterans benefits on Nov. 1.

The group also said that spending cuts that would be required if the debt ceiling isn’t raised could be quite steep. For example, BPC said if the “X-date” arrives Oct. 18, the government would be $106 billion short on its bills between Oct. 18 and Nov. 15, leaving the government unable to pay 32% of the required funds during that time.

It’s the showdown at the Not OK Corral.

Continue Reading on stream.wsj.com

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2 thoughts on “Debt Ceiling Deadline: October 18 to November 5

  1. Boehner is a politician and a Republican, but definately not a Conservative. He'll sputter and belly-ache for a couple of days and then cave to Obama's threats that 'The Republicans are trying to cut Social Security". I expect Obama to get his way, like he has with this congress since he took office. Boehner may be the Speaker of the House, but he's not speaking for the Conservatives in Congress or for the sane-thinking American people.

  2. Government wouldn't shut down or completely stop spending if the debt ceiling isn't raised. And for all of Obama's and MSM's bluster, there won't be a default, either. It just means the government would have to cut spending by the $750B or so difference between annual taxes/revenues and budgeted outlays. Can be done in a 3,000B+ budget, screaming on the left from federal employee unions and Congressional pet projects and the campaign donors that make bank from them aside.

    And, once the Fedreal Government stops soaking up all the free capital for their bond sales, those dollars would be invested in the private market instead, resulting in increased economic activity, higher revenues for all levels of government, and ultimately more jobs for the people, easing the demand for all of the hand-out programs. Wins all around. Which means, of course, that it won't happen in any of our lifetimes.

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