Daily Independent (Ashland, KY)

Local News

January 3, 2013

Fiscal cliff averted but debt ceiling looms

FRANKFORT — The country may have stepped back from the “fiscal cliff,” but another bloody partisan fight in Washington looms in the next two months.

Sometime around the beginning of March, the government will reach its statutory borrowing limit, needing to issue more debt to finance spending already approved by the Congress. Without an increase in the debt ceiling, the government won’t be able to pay its bills.

Congressional Republicans, led by Sen. Mitch McConnell, have vowed to withhold approval to raise the limit without concessions on spending cuts from Democratic President Barack Obama, who just got higher tax rates for the wealthy in a showdown with Republicans.

But Obama has said he will not negotiate on the debt limit. Failure to raise the limit would essentially mean the United States – generally regarded as risk-free by investors – will be in default and many warn that will send the world economy into a tailspin.

“We can’t not pay bills that we’ve already accrued,” Obama said this week. “If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

But in an op-ed on Yahoo News and in a Senate floor speech Thursday, McConnell vowed to fight an increase in the debt ceiling without spending cuts.

“We simply cannot increase the nation’s borrowing limit without committing to long overdue reforms to spending programs that are the very cause of our debt,” McConnell said in the Thursday op-ed.

Raising the debt limit was once a formality – it doesn’t increase government spending by itself. Rather it authorizes the executive branch to issue bonds to pay for spending already authorized by Congress. Congress has raised it 11 times since 2001, most recently last August.

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