"Uh, Marriner Eccles: We Have A Problem" - Obama Predicts He Will Breach Debt Ceiling Two Months Before Election

Tyler Durden's picture

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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
orved's picture

America is not Spain

Comay Mierda's picture

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.

trav7777's picture

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. 

economics1996's picture

No shit, its as if there was a election or something he was thinking about.

redpill's picture

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.

flacon's picture

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.

MillionDollarBonus_'s picture

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 **

Richard Head's picture

Nobody gives a fuck what you "want."

economics1996's picture

I think the guy is being sarcastic.

JW n FL's picture



it is more fun to watch the new people beat their head against the wal!! LULZ!

fuu's picture

I expect "Truth Team 1" to make an appearance in this thread.

Surly Bear's picture

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?

Harlequin001's picture

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...

Bud Denton's picture

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.

trav7777's picture

yeah, the best way to #WINNING is to have a total fucking collapse because you helped the son of a bitch

NumberNone's picture

Why not waste $160 billion to win an election?  We spent $1 Trillion for weapons of mass destruction in Iraq. 

SMG's picture

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.

BigJim's picture

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.

economics1996's picture

Y = C + I -G + lNXl

When you understand the equation you understand economics.

Manthong's picture

The only way to win is not to play.

Clueless Economist's picture

"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

Dapper Dan's picture

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!

Bwahaha WAGFDSMB's picture

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.

Dr. Engali's picture

Can I get a free side of fries with that?

RafterManFMJ's picture



...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.

karzai_luver's picture

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.



gaoptimize's picture

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.

ProtectiveFather's picture

So do you also require fire to release your seed?

gaoptimize's picture

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.

ProtectiveFather's picture

No, just a removal of the underbrush and dead wood that has been building up for a bit too long.

Well put.

trav7777's picture

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.

GeezerGeek's picture

"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!

trav7777's picture

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.

knightowl77's picture

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?

smb12321's picture

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. 

respect the cock's picture

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.

trav7777's picture

the bad news is that as these budgets get cut, the police will refuse to work.

This is also the good news.

ProtectiveFather's picture

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.

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.

Conchy Joe's picture

Thank you MDB for trying to show people the error of our ways.

Real freedom means not ever having to do jack shit!