"Uh, Marriner Eccles: We Have A Problem" - Obama Predicts He Will Breach Debt Ceiling Two Months Before Election
In light of the epic fiasco from last August, when the US debt ceiling hike became a 2 month televized affair, culminating with the GOP caving, but not before the S&P downgraded the US (and in the process breaking the US stock market), Zero Hedge has long been analyzing the chronology of future debt breaches, as with the presidential election in November, what happens in the months and weeks ahead of it as pertains to the number one problem facing America - its lethal debt addiction - will be by far the biggest weakness of Obama's campaign. This is something we believe the GOP has finally understood, and they want a full replay of last August's insanity, to remind America just how broke (and broken) this country is. Yet it turns out all of our analyses have been for naught (if 100% correct). Because it is none other than President Barack Obama who has been kind enough to point out, that on September 30, 2012, or in just over 7 months, total US debt subject to the limit will be, wait for it, $16,333,900,000,000. Why is this an issue: because the final debt ceiling that Obama has been afforded with automatic Senatorial roll overs (even as Congress theatrically votes these down), is $16,394,000,000. In other words, with two months ahead of the election, the US will have a de minimis $60 billion in debt capacity. And since the implied burn rate is $133 billion/month this means that the United States will be in full blown debt ceiling hike chaos just as the final electoral debates take place. And one wonders why the GOP rushed to green light Obama an additional $160 billion in debt issuance. If indeed the $160 billion in new debt is added, the US may not even last to September before Tim Geithner is forced to start plundering G-fund and other retirement accounts. It also means that two months of America in a debt ceiling breach situation will deal a dramatic blow to Obama's reelection chances as the last thing the US population will want is a replay of last summer.
From the Analytical Perspectives Section of the President's Budget (source). One word: OOPS
As a reminder, here is what we said on the topic of the GOP's increasingly more interesting gambit yesterday.
Two weeks ago when discussing the latest lunacy surrounding America's exponential curve #1 also known as its debt balance, we suggested what the GOP election strategy should be: "[if] the debt ceiling becomes a sticking point at the election, Obama's chances of reelection plunge. Which makes us wonder - will Republicans grasp that the paradox of defeating Obama is precisely in giving him a carte blanche on all the stimulus programs he wants? Because if Congress approves another $200, 300 or even $400 billion in stimulus pork (the only thing better than one Solyndra? One thousand Solyndras!) the Treasury will drown in the need to raise hundreds of billions more, and will in fact hit the ceiling well in advance of the elections. As for the stimulus projects themselves, they will crash and burn just like all centrally planned endeavors, and actually result in a far worse outcome than if they had never been attempted. [Because] the best way to finally get back to a fiscally prudent regime? Why go to town, of course." We were delighted to discover that our policy anti-recommendation has finally been adopted. Because as the WSJ reports when it comes to the latest payroll tax extension we find something quite stunning: "House Republican leaders said Monday they would introduce a bill extending the payroll-tax break for the rest of the year without finding spending cuts to offset the program's cost. The proposal marks a major shift for Republicans, who previously had insisted that the costs of extending a trio of provisions expiring at the end of the month be offset with spending cuts." That's right - no offsetting spending cuts. Which means one thing - much more debt. How much more? At least $160 billion much. Which means that the debt ceiling discussion will hit not in November as we speculated previously, but potentially as soon as September.
It also means that by the time the GOP candidate is debating Obama the primary topic of discussion will be just how much the Administration is plundering from government retirement and pension accounts to keep the country under the latest and greatest (and just upwardly revised) $16.4 trillion debt ceiling.
And some more color in this most critical matter from none other than former Obama's economic advisor, Peter Orszag courtesy of Bloomberg:
Table 6-2 shows that even with a somewhat sunny outlook for economic growth this year, the amount of government debt that is applicable to the debt limit is projected to reach, by the end of September, $16.3 trillion. The debt-limit itself currently stands at $16.4 trillion. So by next January, if not sooner, we will again be debating a debt-limit increase -- at the same time that significant spending reductions and tax-cut expirations are scheduled to take effect. The journey through this fiscal maze next year will make last summer’s debt-limit debate look like child’s play.
Spot on Peter, only it won't be next January. It will be this September. If not sooner.
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America is not Spain
I'm sure he will start WWIII by then to distract the sheeple with humanitarian nukes flying all over the place and reminding us all that he has a nobel peace prize. He is well aware that no sitting president has lost a re-election campaign in a time of war.
the best way to convince a drunk driver is to pour them another drink.
For political reasons. To prove a point. Fuck health, welfare, sanity, the truth, principles, ethics...always go for the political calculation. Even machiavelli would have been appalled at these people.
