Can Congress go 44 days without piling on more debt?
At issue is what the future holds for spending and deficits under the House-passed Budget resolution. The so-called “debt reduction” measure was supposed to prevent the government from running up more debt than $1.2 trillion for the first time this year. The original plan to eliminate all the budget deficit – then projected to balloon to $6.5 trillion – was designed to have some sort of “cutoff” date that would prevent the deficit from rising out of control in the near term, while keeping the ballooning government revenue in check.
This is the first year, however, that the debt ceiling has been reached. And that means the only thing Congress has to do is keep passing debt reduction packages to offset the additional spending.
Even with the current fiscal year budget ending Sept. 30, and with the “cuts” from the various debt-reduction packages already exhausted, the Congressional Budget Office (CBO) expects the total deficit for the 2012 budget year to rise to $1.7 trillion, from $1.5 trillion in 2011. That’s $1.3 trillion in higher taxes and increased spending.
The CBO projection could be seen as optimistic for some time to come. It assumes that Congress will continue to pile on more bills at a rate of $40 billion per month.
“It’s a game of chicken,” said Larry Gordon, the associate director of the CBO’s Program on Payment and Budgeting Oversight in the Washington, D.C., bureau. “Right now, the game of chicken is over. And it feels to me like we have only the vaguest idea of how fast things will get worse.”
The CBO also expects the federal deficit to rise this year by about $60 billion. It’s the first time in history that the CBO has projected so much more massive deficits. “This is probably the most conservative estimate we’ve had in five years,” Gordon said. “It’s almost completely