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KAI RYSSDAL: Even though it may not seem like it — given the way Washington’s been spending money the past year or so — there is a limit to how much the government can borrow. Right now the U.S. credit limit, or the “debt ceiling” as those in the know like to call it, is $12.1 trillion. We’re just about there. Which means within the next month or so the White House is going to have to ask Congress for an increase, to as much as $13 trillion.
From Washington, Marketplace’s Steve Henn reports.
Steve Henn: Thirteen trillion dollars — that’s roughly the size of the whole U.S. economy. And right now, the government is almost entirely dependent on foreign lenders to keep the lights on.
David Walker: If foreign lenders lose confidence in our ability to put our government’s financial house in order, we could experience a dramatic decline in the dollar and a dramatic increase in interest rates.
David Walker is the former head of the Government Accountability Office. He warned the Senate Budget Committee earlier this week the country is walking the razor’s edge.
Walker: We will face an economic crisis much bigger than the current one, if we pass a tipping point and we don’t start to put our act together pretty soon.
The Administration borrowed aggressively to fight this economic collapse. But what worries experts is the long term outlook.
Bob Bixby at the Concord Coalition says without changes, in 25 years today’s baby boomers will swell our yawning deficits.
Bob Bixby: If instead of a $1.4 trillion deficit, we’d have a $2.2 trillion deficit.
The solution? Trimming Social Security and Medicare and raising taxes. But politically, that’s toxic. So a group of Senate moderates is trying to force the issue. They want to form a bipartisan commission to make the tough calls. Then both Houses of Congress would get one shot at voting the deal up or down. No amendments, no changes.
We reached Democrat Kent Conrad on his cellphone in Fargo, N.D.
Kent Conrad: The regular order does not work well when you face a challenge of this magnitude. We are on an unsustainable course as a nation.
Liberals in the House and Senate say a commission could force unacceptable cuts. And the Administration hasn’t endorsed the idea either. But the government desperately needs a credit line increase. And before that happens, Conrad wants to force it into credit counseling.
In Washington, I’m Steve Henn for Marketplace.
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