Wednesday, January 2, 2013
Do you think it's time to rest since the 'do-nothing' Congress actually did something and actually passed a bill to avoid the fiscal cliff? If you think you should be able to rest, then think again. What has transpired is only part 1 of 4. During the next 3 months, the U.S. is facing three more budget fiscal cliffs that will affect most Americans.
Next, at the end of January, Congress must increase the debt ceiling or the country will run out of money. But what do you think the country will do if it runs out of money? Print more of course.... Wow.. If you or I decided to just go out and print more money because we needed it, we would go to jail.
Actually Treasury Secretary Tim Geithner has already made it official. As of December 31, 2012, the Federal government has already reached the debt ceiling of $16.394 trillion So no worries right. The government is still functioning because it has created for itself about $200 billion of headroom by employing what it calls "extraordinary measures". So for the next few months, the country will be running on borrowed time. Actually the country will have until sometime late in February or early March to get the debt ceiling addressed, or surely another downgrade in the US credit rating may take effect. What is sad is that the last time the Federal government stalled on raising the debt ceiling, it wasted $1.3 billion because of the uncertainty it shined on the complex task of federal borrowing.
The next thing after the debt ceiling issue to worry about is what is called the 'Sequester'. So what's that all about? The sequester reduces the budgets of most agencies and programs by 8% to 10%. The sequester was created as of a result of the 2011 fight over the debt ceiling the last time. So what really was the sequester supposed to accomplish when it was created? Because of the last debt ceiling fight, the sequester was created to create a "trigger" so that both parties would have an incentive to devise a smarter way to reduce deficits. Has that worked? Of course not. It's been 17 months since the last debt ceiling debacle and now Congress is trying to push it back off of the table to be addressed at another time. Of the deadline. After two months, spending cuts that were laid out in 2011 would affect thousands of federal programs and projects, including defense and non-defense programs.
The last thing to be addressed is what is called a 'Continuing Budget Resolution'. The fiscal year for the federal government begins on Oct. 1 each year but how long do you think it was that the federal government actually had a budget created on time? Actually, it's been years since that was accomplished.
To create a budget, it involves a long drawn out process where Congressional committees are to have hearings about proposals presented by Congressional committees. But as expected, the 'do-nothing Congress' hardly ever follows up on that process. Instead, they create another 'band aid solution called "continuing Resolutions". So when is that deadline? Presently, it is March 27. If congress doesn't pass another continuing resolution bill by that time, a temporary shutdown of some governmental functions will take place along with worker furloughs.
So the Federal government, namely the U.S. Congress has some work to do that most likely will not get done on time unless there may be some interaction by President Obama.