The GOP wins, then what? Debt doubles again in the same time period. They had the Presidency AND Congress for a few years in the last administration and wtf did they do? Pressed down on the pedal harder.
No shit, its as if there was a election or something he was thinking about.
I'm sure they'll try to use their "extraordinary measures" to delay the drop dead date past election day, then Obama won't care one way or another.
All they have to do is pass a law by FIAT renaming August to November and then they can still have the elections in November and not have to worry about a thing. Central planning... why not use it.
Typical ZH rant about the budget without a SINGLE mention of what the debt is financing. The budget includes roads, hospitals, bridges and generous compensation packages for hardworking government workers like teachers and firemen. Libertarians correctly point out that the government is under no obligation to provide these things, however liberals point out that they have a moral obligation to provide a decent standard of living for all Americans. I want a society where we don't have to worry about healthcare, mortgages, jobs or any of the other problems that dog-eat-dog free market imposes on us. That is what I consider to be REAL freedom.
** Obama/Biden 2012 **
Nobody gives a fuck what you "want."
I think the guy is being sarcastic.
SHHHHHHHHHHH!
it is more fun to watch the new people beat their head against the wal!! LULZ!
I expect "Truth Team 1" to make an appearance in this thread.
Do you really expect the Republicans to stop a debt limite increase? Mother fucker, please! If the debt ceiling isn't raised then all this shit you call important stops, and you know we can't have that, can we?
So let me get this right then, the GOP throws away $160 billion of America's money just so that they can score a political point at a convenient time?
That bodes well for the incoming candidate, putting America first.
And does anyone wonder why the sanest among us think they should all be hanging from trees?
and not just the American ones either... One day soon these same individuals are going to ask us to rally round in the name of the country and fight for them...
I don't see how the republicans can be smart enough to score a political point, bbut, I'm keeping my fingers crossed. Tyler is right--the best way to defeat Obama is to let him be Obama. And voila! We are instantly broke[er] with nothing to show for it. Will the main stream liberal media be able to lie Obama's way out of the next debt limit fiasco for him?
Maybe. But if Ron Paul can keep on reaching the people, there is hope.
There is hope.
yeah, the best way to #WINNING is to have a total fucking collapse because you helped the son of a bitch
Why not waste $160 billion to win an election? We spent $1 Trillion for weapons of mass destruction in Iraq.
Actually I don't think so. Pretty sure he's a paid troll who has been lurking around here for quite a while under several different account names.
not sarcastic, genius.
I don't think you get MDB.
MDB is Zerohedge's best comedy troll at the moment... though there was another guy recently, can't remember his name, who said of the national debt: "When you find yourself in a hole, you don't just lie down - you dig!" which I thought was pretty damn good.
That is funny.
-Paul Krugman
Sounds like a HamyWangerism.
stimulation = fail
austerity = fail
liquidation 2012, bitchez
http://azizonomics.com/2012/02/14/the-system-is-the-problem/
Y = C + I -G + lNXl
When you understand the equation you understand economics.
The only way to win is not to play.
That is so fucking hilarious.
You mean the pension fund your favorite administration plunders to keep this debt target alive http://www.zerohedge.com/article/treasury-continues-dip-retirement-accounts-prepares-take-out-66-billion-chunk-make-space-new
"and generous compensation packages for hardworking government workers"
Well done, Mr Troll, well done
"The only solution to the debt problem, is more debt"
P. Krugman
SUBMarriner Eccles...
Dad, there is a fire at the front of the barn!
Son, go get a can of gas and meet me at the back of the barn, we need to start a controlled burn to save the barn!
When a man has once begun to indulge in it he must continue to indulge; or, as it is popularly expressed, the last dose kills him. Indeed the arsenic eater must not only continue his indulgence, he must also increase the quantity of the drug.
Can I get a free side of fries with that?
...and that 100 million Oblamy gave to HAMAS to build environmentally correct buildings. I, for one, cannot wait till this corrupt system burns and we can rebuild, Phoenix-like, from the ashes.
You "rebuild clowns" are a fukin joke.
You will not rise from the ash heap fool.
Talk it over with the Jews that are left over from the last round of ashes.
I think you underestimate the character and talents of those of us planning for the worst. Suggest you visit the burn areas from the 1988 Yellowstone wildfires, or Mt. St. Helens eruption of 1980, and think about us. We are getting stonger while all around us is weakening. Most of us share common (sense) values. We will rebuild and prosper.
So do you also require fire to release your seed?
