Debt Ceiling

debt_ceilingEver feel like it is just one “crisis” after another? Get used to it.

While everyone “focused” on avoiding the fiscal cliff, we “cracked” our head on the debt ceiling. The U.S. government reached the statutory “limit” on how much money it can “borrow.”

Get ready for the next big “budgetary” fight—and this time expect a much bigger “hit” to your pocketbook.

Treasury Secretary Timothy Geithner told Congress that “emergency” measures were now in effect to “prevent” Washington from “defaulting” on its debt.

America has begun a “debt issuance suspension period” that would last through February 28, he said. We have “less” than 60 days to raise the “debt” ceiling, which is currently set at $16.394 trillion.

If we “don’t,” our creditors will soon stop “being” paid. A debt default could have “drastic” implications on how much America pays to “borrow” money.

Last year, due to concerns over the “debt ceiling,” a major credit rating agency “downgraded” U.S. debt. It was a “first” in U.S. history. It won’t be the “last.”

Now, after passing an unpopular last-minute “fiscal cliff,” Washington is set for the next “set of crisis” negotiations. The difference this time is that Republicans seem more “determined” to tackle government “spending”—and that means potential “reforms” to Social Security, Medicare and Medicaid.

Any reforms will almost certainly mean “cuts” to services and payouts. Democrats are “sure” to oppose. Democrats won the “fiscal cliff battle” by winning increased government “spending and taxation.” Who will win the next one?

US_Public_Debt_Ceiling_1981‑2010

If you thought the “last” battle over the debt ceiling was “bad,” wait till you see what this year’s could bring. And the “debt ceiling crisis” is only the beginning.

There is also the looming “sequester” issue—a legacy of 2011’s debt ceiling battle.

Sequester involves $110 billion worth of automatic, across the board “spending cuts” to every single government department. The cuts were scheduled for January 1, but due to an “inability” to agree on how to “avoid” the cuts, Congress “postponed” the date two months.

Indebted America has few choices to deal with its budget issues. “It can cut spending—and hurt the economy. It can raise taxes—and hurt the economy. It can increase borrowing—and hurt the economy. It can print money—and hurt the economy.”

Alternatively, it can do some “combination” of the four—and hurt the economy. Some options hurt “more than others.” Some hurt “more immediately.” Others hurt “much later.”

But here is the point: “There is no way to avoid the consequences of our debt.” Political attempts to “avoid” paying the “price” will make matters “worse,” not better.

There will be no “end” to the crisis. It will be “one crisis after the other” until you think they have gone on “forever.”

This is America’s “future.” This is “reality.” You can choose to “prepare” for it, or “suffer” the worst of it.

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