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The debt ceiling is a cap set by Congress on the amount of money the federal government can legally borrow. The cap applies to debt owed to the public (anyone who buys U.S. bonds, including foreign countries) and intragovernmental holdings (money borrowed from government trust funds like Social Security).
According to the latest projection by the Treasury Department, the current debt ceiling -- set at $14.294 trillion -- will be reached no later than May 16. In his letter, Treasury Secretary Geithner indicates he has the authority to take actions preventing the government from defaulting on its obligations for approximately eight weeks -- about July 8.
Some believe we should enact a "clean" debt ceiling increase -- simply increasing the amount of debt the government can amass without any reforms or spending cuts. One Administration official went so far as to call having a debate over the debt ceiling "ridiculous."
I believe any increase in the debt ceiling should be tied to meaningful reforms that change the trajectory and get spending under control including spending caps, deficit reductions, and rescissions that bring us at or below "08 spending levels. We need to destroy the infrastructure of spending in Washington.
Simply writing a blank check to continue the out-of-control spending in Washington is unacceptable. When Standard and Poor's (S&P) downgraded our long-term credit outlook from "stable" to "negative," it reiterated what many of us have been saying for a long time. We cannot wait any longer to get our fiscal house in order. If our credit rating is downgraded, the results could be as disastrous as if we defaulted on our obligations.
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