No, just a removal of the underbrush and dead wood that has been building up for a bit too long. As much as I'd like more, my seed is already released.
If the debt cieling breach is in focus at the Republican National Convention, Ron Paul will emerge with the most political capital, whether he is the nominee or not.
Well put.
HUH? St. Helens? You want pics? I was just there.
Even 40 years later, NOTHING IS GROWING THERE. There are some hardscrabble wildflowers with signs warning you not to step off the paved path or else get fined $500 because you step on one it won't grow back.
The place is denuded, looks like the surface of the moon. Bleached tree trunks to the horizon where they did not come in and replant. Closer to the mountain, away from the ranger station, literally nothing grows.
"Even 40 years later"
While you were using your time machine to venture 8 years into the future, did you happen to notice what the economic situation was?
Did Obama denude the country economically? Did hope and change work out well?
Please, tell us what 2020 was like!
yeah, it really sucked.
You on the other hand were rich, because you won the "world's biggest idiot" contest...but I've said too much.
Temporal paradox, FTW!
No such thing as "free" anything...Someone, somewher in the end pays....Who foots the bill for this utopia that YOU want?
Space aliens? Villagers in Africa? Who pays the bill?
6.
Million - The overwhelming majority of pays for cops, firemen, teachers and librarians is state and local - budgets that must balance. Federal money goes to 3 things - defense, interest payments and zombie payments (SS, MTC, Medicare, Medicaid, etc). In LaLa Land folks get all they want without worrying how it was provided. In the real world, when unproductive folks get something they are taking it from someone else. What you are asking for is an authoritarianb government that will decide who gets what. This is as profoundly different from our past as Obama is different from every other President.
smb is correct. With the exception of DCFD (funded by Congress) and grants, fire departments/districts are locally funded, mostly on a percentage of assessed residential RE valuations and commercial sales taxes - both of which are dropping like a stone and crushing budgets/leading to reductions in service.
the bad news is that as these budgets get cut, the police will refuse to work.
This is also the good news.
MDB - You're selling your satire short here. War, famine, rebellious teenagers, creepy uncles, STDs, people who don't flush in public restrooms: these are also "problems" the government has the moral obligation and ability to fix. The utopian dream hasn't worked for anyone at any point in history, but since it's theoretically possible, we must not be trying hard enough.
Also, I love your comments. And it's hilarious how many people don't get it and down-button you.
Thank you MDB for trying to show people the error of our ways.
Real freedom means not ever having to do jack shit!
"Freedom's just another word for nothing left to lose." Sung by some drunk woman clutching bottle of Southern Comfort.
MDB your a breath of fresh air ;)
The last few decades were that of the ideologue, the next few decades will be that of the accountant.
It's very nice of you to WANT to pay for these items, it's quite another to be able to afford them.
It's not just defense, Social Security and Medicare will be re-organized as well-- not because anyone WANTS to, but because they have to.
Are you out of your ever lovin fuckin mind?
I didn't know there were that many funds left in the "extraordinary measure"...I mean Federal Employees' Retirement System Thrift Savings Plan to stave off the debt ceiling talk till after the Presidential election. $66 billion was taken out around June of last year - http://www.zerohedge.com/article/treasury-continues-dip-retirement-accounts-prepares-take-out-66-billion-chunk-make-space-new
I suppose the Treasury paid that back iwth interest in all. /snark
let's get some laser sharp focus on this issue...
let's go through it, line by line...
...and yet never actually read it...
Well, we have to open up the passed bill to see what's inside.
-Nancy Pelosi,
If the Republicans were smart and serious, they would let Obama spend whatever he wants starting right now.
Then when the debt ceiling is reached, let him go after the retirement funds of Americans.
There would not be a safe place for a Democrat to hide in the country within a couple of weeks, such would be the outcry.
Ron Paul would find the the 'older' crowd would now be supporting his fiscal ideas.
Alas it won't happen. Why?
Because the Republicans are neither smart about monetary matters nor serious about doing things differently.
You should have stopped on your first statement.... "If the Republicans were smart and serious"
No need to go any further.
I thought of that, but my fingers wouldn't stop.
Republicans & Democrats = two sides of the same (fiat) coin.
Both are backed by nothing of value.
There might actually be a 3rd candidate on the ballot this November. http://www.americanselect.org/about
I don't know that it would matter. I didn't see a large outcry from Federal employees the last time this administration plundered their pensions to keep the debt ceiling from being hit. You think that would wake up those in the democrat party to looking at Ron Paul's positions.
let them plunder it and not give it back one of these times, then see.
