Yesterday, the House of Representatives approved extending the Federal Debt Limit for one year. The Senate is expected to vote this week; however, with the pending Snowstorm in the Northeast and the scheduled Recess for Presidents’ Day (all of) next week, perhaps it will take-up that vote today, reducing the chances of further delays.
Raising the Debt Ceiling for a whole year–rather than what has recently become
several-month-long “band-aids”, at least to me, is a strategic change by Speaker John Boehner (R-OH). In doing so, he broke the so-called (Former Speaker Dennis) “Hastert Rule” of never taking a Bill to the Floor unless it is assured to have a majority of the Speaker’s own Party vote in favor of it. Some D. C. Pundits have suggested that this is a signal that Boehner’s job has just gotten a lot easier.
The Debt Ceiling Extension is vitally important; because, not doing so would mean that the Government would not be able to pay its bills–those that had already been appropriated by Congress–and cause a Default on our National Debt. As I had suggested previously, a U.S. Default would send shock waves throughout the entire World Economy–worse than the recent Great Recession (4Q07-1Q09).
Remember that the U.S. is currently the only Reserve Currency–in which other Nations feel comfortable in placing their excess financial reserves–and believing that their Investment would be repaid. Also, the U.S. Economy is the only (assumably stable) one that is large enough to absorb such large Financial Inflows and Outflows.
Republicans had been hurt significantly when many Americans blamed the Party of “No” for last year’s two-week Government Shutdown, and felt that the GOP caused such shortages in Government Service as: extended delays at Airport TSA Security Points; the Closing of Many National Parks and Monuments and, more recently, putting the IRS behind schedule in preparing for the Annual Tax Filing Period, which ends on April 15th.
NOTE: My next Blog Post will address, once again, what I see as the potential Dark Side of a Default on our U. S. Government Debt.