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"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.

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Tue, 02/14/2012 - 16:14 | 2158754 GeezerGeek
GeezerGeek's picture

"Freedom's just another word for nothing left to lose." Sung by some drunk woman clutching bottle of Southern Comfort.

Tue, 02/14/2012 - 15:09 | 2158403 zerotohero
zerotohero's picture

MDB your a breath of fresh air ;)

Tue, 02/14/2012 - 15:35 | 2158529 ilovefreedom
ilovefreedom's picture

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.  

Tue, 02/14/2012 - 16:01 | 2158697 MFL8240
MFL8240's picture

Are you out of your ever lovin fuckin mind?

Tue, 02/14/2012 - 12:43 | 2157721 Dr. Richard Head
Dr. Richard Head's picture

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

Tue, 02/14/2012 - 12:39 | 2157698 brewing
brewing's picture

let's get some laser sharp focus on this issue...

Tue, 02/14/2012 - 13:08 | 2157855 tickhound
tickhound's picture

let's go through it, line by line...

Tue, 02/14/2012 - 13:56 | 2158079 Conchy Joe
Conchy Joe's picture

...and yet never actually read it...

 

Tue, 02/14/2012 - 23:35 | 2160481 Money 4 Nothing
Money 4 Nothing's picture

Well, we have to open up the passed bill to see what's inside.

 

-Nancy Pelosi,  

Tue, 02/14/2012 - 12:33 | 2157678 Deo vindice
Deo vindice's picture

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.

Tue, 02/14/2012 - 12:47 | 2157735 Dr. Engali
Dr. Engali's picture

You should have stopped on your first statement.... "If the Republicans were smart and serious"

No need to go any further.

Tue, 02/14/2012 - 13:01 | 2157817 Deo vindice
Deo vindice's picture

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.

Tue, 02/14/2012 - 14:36 | 2158266 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

There might actually be a 3rd candidate on the ballot this November. http://www.americanselect.org/about

Tue, 02/14/2012 - 12:47 | 2157741 Dr. Richard Head
Dr. Richard Head's picture

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.

Tue, 02/14/2012 - 15:38 | 2158548 trav7777
trav7777's picture

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

Tue, 02/14/2012 - 13:03 | 2157803 tekhneek
tekhneek's picture

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

Tue, 02/14/2012 - 13:05 | 2157828 Deo vindice
Deo vindice's picture

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).

Tue, 02/14/2012 - 13:09 | 2157873 tekhneek
tekhneek's picture

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.

Tue, 02/14/2012 - 13:21 | 2157928 Abitdodgie
Abitdodgie's picture

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

Tue, 02/14/2012 - 15:39 | 2158556 trav7777
trav7777's picture

Ok I AM telling you to shut the fuck up

Tue, 02/14/2012 - 15:34 | 2158523 economics1996
economics1996's picture

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.

Tue, 02/14/2012 - 15:15 | 2158426 zerotohero
zerotohero's picture

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.

Tue, 02/14/2012 - 13:05 | 2157839 karzai_luver
karzai_luver's picture

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

Tue, 02/14/2012 - 12:37 | 2157691 Silver Bug
Silver Bug's picture

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/

Tue, 02/14/2012 - 13:06 | 2157848 karzai_luver
karzai_luver's picture

news flash to the basement crowd, PAUL doesn't want to get elected.

news flash news flash.............

Tue, 02/14/2012 - 13:38 | 2158011 Deo vindice
Deo vindice's picture

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.

Tue, 02/14/2012 - 15:22 | 2158453 respect the cock
respect the cock's picture

Paul has stated he is more concerned with political influence than political power.

Wed, 02/15/2012 - 01:22 | 2160703 Real Estate Geek
Real Estate Geek's picture

influence IS power . . . applied

Tue, 02/14/2012 - 15:50 | 2158633 JPM Hater001
JPM Hater001's picture

USA USA USA

http://youtu.be/RyI1cXHXnlE - Start it around 4 minutes.

My favorite Mickey Mouse Parody.

Tue, 02/14/2012 - 12:28 | 2157642 battle axe
battle axe's picture

"Hello China, hi it is Barrack, I need a favor".

Tue, 02/14/2012 - 12:31 | 2157660 Gully Foyle
Gully Foyle's picture

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.

Tue, 02/14/2012 - 16:19 | 2158784 GeezerGeek
GeezerGeek's picture

Zeno's paradox. You can never get to your destination.

Tue, 02/14/2012 - 13:13 | 2157894 CrashisOptimistic
CrashisOptimistic's picture

Geithner bought about 6 months with his maneuvers last time. Seems unlikely he won't be able to again.

Tue, 02/14/2012 - 16:48 | 2158949 Archon7
Archon7's picture

... 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..."

Tue, 02/14/2012 - 23:17 | 2160420 StychoKiller
Tue, 02/14/2012 - 12:21 | 2157606 Corn1945
Corn1945's picture

Default and get it over with. Stop insulting everyone's intelligence with this con-game.

Tue, 02/14/2012 - 12:28 | 2157644 potatomafia
potatomafia's picture

everyone's

 

Using this word a little loosely, aren't we?

I think the 7 out of 10 rule still applies.

Tue, 02/14/2012 - 12:39 | 2157695 economics1996
economics1996's picture

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.

Tue, 02/14/2012 - 12:49 | 2157750 Dr. Richard Head
Dr. Richard Head's picture

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.

Tue, 02/14/2012 - 12:57 | 2157787 economics1996
economics1996's picture

 

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?

 

Tue, 02/14/2012 - 13:08 | 2157856 karzai_luver
karzai_luver's picture

despite your fevered desire for a meltdown , it ain't coming in your lifetime.

too bad.

 

Tue, 02/14/2012 - 12:23 | 2157615 wolfnipplechips
wolfnipplechips's picture

HAHAHAHA!!!!

Tue, 02/14/2012 - 12:23 | 2157616 pazmaker
pazmaker's picture

Rut Row!!

Scoobie scoobie doo!

Tue, 02/14/2012 - 13:00 | 2157807 RafterManFMJ
RafterManFMJ's picture

 

 

"...and I would have gotten away with it, if it wasn't for those darn bond vigilanties!"

Tue, 02/14/2012 - 12:23 | 2157619 Gene Parmesan
Gene Parmesan's picture

October will be a good month for Orville Redenbacher.

Tue, 02/14/2012 - 12:24 | 2157622 WallStreetClass...
WallStreetClassAction.com's picture

Remy, we'll watch you again and again and again and again and.....

 

http://www.youtube.com/watch?v=EoS52fVtVQM

Tue, 02/14/2012 - 12:24 | 2157623 Conrad Murray
Conrad Murray's picture

Stop paying taxes. Starve the beast.

Tue, 02/14/2012 - 12:32 | 2157671 BobPaulson
BobPaulson's picture

You're joking right? They can print money.

You want to starve it? Stop borrowing money.

Tue, 02/14/2012 - 12:41 | 2157706 economics1996
economics1996's picture

Taxes are for the little people.  Taxes are a means of control.  If they want what you have they can print all the money they want and outbid you for anything they want.

Tue, 02/14/2012 - 12:44 | 2157725 LawsofPhysics
LawsofPhysics's picture

well, maybe on paper,  there is always the issue of actually trying to take possession.

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