Police have already said don't cut my pension or else i won't work. Which means what exactly, less harassment and tickets? OH NOZE
Ah yes. It's the Republicans! No wait, the Democrats! No wait! The independents! No it's the tea party. No it's the neo-cons! No it's the liberals! No it's the SHUT THE FUCK UP.
SHUT THE FUCK UP.
SHUT THE FUCK UP.
(*not telling you directly to STFU, I like your comment it's just the republican/democrat thing in this day and age is... man. I think you get it.)
After all what's the difference if you're on the Red team or the Blue team if you both fucking get compensated to vote the exact same way? I'm so sick of the stupid fucking republican/democrat bullshit.
http://www.youtube.com/watch?v=fOaCemmsnNk
Setting aside your articulate ability, my point was that there was no difference between the two.
(Edit: O.K. read your edit and get it).
We're "on the same page", I just wanted you to know I wasn't literally asking you to "shut the f*** up", but people who don't understand the reality of the political situation and literally blame entire problems on the two-party system bug me to no end as of late.
Soooooo what you are saying that there is no differance between republican/democrat, well thats it ,Im am going to write to my senitor he will sort this problem out. Thats how you get results
Ok I AM telling you to shut the fuck up
tekhneek go bang the chick and snort a line. You will feel beter in the morning. The time to lock and load will come soon enough.
tekhneek - its the same in Canada - Liberal, Conservative - it is beyond stupidity. The system is truly f**ked - I love when people say "you can't complain if you didn't vote" - F**K that shit! Vote - don't vote - it doesn't F**KING MATTER.
He IS SPENDING whatever he wants.
AND the amerikan sheep no matter their few bleats LIKE THE FREE SHIT.
AND the pugs will NEVER CUT ANYTHING THAT COSTS THEM THE VOTES OF THE 99%.
No fun to play a game when only 1 team shows up.
Thus the two teams of the same type.
bogus fake
He will run out much faster if he starts a carpet bombing on the middle east again. Looks like he is going to have to, too if he is going to get re-elected. Lets just hope we get Ron Paul.
http://ronpaul2012blog.blogspot.com/
news flash to the basement crowd, PAUL doesn't want to get elected.
news flash news flash.............
If that is true, he has the most amazing way of showing it.
At 76 years of age, I am sure there are a lot of other things he could be doing than keeping up this grueling schedule and taking on the establishment in Washington and the MSM.
Paul has stated he is more concerned with political influence than political power.
influence IS power . . . applied
USA USA USA
http://youtu.be/RyI1cXHXnlE - Start it around 4 minutes.
My favorite Mickey Mouse Parody.
"Hello China, hi it is Barrack, I need a favor".
You Fools!
Barry's Paradox may be rephrased as follows. Suppose I wish to increase the debt ceiling. First, of course, I must cover half the amount. Then, I must cover half the remaining amount. Then, I must cover half the remaining amount. Then I must cover half the remaining amount . . . and so on forever. The consequence is that I can never get to raise the debt ceiling.
Zeno's paradox. You can never get to your destination.
Geithner bought about 6 months with his maneuvers last time. Seems unlikely he won't be able to again.
... and in the midst of the debt-ceiling chaos, the Marxists will find perfect cover to commit widespread vote-fraud as they attempt to steal a presidential election... It's a page from Saul Alinsky, and classic Obama - turn the system on its head, invoke total chaos, and while everyone's distracted by the chaos you calmly walk in and achieve your goals. "Watch what I do with my right hand while I rob you with my left hand..."
Cloward-Piven Strategy...
Default and get it over with. Stop insulting everyone's intelligence with this con-game.
everyone's
Using this word a little loosely, aren't we?
I think the 7 out of 10 rule still applies.
People believe in crap. I see it in graduate level students, why would it not be more prevalent with the general public. It will take a crash, decentralization of education, that means ZHers need to educate their friends, and a whole lot of luck to get back to a real economy.
I have tried educating many family, friends, and neighbors and they always come back with, "If our party just gets control in Washington." Sad, sad, sad.
Yes, they are playing the Red Team/Blue Team game. all you can do is point out that there is a crash coming, slow, fast, we don't know, but the economy will not improve until deleveraging and or default has occurred. Debt is a way for the elites to enslave governments and people, yada yada yada.
When the layoffs happen the economy does not improve THEN and only THEN will they look at you with a different look and THEY will understand that you really do understand what is happening.
So for ZHers these people will not pay attention to you as long as they are employed, but the day will come when inflation cannot be ignored and interest rates increase. When that day comes the bubble will burst and millions will finally realize this was 100% predictable and that they were lied to.
Ask yourself to you want to be one of the ones who lied to people or told them the truth?