The General Assembly’s vote to reduce the debt of a capital projects program is even more commendable considering what happened to the national debt limit – nothing. After weeks of political stalemate between President Obama and a polarized Congress, the federal government now has no debt limit until the arbitrary date of February 7. Whatever our debt rises to above $16.7 trillion, the last approved debt limit, that’s where it will stay until Congress votes to either raise or lower it, according to fiscal experts.
“It would be the same as if your credit card company said you have no limit until a certain date,” said Matt Miller, Vice President for the Business Roundtable, an association of the nation’s largest corporations. “After that date, you’re then locked into the limit that you spent to.”
The Business Roundtable had hoped that the budget and debt ceiling debate would open the door for at least a debate on needed changes in our corporate tax structure. America’s 35 percent corporate income tax rate is by far the highest in the industrialized world.
In the meantime, fiscal experts say, Treasury will have to have to borrow from itself to honor debt over the $16.7 trillion last approved limit. One likely victim for the additional cash will be the Exchange Stabilization Fund, established as an emergency fund for foreign exchange intervention. Others could be the civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefit Fund.
Miller said that by February Treasury’s fiscal sleight-of-hand will be made easier with the beginning of the collection of federal tax receipts.
Treasury, of course, won’t be able to shift money around forever. And Congress will have to resolve the stalemate before next summer, prior to the November 2014 General Election.