US debt passes $14 trillion, Congress weighs caps

By Tom Raum

Associated Press

Published: Saturday, Jan. 15 2011 8:40 a.m. MST

Bush won on a 52-48 party-line vote. Not a single Senate Democrat voted to raise the limit, opposition that's now complicating White House efforts to rally bipartisan support for a higher ceiling.

Democrats have use doomsday rhetoric about a looming government shutdown and comparing the U.S. plight to financial crises in Greece and Portugal. It's all a bit of a stretch.

"We can't do as the Gingrich crowd did a few years ago, close the government," said Senate Majority Leader Harry Reid, D-Nev., referring to government shutdowns in 1995 when Georgia Republican Newt Gingrich was House speaker.


And there are many temporary ways around the debt limit.


In a 1995 debt-limit crisis, Treasury Secretary Robert Rubin borrowed $60 billion from federal pension funds to keep the government going. It wasn't popular, but it helped get the job done. A decade earlier, James Baker, President Ronald Reagan's treasury secretary, delayed payments to the Civil Service and Social Security trust funds and used other bookkeeping tricks to keep money in the federal till.

Baker and Rubin "found money in pockets no one knew existed before," said former congressional budget analyst Stanley Collender.

Collender, author of "Guide to the Federal Budget," cites a slew of other things the government can do to delay a crisis. They include leasing out government-owned properties, "the federal equivalent of renting out a room in your home," or slowing down payments to government contractors.


"My guess is they can go months after the debt ceiling is not raised and still be able to come up with the cash they need. But at some point, it will catch up," and raising the debt limit will become an imperative, he suggested.

Republican leaders seem to acknowledge as much, but first want to force big concessions. "Do I want to see this nation default? No. But I want to make sure we get substantial spending cuts and controls in exchange for raising the debt ceiling," said the chairman of the House Budget Committee, Rep. Paul Ryan, R-Wis.


"At some point you run out of accounting gimmicks and resources. Eventually the government is going to have to start shutting down certain operations," said Mark Zandi, chief economist for Moody's Analytics.

"If we get into a heated, protracted debate over the debt ceiling, global investors are going to grow nervous, and start driving up interest rates. It will all become negatively self-re-enforcing," said Zandi. "No good will come of it."



Treasury background on national debt: http://tinyurl.com/4862vxd

Daily debt totals: http://tinyurl.com/yrxrsh

Frequently asked questions about the debt: http://tinyurl.com/69qskf

Government Accountability Office report: http://tinyurl.com/3kw2dr






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